Budgeting is easier when money is abundant, and Utah undeniably is in an age of abundance. The state continues to rank high in numerous surveys of the best places to do business. Employment is strong and the population is growing.
With that in mind, Utah Gov. Gary Herbert’s proposed 2019 budget is prudent, especially considering recent projections that the state will reap $1.3 billion in new revenue — a combination of new ongoing funds and one-time windfalls.
He wants a $200 million cut to the sales tax. That’s a valid desire, considering surpluses indicate taxpayers are paying more than is necessary to fund government. Of all taxes, the sales tax is the most regressive. The poor pay the same rate as the rich, but for the poor this represents a proportionately higher amount of their total resources. The governor also wants to revisit something conservative politicians have talked about for years — the large number of loopholes, or tax exemptions granted to various services or industries.
That makes sense. Tax exemptions are government’s way of picking winners and losers in the free market. If they went away, tax rates could drop because the base of tax contributors would be broader.
In practice, however, eliminating these exemptions is extremely difficult to do. Each came about as a result of a convincing plea, usually in the name of economic development or some other perceived public good. During each legislative session, more of these arguments are made, and exemptions typically are granted, sometimes without enough thought to the larger tax picture.
Also, each exemption comes with advocates who will vigorously resist its removal.
Herbert argues that the percentage of economic transactions covered by the sales tax in Utah has dropped from 70 percent in the 1980s to about 40 percent today. That makes the tax less effective while also placing a larger burden on those transactions that are taxed. We encourage lawmakers to confront this complicated issue now rather then wait for less prosperous times.
As always, education promises to be a big part of budget discussions during the upcoming legislative session. This year, it will be complicated by Question 1, a ballot measure that would have increased education funding through a 10-cent hike in the gas tax. It failed overwhelmingly, with 65 percent of voters saying no.
Is that to be interpreted as a lack of support for education? Likely not. The ballot question was confusing and critics said drawing a link to the gas tax and education was not a smart approach. Polling regularly notes support for education by the public.
The governor proposes $445 million in additional state-directed funding toward public schools, which he said would add to more than $1 billion more in education funding over the past four years, exceeding by one year his 5-year goal to put $1 billion into education.
That represents a healthy commitment to the education of the state’s large youth population — a commitment statistics have shown waning over the past few decades.13 comments on this story
The governor’s proposed budget includes much more, of course, including $100 million to combat the type of polluted air that crept into the Wasatch Front this week. We look forward to a robust debate on these issues.
The Legislature holds the power to craft the state’s annual budgets. Governors can only suggest, lobby and, if things go badly, veto. But if lawmakers take the same prudent approach to flush times as Herbert has suggested — bearing in mind that good times won’t last forever — the state would be well-served.