howardnlby Howard Stephenson

A common trick in days gone by involved substituting a cat for a sucking-pig in a bag or a “poke,” and trying to palm it off on greenhorns.  Anyone who fell for this trick was described as buying a pig in a poke.  Wise consumers always opened the sack to examine the contents before making the purchase and as a result, “let the cat out of the bag.”

My purpose in writing this week’s column is to let the cat out of the bag regarding what I believe is the most deceptive initiative ever to be placed on the Utah ballot — Initiative 1.  The so-called “open space, clean air, and clean water” initiative is dressed up like motherhood and apple pie, but nobody knows specifically what the money will be used for or which communities will benefit from $195 million in new sales taxes and $150 million in additional state debt.

We have learned that very few signers of the initiative knew it contained a tax increase or new state debt.  Professional signature gatherers, funded in large measure by the liberal Nature Conservancy, pulled into town, set up in front of grocery stores, and began asking people to sign their petition to support clean air, clean water and open space.  Seldom was the “T” word or the “B” word used and signers could only discover the tax increase or the bonds contained in the initiative by reading the fine print.

Even prominent supporters have personally told me they didn’t know the inititiave provided for convention centers and municipal buildings.  Other prominent supporters stood with Bill Clinton on the South Rim of the Grand Canyon when he announced the Grand Staircase National Monument which removed the largest coal reserve in North America from future production.  Many leaders from rural Utah fear Iniatitive 1 money will be used to put  natural resources off-limits for development, ensuring the economic demise of many communities in rural Utah.

Utahns have at least thirteen major reasons to reject this initiative.

1. Convention Centers are not “open space.”

Initiative 1 allows up to $30 million to be used for “community projects… intended to enhance local communities such as athletic and recreation fields, aquatic centers, …convention centers,…capital improvements to city, town or county buildings…”

Convention centers, swimming pools, and capital improvements to city, town and county buildings should be funded by local taxpayers, not by a state-wide “open space” tax.  This is nothing short of an attempt to buy rural Utah’s vote for a tax increase.

2. Initiative 1 has serious accountability problems.

An appointed board, based on recommendations from unelected state bureaucrats, will decide how the $150 million bond will be spent, bypassing the normal appropriations procedure in which the Legislature and the Governor determine how tax dollars should be spent. Moreover, proponents of the bond have not provided significant details as to how this bond will be spent. When school districts seek voter approval of bonds, voters are given precise details as which schools will be built and which roofs will be replaced. When Nevada voters were asked to support an open space bond, proponents prepared a detailed list of which projects would be funded.

Proponents of Initiative 1 won’t say what specific projects will be funded, leaving every community hopeful that they will get a piece of the action.

3. Initiative 1 would encourage local leaders to beg for money from a state bureacracy just like Utah has to beg Washington for money.

Initiative 1 would increase sales taxes on individuals and businesses and transfer these taxes to an unelected state bureaucracy, the Quality Growth Commission. The Quality Growth Commission would then wave this money in the face of local leaders saying “you and your residents can have your money back, with strings attached, if you jump through the following hoops.”

Sound familiar? It should because this is exactly what the federal government does to Utah and the other states. The feds tax individuals and businesses in Utah and take the money back to D.C. The federal bureaucracy tells the states and local governments that they can have their money back if they comply with federal rules. Sometimes, this requires that state and local governments increase their taxes on top of the taxes that they are already sending to Washington.

4.  Initiative 1 ignores the fact that Utah has been exemplary in its successful efforts to protect the environment and perserve open space

Utah’s efforts to protect open space and to improve air and water quality have been extensive and hugely successful, despite rapid population growth in recent decades.  Here’s proof —

A.  Utah’s air quality has made remarkable progress as evidenced by the following data from the Utah Department of Environmental Quality (DEQ):

• In 1971, Salt Lake, Ogden, and Provo exceeded the EPA 8-hour standard for carbon monoxide 97 times. Since 1997, there have been no violations.

• In 1980, Salt Lake and Bountiful exceeded the EPA 1-hour standard for Ozone 16 times. By 2002, there have been no ozone violations.

• Violations of sulfur dioxide standards were common in Salt Lake during the 1970s. Salt Lake has not exceeded EPA standards for sulfur dioxide since 1980.

• Utah has not violated nitrogen dioxide standards for more than 20 years.

• In 1991, Utah cities violated the EPA 24-hour standard for PM10 sixty-four times. In 2003, there was one violation.

B. Utah’s water quality has made consistent progress as evidenced by the following data from DEQ

• The percent of Utah stream-miles meeting environmental standards has increased from 59% in 1985 to 73% in 2002.

• The percent of lake/reservoir-acres meeting environmental standards has increased from 62% in 1994 to 69% in 2002.

This improvement is remarkable, especially considering the persistent drought. Drought reduces water flow which increases contaminant density. When the drought ends and water levels increase, the percent of stream-miles and lake-acres that comply with EPA standards will increase even further as contaminant density decreases.

C. The State of Utah spends more than $200 million per year to protect the environment.

Department of Natural Resources (DNR) spent a total of $168 million for operations and capital in fiscal year 2004. DNR’s budget has increased 60% since 1997, an annualized growth rate of 7.7% which is well in excess of inflation and population growth.

