My interest in government efficiency and taxpayer advocacy began when as a 13 year old I watched multiple TV airings of Ronald Reagan’s “A Time for Choosing.” This was a fundraising speech for presidential candidate Barry Goldwater just prior to the 1964 general election. I was fixated by Reagan’s inspiring message of keeping government off our backs and out of our pockets. I wanted to have a part in that effort and began planning my education to prepare for it.
Hooked on Politics and Public Policy
I gave a lot of attention to politics and elections, staying up late on election night watching the results trickle in on the family’s small black and white television. I worked hard in high school to ensure a GPA and ACT score that would qualify me for admission to a good university. I took college prep classes such as Trigonometry by correspondence course since our school didn’t have anyone to teach it. I graduated high school in a class of 22 students. Following my return from an LDS mission to England I immediately enrolled at BYU and qualified for a four year Air Force ROTC pilot scholarship. At graduation I was commissioned as a 2nd Lieutenant but not assigned to active duty because the Vietnam War had ended and the Air Force was unsure of what to do with a large pipeline of pilots. So I enrolled in graduate school at BYU seeking a Masters Degree in Public Administration, “so I would know how the enemy thinks.”
My First & Only Job Out of College
In March of 1977 there appeared a hand-scrawled note on the MPA office bulletin board saying the Utah Taxpayers Association was seeking to hire a research analyst (the first hire in 14 years and we wouldn’t hire again for another 14 years). Even though several of my fellow graduates applied for the position, I felt it was not a coincidence that this job came available at this time for me.
Following interviews, I was tentatively chosen for the job. Jack Olson took me to lunch at the Alta Club to meet and be interviewed by the officers of the Association. I had never eaten at such a fancy place so this was very intimidating for a country boy from Fredonia, AZ. I wasn’t sure which forks or spoons to use when, but I guess I didn’t embarrass myself too badly.
I got the job and began work on April 1, 1977 with my own desk in my own room in the Taxpayers Association 210 Kearns Building HQ. I immediately was put to work on evaluating the costs of burial at Salt Lake’s cemeteries. My report was published for Memorial Day and I remember KSL’s Bob Shildmeyer doing a phone interview for radio news. Even though I was well-prepared, I remember how nervous I was and how much I was sweating during that first interview.
Riding the Local Budget Circuit
Jack Olson took me on the week-long School District Budget circuit, stopping at each of the 40 school districts to get their tentative budget proposals so we could sound the alarm if they were unnecessarily increasing property taxes. This was tedious work in my motel room each night summarizing the proposals in three columns showing previous, current and proposed budget years and manually calculating the percentage increase of each line item. I then had to type up the proposals which we mailed to our members. Some budgets were penciled on the back of random pieces of paper rather than the format required by the fiscal procedures acts for cities, counties, school districts and special taxing districts established in state law. Many times the budgets didn’t tally, so I had to call the district officials and find out where the error was. They often thanked me for catching the mistakes. Today all of this is available error-free on electronic spreadsheets and taxing entities gladly email them to the association office for our review.
In November we did a similar week-long circuit trip to pick up the budgets of Utah’s 29 counties. I was impressed over the years with how open these school and county officials were with the work of the Association and how much most of them welcomed our input. I remember Sam Taylor of Grand County telling me how much he appreciated Jack Olson advising the county to make a small tax hike which he said enabled them to avoid a much larger tax hike later on.
Bringing Tax Rates in Line with Budgets
Armed with my MPA government finance training my biggest surprise was to find that local property tax rates bore little direct relation to budgeted property tax revenues; the rates were nearly always significantly higher than needed to meet budgets and elected officials decided to keep rates high even when values were also escalating.
Consequently, one of my first experiences in changing Utah taxes and budgets was to lobby for legislation to ensure property tax rates were directly tied to budgeted revenues in a duly adopted budget. My first inclination was to give the State Auditor the responsibility to ensure that tax rates related to budgeted revenue, but fortunately, the bill was amended to give the responsibility of enforcement to the Tax Commission’s Property Tax Division.
Preventing Runaway Property Taxes
The nation experienced runaway inflation in the late 70s which was accompanied by rapidly rising property values. At the same time, county assessors obtained improved computerized processes to keep assessed values current with market values. This gave locally elected officials outrageous increases in property tax receipts without raising tax rates. Utah taxpayers felt the sting of rising property taxes and revolted, demanding the legislature put the brakes on local property taxes. The legislature responded with a new law limiting annual property taxes of all local taxing entities to 106% of the previous year. Unfortunately, the ceiling became the floor with most taxing entities taking the 6% increase every year.
In light of tax protests, the Utah State Tax Commission, Counties, and legislators all agreed with your Taxpayers Association that we needed a solution to runaway property taxes. So in 1985 your Taxpayers Association was instrumental in winning passage of the now famous Truth-in-Taxation property tax law. The measure requires the ‘certified tax rate’ to produce no more than the property tax revenues as the year before plus new growth.
