How well did Utah taxpayers and economy do in the 2016 session?

By Derek Monson

By Derek Monson, Sutherland Institute Director of Public Policy
By Derek Monson, Sutherland Institute Director of Public Policy

From the Sutherland Institute perspective, the 2016 legislative session was a good one for both taxpayers and the economy. Taxpayers were spared from varied attempts to extract more money from their wallets, including a proposal from some in the business community to take 20 percent more of Utah taxpayers’ income by hiking income tax rates from 5 percent to 5.875 percent, and legislation to force collection of sales taxes on Internet purchases. Coming a year after state policymakers increased both state property taxes and gas taxes, the decision to hold off on further tax hikes was a prudent policy decision by legislators.

Additionally, expenditures of tax dollars will soon be more transparent. The Legislature passed good charter school funding legislation that will inform taxpayers about how much of their local property taxes are going to both public charter schools and district public schools. And starting next year, taxpayers in smaller cities and counties will be able to see their local government’s spending online, just like taxpayers in large municipalities currently can. Finally, legislators passed legislation requiring regular review of the tens of millions of dollars’ worth of special tax credits that the Governor’s Office of Economic Development hands out to select (and often politically well-connected) businesses each year, on a post-performance basis.

Taxpayers were well served by a thorough and transparent budget process, even if the state budget appropriation for the coming fiscal year reached a record high. The total state budget appropriation for fiscal year 2017 came in just over $15.1 billion – the first time the state budget has topped $15 billion. As has been the case for many years, the majority of that budget came from a combination of federal funding (26 percent), education funds (26 percent) including personal/corporate income taxes and state property taxes, and general funds (15 percent) including state sales taxes. Similarly, the large majority of state spending of taxpayer dollars went to public and higher education (42 percent) and social services (34 percent).

Taxpayers were also well served by the passage or defeat of several other pieces of legislation. The Utah Legislature wisely stayed away from Medicaid expansion proposals that would have roped taxpayers into the unpredictable and budget-busting costs created by Obamacare’s rules and restrictions, and instead enacted a targeted and measured expansion of Medicaid to focus mostly on the chronically homeless and those requiring substance abuse or mental health treatment. Legislators also wisely defeated multiple proposals to add hundreds of millions of dollars in unfunded future liabilities to taxpayers through “double dipping,” which happens when state employees retire, then take another job with the state and collect both a pension and a state paycheck at the same time.

Utah’s already strong economic health was strengthened further this legislative session. First, the lack of tax increases will encourage growth of the state economy, meaning more job opportunities and increasing incomes. Additionally, economic mobility was strengthened by a measure that establishes “stackable credentials”: alternative routes to high-paying jobs outside the traditional four-year college degree. Economic opportunity through self-reliance was also aided through legislation that encourages self-reliance training for those in welfare programs.

Finally, Utah policymakers protected the cultural foundations of the state’s economic health. They rejected misguided, if well-intentioned, efforts to legalize marijuana and upset Utah’s effective system of alcohol control laws. They also took a small step toward strengthening protection of Utahns’ right to work by establishing some limits on the ability of employers to hamper future career prospects through the abusive use of so-called “non-compete agreements.” As critically important as economic growth, mobility and opportunity are to a healthy economy, cultural institutions such as civic virtue, the right to work and the family are equally important, and Utah lawmakers wisely reflected that in their policy decisions in 2016.


Derek Monson is director of public policy at Sutherland Institute.

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