Utah's 2010 Budget
Utah balances its budget every year. Revenues must match expenditures. With the continued economic downturn, Utah's tax revenues now do not match the State's expenditures. There are 3 main tools the State can use to bring its budget back into balance. It can (1) reduce expenditures, (2) raise revenues through increased taxes, or (3) draw money from the rainy-day fund. Of course, the State can employ any mix of the 3 options, so long as revenues match expenditures.
I believe that my constituents do not want the Legislature to raise taxes. Therefore, I will oppose tax increases. (I am not opposed to adjustments -- raising some taxes, while lowering others -- so long as the adjustments are revenue neutral; the one possible exception my constituents raise is the tobacco tax; perhaps the tobacco tax should be raised to the western states average, even if not revenue neutral, so long as the increased revenue is placed in the Tobacco Trust Fund).
Over the last 20 years, the growth of Utah government has significantly outpaced the State's combined rate of population growth and inflation. In other words, the growth of State Government has outpaced the underlying economy. To fuel the growth of Government, Utah saddles its citizens and its economy with a tax burden that is much too heavy.
A high tax burden chases away productive businesses and citizens. Conversely, a lower tax burden attracts productive businesses and citizens. Utah needs to balance its budget in a way that promotes job growth and job creation. That means that the Legislature should bring expenditures in line with revenues, without adding to the overall tax burden of its citizens.
Because Utah balances its budget, the money is real. A dollar really is a dollar. Depending on tax policy, each dollar can either be in the pocket of the person who earned it, or it can be collected and shifted to someone else. Utah already takes too many dollars out of people's pockets. Each additional dollar we take is one less dollar that the worker could have spent on food, shelter, charity, business development, etc. Government simply does not multiply the benefits of a dollar like the owner of a dollar does. Thus, while taking additional dollars out of people's pockets could work to shore up the State's budget issues, it would not be in the long-term best interests of Utah's citizens or economy.
We currently understand the financial hole we are in; we understand the tools at our disposal; and I believe that I understand the will of my constituents. We can -- and should -- balance the budget without digging deeper into our citizens' wallets.
I believe that my constituents do not want the Legislature to raise taxes. Therefore, I will oppose tax increases. (I am not opposed to adjustments -- raising some taxes, while lowering others -- so long as the adjustments are revenue neutral; the one possible exception my constituents raise is the tobacco tax; perhaps the tobacco tax should be raised to the western states average, even if not revenue neutral, so long as the increased revenue is placed in the Tobacco Trust Fund).
Over the last 20 years, the growth of Utah government has significantly outpaced the State's combined rate of population growth and inflation. In other words, the growth of State Government has outpaced the underlying economy. To fuel the growth of Government, Utah saddles its citizens and its economy with a tax burden that is much too heavy.
A high tax burden chases away productive businesses and citizens. Conversely, a lower tax burden attracts productive businesses and citizens. Utah needs to balance its budget in a way that promotes job growth and job creation. That means that the Legislature should bring expenditures in line with revenues, without adding to the overall tax burden of its citizens.
Because Utah balances its budget, the money is real. A dollar really is a dollar. Depending on tax policy, each dollar can either be in the pocket of the person who earned it, or it can be collected and shifted to someone else. Utah already takes too many dollars out of people's pockets. Each additional dollar we take is one less dollar that the worker could have spent on food, shelter, charity, business development, etc. Government simply does not multiply the benefits of a dollar like the owner of a dollar does. Thus, while taking additional dollars out of people's pockets could work to shore up the State's budget issues, it would not be in the long-term best interests of Utah's citizens or economy.
We currently understand the financial hole we are in; we understand the tools at our disposal; and I believe that I understand the will of my constituents. We can -- and should -- balance the budget without digging deeper into our citizens' wallets.
posted by steve u. at 12/06/2009
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8 Comments:
I will ask you the same thing I asked Craig Frank(He told me that the question was above his pay grade),
Any plans on how the State is going to handle the end of the ARRA stimulus in 2011, or the shortfall in the state employee pension fund?
When is the state going to announce the real size of the short fall given the above items, which I figure puts the real short fall amount somewhere in the $2.5-$3 billion dollar range.
And should I start planning for a California style tuition increase next year at Weber University? I mean this question seriously, cuts here have me a bit worried about how much more I can afford.