Nationally, Utah property taxes compared to total personal income were 24th highest. Today we rank 39th.
Becoming President of the Association
When Jack Olson retired in April of 1990 I was named President of the Association. I made a personal goal of improving tax and spending practices to make Utah the best economy in the U.S. to ensure that families could not just survive, but thrive. When we hired Vice President Howard Headlee he agreed with that goal and worked to limit taxes and spending at all levels of state and local government. He was a champion of defending Utah’s Truth-in-Taxation law against technicalities raised by local taxing entities.
Winning a Senate Seat
As a result of the 1990 Census and reapportionment, I found myself in a senate district without an incumbent. Fortunately the Taxpayers Association gave me permission to run for the seat. After winning the election, Howard Headlee became the chief legislative lobbyist for the association and we hired Greg Fredde as research director.
Removing Sales Taxes from Business Inputs
The first legislative measure in our goal to make Utah’s economy first in the nation, we sponsored a measure to eliminate sales taxes on manufacturing machinery and equipment. We assumed everyone would naturally understand the wisdom of removing taxes on business inputs, so we were surprised when the business community didn’t get behind the bill and in fact the Utah Manufacturers Association initially opposed the measure. So we had an uphill battle, but as Senate sponsor, I was able to get the bill out of the Senate. Headlee and Fredde educated House members on why it is economically counterproductive to tax business inputs. They even got support from House Democrats who saw the bill as good for jobs. The bill was expected to pass easily. Unfortunately, on the final night of the 1994 session Governor Michael Leavitt pressured by the UEA teachers union convinced House leadership to send the bill back to rules, effectively killing it. The following year Leavitt worked hard to get the exemption passed because Micron was looking to locate a huge manufacturing plant in Nebraska or Utah and he wanted Utah to win. Over the following years we worked to eliminate sales taxes on business inputs of other types of businesses which together with low property taxes, our educated workforce, relatively low unemployment insurance rates, workers compensation taxes, and lower power rates have made Utah one of the most attractive places to do business.
Tax Court, Trial de Novo, Intangibles
When Howard Headlee left to head the Utah Bankers Association in 1997, Greg Fredde became VP and led the Association’s lobbying efforts to win passage of a total revamp of Utah’s tax appeal process including Utah Tax Court and Trial de Novo, allowing new evidence to be considered by the court. Fredde also helped win major victories against county assessors and the Tax Commission’s Property Tax Division in their effort to impose property taxes on intangibles such as good-will, going concern, patents, and trademarks.
Protecting TnT, Passing Paycheck Protection, Limiting UTOPIA
In 2001 Greg Fredde left to become president of the Utah Mining Association and former research analyst Wes Quinton replaced him as VP. Quinton worked successfully to defeat a legislative proposal to exempt the statewide basic school property tax from the limits of Truth-in-Taxation. This would have imposed annual property tax hikes. Your Association was also able to get Paycheck Protection finally passed which eliminated the ability of public employee and teacher unions to use the taxpayer funded payroll system to collect their PAC contributions. The Association was also able to limit the expansion of Utah’s Soviet-style government owned broadband system known as UTOPIA.
Defeating Tax Hikes, Limiting Special Election Dates
Mike Jerman replaced Quinton when he left in 2002 to work for the Utah Farm Bureau. With Jerman’s assistance, the Association defeated tax hikes in the wake of the 9-11 world wide recession when the state faced a $256 million revenue shortfall. When the Tax Commission miscalculated certified tax rates, he discovered the errors and fought to make sure that property taxpayers statewide avoided what would have been a tax hike. During Jerman’s tenure the Association helped to defeat a statewide sales tax initiative for open space and to limit special tax elections to the days of the Primary and General Election.
Cutting Income Taxes for Families & Businesses
Besides eliminating sales taxes on business inputs, your Taxpayers Association has worked to cut state individual and business income taxes arguing that income taxes are a deterrent to economic growth. With the support of Governor Jon M. Huntsman the legislature cut the income tax rate from 7% to 5% and reduced taxes for multi-state business by double-weighting the sales factor for allocation of business income.
Defeating Unreasonable Tax Increment Financing & Lavish Bond Proposals
Royce Van Tassell took the VP position when Mike Jerman left in 2007 to join Congressman Jason Chaffetz’s staff in Washington, D.C. Royce helped defeat unreasonable RDA tax increment financing schemes including a proposal to give tens of millions in property taxes for the rebuild of the Cottonwood Mall.
After helping to defeat two Salt Lake City public safety building bonds your Taxpayers Association worked with Mayor Ralph Becker to place a reasonable proposal on the ballot. When the Association endorsed the agreed proposal, the news headline read, “Hell has frozen over.”
The Association also defeated Jordan School District’s $500 million “Taj Mahal” school bond. After the Association worked with the district, two years later voters approved a bond of just half that size.
