Category

Revenue

November Budget and Fiscal Report

By Fiscal Responsibility, Revenue, State Budget No Comments

During the session, there are many many important issues that we discuss, but by far the most important job of the legislature is the allocation of the budget. As you are already aware, this year’s budget discussion will have many challenges because there are still so many unknowns. We do not know what will be decided in Washington or how those decisions will affect us. Predictions are grim no matter what they decide. If the sequestration is allowed to happen and the spending cuts take place, our state budgets will be affected. If some agreement is not reached and the debt reduction measures are essentially postponed, economist say that there could be extreme financial consequences within a few years.

You are also probably aware, that in spite of all the recent economic problems, Utah is doing better financially than most other states. Utah’s financial stability is not necessarily due to our Constitutional requirement to balance the budget each year. Forty-eight other states actually have that requirement in their Constitutions. But many of those states have found ways to work around that requirement. Utah’s level of fiscal stability comes from the legislature making responsible, informed decisions and the fact that we fund realistic budgets with the money we have available.

The only way the Legislature has money to spend on anything is if that money is taken from us as citizens in the form of some tax. It is always interesting to me how many times I hear, “The Legislature needs to spend more money on…” But I don’t hear, “The Legislature should raise taxes so that they can spend more on…” People seem to forget that first part about where the money actually comes from.

Careful Oversight of Tax Dollars

The majority of the Utah Legislature is not of a tax-raising mindset. Occasionally, as may need to be discussed this year, the incoming tax revenue is simply not high enough to cover the existing needs of the state. In that situation, the choices are simple: eliminate and/or reduce existing programs and/or increase taxes. Over the past few years, departments have been asked to cut and trim internally so that budget dollars can stretch and for the most part they have done a good job. But our state’s needs continue to increase, our school populations are growing and federal requirements are creating more of a strain. All of these elements add up to the possibility of increasing taxes.

Interim Committee Summaries

By Economy, Education, Fiscal Responsibility, Governance, Legislation, Legislative Update, Revenue, State Budget No Comments
August:

The Executive Development and Workforce Services Committee heard a report from Kristen Cox, the executive director of the Department of Workforce Services on SB 37, “Intergenerational Poverty Provisions” passed by Senator Reid in the 2012 session. Ms. Cox reported on the department’s plans to create a tracking system that will identify trends and assist case workers as they pinpoint children who are at risk of being trapped in intergenerational poverty. The new research they are collecting will set a benchmark so that we can see what the best strategies would be to help break this cycle. The final results of their study will be made public in October.

The Health and Human Services Committee heard testimony on the parental rights of biological fathers in the adoption process and a report from the Utah Department of Health on efforts that are being made to promote wellness strategies among Medicaid enrollees. According to the Center for Disease Control and Prevention, the biggest expenditures in health care (at least 75%) goes to treating heart disease, diabetes, arthritis and cancer–all of which are generally preventable. They estimate that more than $16 billion could be saved annually by preventing or delaying the onset of these chronic diseases. In Utah we are establishing several programs to help encourage better health practices such as a smoking sensation program, a chronic disease self-management program and preventative dental care program. These sorts of programs teach healthier behaviors and accountability to people, reducing many of the problems that cost so much in healthcare.

The Law Enforcement and Criminal Justice Interim Committee identified capital punishment as the highest priority for the committee to study this year. In June’s discussion of the issue the committee was presented with a comparison of Utah’s capital punishment execution rate, number of death row prisoners and expenses, with those of other states. This month the discussion continued, with testimony that focused on the fiscal costs (not the pros and cons) of capital punishment versus life in prison without the possibility of parole; the capital offense punishment process and the appeal process. It was a very interesting discussion. You can listen to it here if you would like.

The Natural Resources, Agriculture, and Environment Committee had a report on the Children’s Land Alliance from director, Margaret Bird. This is a multi-state non-profit corporation that helps to manage the school trust lands in Utah and lands in other states, some of whom do not have trust lands. School trust lands are an important part of our discretionary school funding and must be managed carefully.

They also heard a report from the Division of Wildlife Resources on how tags and licenses for big game hunting are administered and what sort of opportunities the state has for promoting those hunts. This year thousands of acres of prime game habitat was burned. The reseeding program will help recover the damaged rangeland, but in the meantime there will be many displaced animals, which will likely affect the hunting season.

Tax funding for roads is always a major subject of discussion. The Revenue and Taxation Committee took public comment on that issue this week. Some of the concerns that were brought up were the problems that local municipalities are having with road bonding for maintenance purposes and the decreased funding from gas tax revenue. The committee voted to hold a daylong summit to discuss possible ways to address these problems and help fund transportation in Utah.

Along the same lines, the Transportation Committee heard an update from UDOT’s Linda Hull on the federal highway program. They also discussed the need for increased transportation options in the Uintah Basin area.
Here is a link to the meeting.

September

One of the items the Law Enforcement and Criminal Justice Committee discussed was seat belt compliance law. In Utah, 70% of all crash related fatalities occur in high-speed crashes. However, people involved in those high-speed crashes are 13 times more likely to survive if they are using seat belts. Please be careful as you drive and always wear your seatbelt.

A presentation on water rights issues took place in the Natural Resources, Agriculture and Environment Committee. Michael Styler, the Department of Natural Resources Executive Director presented 12 proposals for legislation that would clarify the use of water rights in the state.

