by Howard Stephenson
by Howard Stephenson
It’s easy for elected officials to be generous when the economy enables taxpayers to be generous. But the real measure of fiscal conservatives is when elected officials provide permanent tax reductions and keep spending limits intact.
Record Education Spending Increases
The Utah Legislature was generous, enacting the biggest spending increase in state history including a $489.5 million, 21% increase in spending for public education. More than 10%, or $50 million of the total was earmarked for increased technology spending in an attempt to bring Utah classrooms into the 21 st Century. Teachers were provided a uniform $2,500 ongoing pay raises plus one-time $1,000 bonuses. In an unusual precedent, these pay increases are provided outside the Weighted Pupil Unit (WPU) which usually reflects the compensation package increase for the year. On top of the compensation increases, the WPU is increased 4% and non-teaching personnel are provided $7 million for one-time bonuses. Additionally, teacher compensation will also increase as a result of $6.6 million funding for an extra professional development day for teachers. Classroom supply money was funded at $10 million, up $2.5 million to provide an increase for first year teachers.
Truth in Bonding
HB393 will require local governments to disclose to voters the property tax impact if proposed bonds are approved by voters, unless the impact is less than $15 per year on a primary residence of average value.
HB393 is a good government bill. When voting on a proposed bond, taxpayers need to know the cost of proposed bonds to their homes and businesses. The Utah State School Board has asked Governor Huntsman to veto the measure based on legal counsel Carol Lear’s claim that it is flawed.
Record Tax Cuts
Cutting taxes a record $219 million has to count for something. While I sponsored a $14.5 million R&D tax credit expansion, a $2.9 million renewable energy tax credit, and a $5 million mining equipment sales tax exemption, these were rolled into a single senate bill to eliminate the possibility that the House might play games as they did in the 2006 session. At that time, the House passed the food sales tax cut but refused to pass the income tax cut. Also included in this year’s senate bill were another one cent reduction in the state food sales tax amounting to $40 million and a $108 million income tax cut and simplification.
Utah ’s spending limit was left largely intact despite attempts to gut it. The limit was slightly weakened by exempting all transportation expenditures.
Despite these huge victories for taxpayers and schools, there were some areas of disappointment in the 2007 general session of the legislature: The legislature failed to accomplish a few conservative goals.
Differential pay and merit pay
In a surprise move, the Legislature did not implement differential pay for teachers this year, which would have provided a $5,000 per year pay differential to math, science, and special education teachers. Finding teachers in these subject areas is difficult, and basic economics dictate that higher wages will increase the supply of teachers in these areas. In fact, legislation in 2005 directed the State School Board to develop plans for differential pay and merit pay. The school board followed the direction of the legislature and brought a plan forward with the bill receiving unanimous approval of the House of Representatives, but insider wrangling among Republican legislative leadership defunded the bill, preventing it even being considered on the Senate floor.
Differential pay will be further studied during the interim and the legislature is expected to take up the idea next year as the realization of severe shortages sets in for qualified math, science, and special ed teachers.
Unfortunately, the Legislature did not consider highway congestion pricing this year. Your Taxpayers Association will continue to advocate for transportation reforms such as congestion pricing to expand the capacity of existing highways in addition to significantly expanding highway funding. This year’s Utah Taxes Now Conference will focus on transportation issues such as congestion pricing.