SALT LAKE CITY — A pessimist won’t truly enjoy good times because he or she is sure bad times are just around the corner.
Or maybe that’s a realist. You decide.
Meanwhile, some of Utah’s political leaders seem to have the yips, to borrow a baseball term. That’s a nervous tension that drives you to distraction.
At a recent Utah Taxpayers Association conference, Senate Budget Chairman Jerry Stevenson, R-Layton, titled his presentation on the budget year that begins July 1, “Caution: Rough Road Ahead.”
“I’m not a doomsayer, but something is going to happen,” the Deseret News quoted him as saying.
For his part, Gov. Gary Herbert said he won’t let anyone on his staff utter the word “recession,” or the R-word, as he calls it. He’s not sure why people would want to use it, adding that the R-thing “is not an inevitability. …”
History may have a different opinion, hence the yips.
You would hardly guess the state is facing a $1.3 billion surplus, divided roughly evenly between one-time windfalls and a projected growth in ongoing tax collections.
You also might not guess the state is the third-fastest growing in the nation or that its unemployment rate is 3.2 percent. Despite inversions and winter storms, the sun most definitely is shining.
Some of us seem to have been spooked by the Great Recession of a decade ago, just as people after World War II expected the nation to plunge back into the Depression.
Then again, have you followed the stock market lately? Have you seen the reports about a slowdown in the global economy? Do you realize how long the current economic growth cycle has lasted? Maybe these jittery politicians are doing something the rest of the debt-riddled nation ought to be doing, which is to think about patching the roof while the sun shines.
The governor wants to give Utahns a $200 million cut in the state portion of the sales tax, dropping the state rate (not the overall rate you pay) from 4.7 percent to less than 3.9 percent. But he wants to do this while also getting rid of a lot of tax exemptions out there.
He’s fond of using limousine services as an example. If you hire a limousine for the evening, you don’t have to pay any sales tax on that. Why? Who knows, really?
You can imagine the fat cats, or worse, movie stars, soaking in mobile hot tubs as they ride around tax-free. Who do they think they are, anyway?
But other things that would fall under this broadening of the tax base are not quite as luxurious, like haircuts. In Utah, most services are not taxed, and yet services are becoming a big part of the economy.
Herbert says over time Utah has gone from charging sales taxes on 70 percent of economic transactions to only 40 percent.
When hard times hit and government services are in high demand, a broad tax base might not sink revenues as fast as one that depends on 40 percent of transactions. Moody’s Analytics ranks Utah a mediocre 29th in terms of readiness for a recession.
So far, the 21st century has been an era of disruption. We shop online; we buy cars that don’t use gas; and we set up our own cottage industries on something called Etsy. Each of these, in some small way, impacts government’s ability to provide services.
Sales tax is only one of the taxes that need updating for this new era. But here’s a tip based on decades of following governments: Don’t expect a lot of quick action.
I may be the only person left in Utah who has a copy of former Gov. Olene Walker’s 2004 tax reform plan on my desk. Fifteen years ago she saw the long-term trends. Her plan included a proposal to “broaden the tax base to include consumer services” and to lower the overall rate to 3.75 percent.11 comments on this story
The lesson here is that government reforms move at starfish speed. Also, politicians who push too hard for them may not get re-elected. The only one of Walker’s reforms that made it into law was the adoption of a flat-rate income tax, and that was done under Gov. Jon Huntsman Jr.
And so we tread lightly into the future, hoping not to trip any alarms that might set the economy into a dither.
All we know for sure is that the time to reform the tax structure is when the sun is shining, not when people are losing jobs and government is trying to stay afloat.
The yips may be a good thing to have before the 2019 legislative session begins, but only if they lead to action.