Both the Political Subdivisions and the Revenue and Taxation Committee heard reports on the recent UTOPIA audit. Eleven Utah cities formed a consortium, pledging about $500 million over the next 32 years to back the necessary bonds to finance the Utah Telecommunication Open Infrastructure Agency (UTOPIA), an organization that would build a high-speed fiber-optic network. However, the network has yet to make a profit. The legislature requested that an audit be done to see what the ramifications will be to the cities in the consortium and the results are not good. According to the audit, UTOPIA is failing because of poor management and wasteful spending. So the cities (actually the taxpayers) are left on the hook to pay for a failing company. Sadly there is very little that the state can do to remedy this situation for the cities. Here are some thoughts that Senator Valentine had on the problem.

The Business and Labor Committee heard a follow-up from last month’s discussion on Alarm System Security Licensing. The language in the current law needs to be clarified because right now, people who work for alarm system companies such as janitors or human resource agents are required to hold a license. The Alarm System Security Licensing Board has indicated that this is unnecessary and so the language needs to be clarified. They also heard recommendations for procedural changes from the Uniform Building Code Commission and the Utah State Fire Prevention Board.

A report on the state’s Tourism Development plan was given to the Economic Development and Workforce Services Committee. The good news is that tourism related taxes are continuing to rise. This is due in part to the hard work of our tourism development team that has placed representatives in several European nations and makes a considerable effort to promote the wonders of our state around the world.

Last month that committee had a discussion on intergenerational poverty. S.B. 37, passed last session by Senator Reid, provided for a study on the intergenerational poverty in our state. The results of the study will be presented at a conference on October 9th. You can find details about the conference on this pdf.

The Education Committee was long this month. There was a discussion on the Replacement of the State Superintendent, a report on teacher quality and employment reform, discussion on the possibility of funding a state preschool and a report on the UPSTART program. (UPSTART is a computer pre-school readiness program that can be done at home.) If the state decides to implement a pre-school program it would be contingent on such requirements a small class sizes, trained teachers and use of a research-based curriculum. Senator Osmond is proposing the legislation. There was also a report given to the committee about what will happen as a result of federal sequestration to our education budgets. As part of the Budget Control Act of 2011, Congress was required to reduce the deficit by at least $1.2 trillion by January 15, 2012. Because they failed to do so, automatic across-the-board spending reductions will be instated in the FY2013 federal budget. The mandatory reduction rate will be either 8.2% or 7.6% depending what is being funded. If you would like to hear any of these discussions you can listen from this link.

A very interesting report was given to the Public Utilities and Technology committee on Utah’s coal industry. Last year 20 million tons of coal was extracted from Utah mines. There are nearly 5000 jobs in our state that are directly or indirectly related to our coal industry. This puts $600 million into our local economy. Some of Utah’s highest paying jobs are directly related to coal mining. This is a great boon to many of Utah’s rural areas. Additionally, because coal based electricity is so inexpensive here, it is a great incentive to entice business to build here.

The Transportation Committee heard reports on the results of a pilot program that increased the speed limit to 80 mph. in certain sections of the state. The results were good, showing enough of a decrease in accidents that the Department of Transportation is considering the change for other parts of the state as well. The Department also reported that it is looking into increasing the number of carpool lanes in the state as well.

The Senate also met quickly on the floor to confirm gubernatorial appointees. Here are the names of the appointees.

How Utah Funds Education

By Education, Revenue No Comments

It is critical that Utah parents understand how the state funds education and that their voices are heard as the state sets education policy.
[frame src=”https://curtbramble.org/wp-content/uploads/2012/03/Blogpost_Education_Graphic40.png” width=”225″ height=”150″ lightbox=”on” ] Education is the state’s largest budget expense, accounting for approximately 40 percent of the total budget. In 2012, Utah’s state budget is 11.9 billion dollars. Of that, 28.8 percent will be spent on K-12 public education and an additional 10.9 percent on higher education. Over 90 percent of funding for our K-12 public education is from state and local sources (only about 9 percent comes from the federal government).

Education Funding Sources

1. State Income Tax

Utah has a 5 percent individual and corporate income tax. Utah’s Constitution mandates that all of those funds be spent on K-12 and higher education. Approximately 55 percent of all education funding comes from state income taxes.

2. Property Tax

About 55 percent of property tax revenue will go directly to local public school districts. These property taxes fund about 30 percent of K-12 public education and are set by the state legislature and local school districts.

Utah is able to collect property taxes on only about ¼ of its total land. This explains the concern about Utah’s public lands being under the control of the federal government.

3. Federal Taxes

About 9 percent of the state’s total education budget comes from federal funding.

4. Additional Local Funds

Between 5 and 7 percent of education funding comes from local sources, including interest on district funding reserves.

5. State Alcohol Sales

Like the state income tax, 100 percent of profits from state alcohol sales are spent on K-12 public education. Depending on the year, this is approximately 1 percent of total education funding.

6. State Sales Tax

Depending on the year, a little less than 1 percent of total education funding comes from state sales taxes. Because all of the Utah state income tax is spent on education, the state must fund all of its other responsibilities with other taxes and fees.

7. School LAND Trust Fund

About 6 percent of Utah’s land is held in a trust. The interest on revenues from this land goes directly to public education funding. Again, depending on the year, this accounts for about 1 percent of total school funding.