• Parks and recreation: $38.3 million

• Water resources and water rights: $11.0 million

• Endangered species: $3.1 million

• Foresty, fire, and state lands: $16.4 million

• Wildlife resources: $45.3 million

• Other DNR projects: $53.9 million

Department of Environmental Quality (DEQ) spent a total of $43 million for operations in 2004. DEQ’s budget has increased 44% since 1997, an annualized growth rate of 5.4% which is in line with inflation and population growth.

• Air quality: $8.9 million

• Drinking water: $3.7 million

• Water quality: $9.4 million

• Environmental response/remediation: $6.6 million

• Radiation: $2.7 million

• Solid and hazardous waste: $6.5 million

• Other DEQ projects: $5.5 million

D. Federal and state governments already own 78% of Utah’s land.

Utah is known for its national parks and monuments, national forests, wilderness areas, state parks, and many other natural amenities. Very few metropolitian areas in the world can compete with the Wasatch Front in terms of easy access to natural beauty and outdoor recreation. These lands are already protected through federal and state ownership.

E. Farmland Assessment Act: more than $300 million per year to preserve open space

More than 30 years ago, Utahns voted in favor of the Farmland Assessment Act (FAA). The FAA significantly reduced property taxes on agricultural land and has enabled family farms to stay in business. Without the FAA, valuation of agricultural land for property tax purposes would be $300 million higher per year. This would force most family farms to sell their lands to developers.

F. State sales taxes are already earmarked for water projects.

The legislature earmarks $15.8 million per year for water and waste water projects throughout the state.

G. Local Governments are already preserving open space

Many local governments are already addressing this issue including: Park City $20 million, Salt Lake City $5.4 million, West Jordan $4.2 million, Farmington $2 million, Draper $7 million (pending), Draper/Riverton 370 acres with no tax increase and many more without tax increases.

5. Initiative 1, which increases the state’s debt by $150 million, significantly reduces statutory bonding capacity, leaving lawmakers with reduced options for funding higher education buildings and Highways.

The State of Utah enjoys the highest possible bond rating, and this high bond rating reduces interest costs, a benefit to all Utahns. Utah has achieved this high bond rating by imposing constitutional and statutory bonding limits.

The state is within $195.2 million of its statutory bonding limit, down from $281.4 million just two years ago (both figures include bonds authorized but not yet issued at the end of the fiscal year). Initiative 1 accounts for 77% of the remaining bonding capacity. Although the state will be retiring some debt next year, the state will be issuing significant debt to finance construction and renovation of university and other government buildings. Initiative 1 reduces the ability of the governor and the Legislature to address critical capital needs without jeopardizing the state’s bond rating.

6. Higher taxes hurt economic growth, even “small” tax increases.

Utah’s state and local tax & fee burden as a percent of personal income is already third highest in the nation. Consequently, voters and government must resist the urge to raise taxes every time somebody identifies a new “need” or comes up with a “good idea”.

7. Approval of Initiative 1 will mean open season on Utah’s taxpayers and more sales tax increases in the future.

Passage of this tax increase will signal to well-funded out-of-state spending groups that hunting season is open — on Utah’s taxpayers. Utah has no restrictions on initiative campaign finance, and special interest groups will effectively manipulate the system with paid signature gatherers and high powered PR firms to impose tax increases that will harm Utah’s economic growth.

8. Rural areas have sufficient open space.

Less than 25% of Utah is privately owned, and the percentage is even lower in rural Utah. Utah’s rural areas are already known for national parks, wilderness areas, BLM lands, state parks, and other open space.

9. Sales taxes hurt low income families.

Low income families bear a higher sales tax burden as a percent of personal income than other families due to Utah’s broad sales tax base which includes sales taxes on food. Since Utah’s total state and local tax burdens are higher for low income families than for other families due to sales taxes, sales taxes need to be reduced, not increased.

Utah’s state and local sales tax burdens are 37% higher than the U.S. average and rank 10th highest overall.

10. Earmarking general revenues for specific purposes is poor tax policy.

Earmarking reduces budget flexibility. As needs arise and priorities change, elected officials need to be able to shift funding from one area to another. As revenues become increasingly earmarked, elected officials must either raise taxes or reduce services in order to balance budgets. Budget priorities must compete against each other on an annual basis in order to maintain fiscal discipline.

11. Open space and other environmental issues are being more than adequately addressed compared to other state priorities like transportation, higher education, and public education,.

Government will never have enough money to spend on  any budget item, but some areas of government need more funding than others. Utahns have access to more open space and outdoor recreational opportunities than nearly any other state in the nation whereas Utah’s transportation system is facing gridlock and Utah’s K-12 public education system is struggling to finance an additional 145,000 students over the next ten years.

12. While hunting and outdoor recreation are important to many people, Utah state and local governments already spend sufficient tax dollars on parks and recreation.

As a percent of personal income, Utah governments spend 57% more on recreation than the national average. Increased funding for hunting and habitat should be obtained from existing tax dollars, not new tax dollars.

13. Tax policy should be determined through the legislative process, not by initiative.

Tax policy is an inherently complicated subject, and tax policy decisions should be determined through a deliberative legislative process, not through a system of paid signature gatherers and 30-second TV commercials.

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