Royce Van Tassell was instrumental in exposing the continuing follies of UTOPIA municipal broadband and convincing city leaders to avoid joining the failed project which took the sales taxes of the eleven member cities which should have been preserved for general fund purposes.
Eliminating Ratcheting of Property Tax Rates
Billy Hesterman was hired to replace Royce when he left to head the Utah Association of Public Charter Schools in 2013. Billy helped negotiate legislation to prevent local taxing entities from receiving automatic and undeserved tax hikes. These tax hikes had occurred because of a glitch in the calculation of the certified tax rates in counties with cyclical changes in the values of centrally assessed taxpayers. This has prevented many millions in higher taxes over the years.
Protecting Anonymous Political Speech
Your Taxpayers Association also won a lawsuit challenging the constitutionality of a state law requiring non-profits to disclose their donors if the organization takes positions on ballot issues or candidates. The law was subsequently amended to require disclosure if non-profits were spending a majority of their funds on ballot issues or candidates.
Single Sales Factor, Full Sales Tax Exemption for Business Inputs
The Association in the 2018 General Session of the Legislature – my final session as a state senator – won passage of legislation providing single sales factor for apportionment of multi-state business profits to Utah. This makes Utah very competitive in attracting jobs and capital to the Beehive State. We also won passage of legislation to fully exempt from sales taxes business machinery and parts with a life of less than three years while fully exempting materials consumed in the manufacturing or mining process. This three year life exemption was the most difficult tax reform of my career, taking 23 years to win because of a legislative rule that funding had to be secured before taxes could be cut – the ultimate oxymoron. Passage was only made possible when we made ‘funding’ of the three year life exemption contingent on the eventual overturning of the Wayfair decision which prevented states from collecting sales taxes from out of state sellers. Serendipitously, the U.S. Supreme Court decided just three months later to overturn Wayfair.
Preparing the Association for the Future
Rusty Cannon became VP when Billy Hesterman left to join the government affairs team at the law firm of Holland & Hart in October 2018. While the Association was proud to have provided talented former VPs to head Utah’s leading nonprofits and government affairs teams, they wanted to make sure Rusty was prepared to take over upon my retirement. Having three legislative sessions under his belt, Rusty, together with Research Director Spencer Nit and Operations Director Autumn Skousen are well prepared to take the Utah Taxpayers Association to the next level of success.
Significant Successes in Just the Past Three Years
During the past three years your Taxpayers Association team was successful in reducing the income tax rate to 4.95%, restoring the dependent exemption which was inadvertently eliminated through the Trump tax cuts, exempting certain Social Security income and military retirement income from Utah income taxes, expanding the sales tax exemption on business inputs, protecting Truth-in-Taxation, expanding the personal property exemption for small business to $25,000 (allowing over 50% of businesses to avoid this cumbersome tax), protection when property tax assessments increase over 15% in a single year while shifting the burden of proof to the tax assessor instead of the taxpayer, and supporting a constitutional amendment to expand the permissible uses of the income tax to include expenditures for childrens’ health and people with disabilities.
Another huge victory just this year was HJR 11 (J Moss), which Rusty Cannon proposed as a solution to the age old oxymoronic requirement of finding money before tax cutting legislation could be passed. Under this rule change, the Executive Appropriations Committee in their December meeting before each January General Session would consider how much revenue growth would be taken off the table to be reserved for tax cuts. This could be a game changer going forward.
These are just a few of the successes resulting from your support of the Utah Taxpayers Association, now in its 99th year. We have also tightened statutory requirements to ensure that Utah has the most qualified Tax Commission in the nation, unlike too many other states where inexperienced partisans are appointed to the position as political favors.
The Association has its work cut out for it and cannot rest on its laurels as we work for completion of the sales tax exemption on software and oil and gas exploration and production and pipelines, finishing the work of school property tax equalization, ensuring adequate funding of highways through expansion of the Road Use Charge program, and reducing abusive uses of tax increment financing, among others.
Gratitude to Association Members, Board, and Staff
I would be remiss if I did not recognize the immense contribution to the success of the Association from the financial support of members, uncompensated guidance of our board and officers and the dedicated hard working staff we have had over my 44 years at the Taxpayers Association. I’m grateful too for the many wonderful state and local elected officials who have been willing to listen, give feedback and find constructive compromises.
Looking Back
Having set that goal years ago to make Utah the best economy in the nation for the benefit of families and individuals, multiple current metrics now reflect our success and the success of the many leaders and organizations that have joined in achieving this distinction. Perhaps the most steady indicator of this achievement is the Rich States Poor States annual economic analysis by economist Art Laffer, et al, which has ranked Utah with the best economic outlook for all 13 years it has been published.
I said earlier that my inspiration to become a taxpayer advocate came from Ronald Reagan. As I leave my position in leading this wonderful organization it is clear that Utah truly has become a shining city on a hill. I echo the final words of President Ronald Reagan in his farewell address, “Not bad, not bad at all.”