howardnlby Howard Stephenson
For Utah taxpayers, these are crazy times.
We’ve seen the biggest local tax protest during my 25 years at the Taxpayers Association as Davis County Commissioners proposed a 138% tax hike which was absolutely unnecessary. Now, some legislators are also talking seriously about increasing taxes to solve a $117 million budget deficit.
When facing budget challenges, it seems the first thing too many politicians think of is tax hikes. Many state and local leaders are proposing tax increases because too many of them don’t have the backbone to live within their means. They don’t seem to realize that Utah taxes already rank 9th highest among the 50 states. They don’t seem to care that last year one in 34 Utah households filed for bankruptcy – the nations highest rate, and this year our bankruptcy rate looks even worse.
Some Elected Officials Are Oblivious to Economic Hard Times
While joblessness grows and most employees in the private sector feel lucky to have a job paying the same as last year, government agencies still dole out pay raises like the good times are still here. For example, Davis County has proposed a 1.5% cost-of-living adjustment plus a 3.25% merit increase. Salt Lake County is planning on giving a 1% COLA next year plus 2.75% merit increases. Additionally, the nine full-time administrative assistants for the part-time Salt Lake County Council will get an outrageous 15% or $7,000 salary hike, bringing them to $54,500. Frankly, the nine AA’s are hardly overworked and some observers have suggested that one AA for every three council members would be more than adequate. Salt Lake County is known to other taxing entities as the government agency in Utah with the highest salaries. An amazing 68 employees in Salt Lake County receive over $90,000 annually compared to eight in Davis County and just two in both Utah and Weber counties.

Why does it take economic hard times for taxpayers to realize how many elected officials just don’t seem to get it?
Some Public Officials Do Get It
Fortunately, there are some public servants who do get it. Utah County Commissioners, facing similar budget challenges as other elected officials this year have cut budgets instead of raising taxes. They eliminated $2 million normally allotted for long-term capital improvements, trimmed about 15 employees, and are now proposing a one-day furlough, without pay, for all county employees to finish balancing the budget. Utah County’s proposed $47 million general fund budget for 2003 is $3 million less than this year’s.
Short of cloning Utah County Commissioners, the avoidance of unnecessary tax increases requires the vigilance of citizens everywhere. We saw an example of this vigilance at the Davis County truth-in-taxation hearing where approximately 2,000 taxpayers turned out to hold commissioner’s feet to the fire. Hopefully there will be a similar public reaction if the legislature tries to balance its budget on the backs of taxpayers instead of making necessary cuts in spending.
Legislature Might Raise Taxes
Following on the heels of budget deficits totaling $567.9 million for Fiscal Years 2002 and 2003, the Utah Legislature is expected to go into special session on December 18 to grapple with an additional revenue shortfall of $117 million in the FY 2003 budget. There is already talk among lawmakers about tax hikes to fill the void. Potential tax increases include $20 million from de-coupling Utah income taxes from Congress’s accelerated depreciation for business fixed assets, $73 million from elimination of the dependent exemption on Utah individual income taxes, $60 million from quarterly withholding of taxes for self-employeed businesses, $13 million per penny of gasoline tax increase (some legislators are talking about an increase of 5 cents to 10 cents per gallon), and millions more from imposing a surcharge on all culinary water use in Utah. Others are suggesting that business sales tax exemptions be repealed and that a higher tax be collected on Envirocare, similar to Initiative 1, which failed on the November ballot.
But before lawmakers think tax hikes are the only way left to balance the budget because of the impression budgets have already been cut to the bone, they need to realize their past $567.9 budget balancing involved less budget cutting than use of pots of one-time money. The Legislative Fiscal Analyst’s 2002 – 2003 Appropriations Report reveals that budget cuts amounted to only 38% or $213.3 million of the $567.9 million in budget balancing. The rest (62%) of the budget hole was plugged with use of rainy-day funds, other reserves, and borrowing. This use of one-time monies to prop up ongoing spending was done with the assumption that there would be a “V”- shaped economic recovery. Unfortunately, prognosticators were wrong – the economic downturn has been shaped more like an “L”.
The $213.3 million in actual cuts over two years amounts to an average annual cut of only 1.4% of the state’s original $7.7 million 2002 budget. While it is true that the total number of full-time-equivalent employees in state government have been budgeted to drop 1.4%, from 32,795 to 32,340, Utah has experienced little of the severity of budget cuts in many other states.
An economic downturn is no time for tax hikes, especially in a state which already ranks 9th highest in taxes. Now is the time for lawmakers to roll up their sleeves and do some real budget cutting.