You echo my sentiments too. In the years ahead government is not going to be able to provide as many services as in the past, nor should it. Best to get get ready for that reality.
I do think that if necessary some taxes could be adjusted for inflation, either up or down.
Once you have the state budget balanced can you then go and fix the federal budget? They are going to take us all down if they don't come their senses soon.
RD and Rick,
I'll address your concerns together. Rick, because they are based on a percentage of income and price, respectively, our main state taxes -- income and sales -- do naturally adjust for inflation/deflation; as people make more or spend higher prices, they pay more money in taxes. Currently, when people are making less and spending less, they are tossing less into the tax coffers; hence, the shortfall. (By contrast, the property tax -- because of Truth-in-Taxation requirements -- and the flat gas tax do not adjust for inflation/deflation).
Some services will need to be eliminated. Last year, we shaved budget from every department, division, and program. That is not healthy, because agencies are not equal in fiscal discipline and importance. Across-the-board cuts disproportionately hurt lean agencies, not to mention that they fail to prioritize which spending is essential, non-essential, and otherwise. Our revenue reality is that we've only gone back to 2006 levels. We've added a lot of government since then; some of it will need to be eliminated.
RD, the size of the hole we're dealing with (about a $billion) includes the loss of ARRA money. Last year, we made actual cuts of approx. 14%, but we then backfilled about half that amount for just one year with stimulus money. Therefore, many of the needed cuts were made; they were simply plugged for one year. Knowing that the ARRA money was "one time," agencies were told to plan for the loss of those funds and to design strategies to deal with the full cuts this coming year.
Yes, you should plan for tuition increases. Before we get into the additional downturn for this year, the loss of the ARRA money alone means that the higher education budget will see an approx. 8% decrease. Just like the State is doing, each college and university must make revenue match expenditures. They can (1) cut expenditures or (2) increase revenues by raising tuition. My bet is that they will not cut expenditures much.
RD,
Sorry, I left off a response to your retirement fund question. That is a hugely important issue this session. We have a significant imbalance in our state retirement system that must be addressed. To give you an idea of the scope -- we need an annualized 7.75% return on all investments, to be a mere $6 billion in arrears over the next 20 years; a 6% rate of return would increase the deficit to $30 billion.
Again, we deal with real dollars. Those obligations would have to be funded, meaning that huge amounts of money would have to be shifted away from education, health and human services, transportation, etc.
Clearly we have to do something. Quite likely, we have to change retirement for future hires to a defined contribution system (401K-type system), instead of defined benefits (pension). Taking that step would give some breathing room to deal with folks already employed by government and accruing benefits under the system. The clear desire is to leave those folks alone as much possible.
I appreciate you taking on this budget issue head-on. Two questions/comments. First, in my personal budget I can't plan for rebates on my expenditures. Other people don't pay for my expenses. Yet, in a state with the highest class sizes in the nation, the lowest per pupil expenditures, and the highest fertility rate in the nation, we still allow parents to get tax credits (rebates) for ALL their children. This is fiscally irresponsible and not meeting the conservative philosophy of individual responsibility. I ask that you and the legislature add some sort of cap (2 kids? 3 kids?) regarding how many children a person may receive a tax credit for. If they can afford to have those children, I have no problem with them paying for them.
Second, if you want to attract high quality educators to your state (and I'm assuming you do) then changing to a defined contribution system will not attract them. The low pay of Utah educators is offset by the pension benefits. Without that offering, your quality teacher shortage will become even worse. Thank you for your time.
You need to work on your anti-spam filters in this comments section, methinks.
Adano,
Ya. Suggestions?
Enjoying that new computer and looking forward to your new blackberry? How do legislators, including you, expect to have any credibility when you complain about the budget and promise to make deep cuts in the budget while enjoying free perks at taxpayers' expense?
Is your two-year-old computer really that bad? Is your current Blackberry (all legislators were given them years ago) really that bad?
If I had planed and even budgeted for a family vacation, but had since taken a major pay cut or lost my job, it would be irresponsible to still take that vacation. I should move the money from the vacation fund to pay for essentials such as food or mortgage. I guess lawmakers don't believe in being responsible. After all, it's not their money!
The hypocrisy is just screaming at me and all other Utahns!
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