Recently it seems that news articles in Utah have surrounded just two topics: Attorney General John Swallow and transportation. While the former is intriguing to many, the latter is important to all. Your Taxpayers Association has been working consistently with stakeholders in Utah to find a solution for Utah’s transportation issues.
As part of the ongoing discussion, the business community in Utah formed a coalition called the Utah Transportation Coalition. This coalition recently released a study to determine what different investment levels in transportation infrastructure could do for Utah’s economy. The study explored three investment scenarios, and their effect on the long-term economy in Utah. The Maintain Existing Systems scenario calculates what could be expected if the investment level only maintained the current roads and transportation infrastructure that Utah has today (2011 system). The Business as Usual scenario calculated based on investment supported by current revenue streams to accommodate future demand. The final scenario, which the report recommended be implemented, is called the Unified Plan, which calls for significant new money to be spent.
Under these three scenarios, investment in Utah’s transportation system over the next 30 years will range from $18.3 Billion (Maintain Existing Systems) to $54.7 Billion (Unified Plan). What does an additional $36.4 Billion in expenditures over 30 years get the State of Utah? According to the report, a significant savings to the private sector and increased revenue to all levels of government. The report suggests that by spending more to increase capacity, productivity in the private sector can increase and Utah’s GDP will grow.
Source: Economic Benefits and Impacts of Utah's Unified Plan by Economic Development Research Group
The nearby chart provides a breakdown of the three scenarios studied, and what the outcomes are projected to be with each investment level. The first scenario, Maintaining Existing System, requires $18.3 Billion to be spent over the next 30 years (until 2040). This is estimated to yield $46.3 Billion in private sector savings (time saving, fleet repair savings, employer productivity, etc.), 49,881 jobs, and $36.4 Billion in Utah’s GDP over 30 years.
The second scenario, Business as Usual, requires $43.4 Billion to be spent over the next 30 years and $25.1 to be spent in expanding the current transportation system ($68.5 Billion total). The difference between the Maintaining Existing Systems scenario and the Business as Usual scenario is the expenditure of $25.1 Billion for future growth; where as the Maintaining Existing Systems would only maintain the current transportation system as it stands today. This is estimated to yield $77.5 Billion in private sector savings, 139,187 jobs, and $149.5 Billion in Utah’s GDP.
The final scenario, the Unified Plan, requires that $54.7 Billion be spent and an additional $36.4 Billion on expanding Utah’s current transportation system ($91.1 Billion total). This is expected to yield $84.8 Billion in private sector savings, 182,618 jobs and $183.6 Billion in Utah’s GDP. While a transportation system that promotes growth in the economy is critical, the first step needs to be deciding how to properly fund that system.
Having a robust transportation system is critical for Utah’s economy. Road conditions affect how efficiently products can be moved and how much money needs to be spent on repairs and maintenance for fleets. The importance of efficiently transporting goods and doing so on good roads is highlighted in the report, considering that 69% of Utah’s export value is shipped using trucks. Fortunately, Utah has maintained it’s urban roads relatively well. In fact, a new report from the Reason Foundation ranks Utah’s urban interstate pavement condition first in the nation.
The analysis in the report highlights the importance of a good, reliable, and efficient transportation system. There is no question that in order to grow Utah’s economy, its transportation system must be robust. But, a critical issue in addressing Utah’s transportation system is determining how it should be paid for. Currently, Utah’s transportation system is funded through a combination of methods, including sales taxes, user fees and General Fund money.
A recent report from the Utah Foundation recommended a number of funding mechanisms to generate revenue for the 3 proposed scenarios in the Utah Transportation Coalition report. Using methods from other states, the federal government and other countries, the Utah Foundation listed over 20 options to generate more revenue. Some of these methods include increase the gas tax, either through a straight dollar amount or indexing based on CPI, infrastructure costs or the price of gasoline. Additional methods include increasing severance taxes, motor vehicle registration fees, allowing local and regional governments to exercise additional sales tax options, taxing vehicle miles traveled, congestion pricing and public private partnerships.
Investing in Utah’s transportation system is critical, and that’s why your Taxpayers Association has been working hard to find new, sustainable ways to pay for these projects. The ideal funding source is from user fees, which encourages responsible use of these systems and results in safer, smoother, and less congested roads. For example, toll roads rarely have potholes or traffic. Your Taxpayers Association recently put forward a proposal to move in that direction. Under this proposal, the current sales taxes being spent on transportation (roughly $440 million) would be shifted to higher education. Then, $440 million in income taxes being spent on higher education would be reduced in the form of an income tax cut. And to replace the sales taxes shifted from transportation funding to higher education, the gas tax would be increased by $0.42 per gallon.
As Utah cannot rest on its laurels, your Taxpayers Association is working hard on all fronts to maintain our position as the #1 Place for Business (Forbes), #1 for Economic Outlook (ALEC), Best Value for Education (US Chamber of Commerce), etc. Reducing Utah’s income tax while improving Utah’s transportation system is the just one of those win-win solutions.