by Howard Stephenson
Special legislative sessions are the most dangerous time of the legislative process as rules are suspended and mistakes are often made in the rush of getting things through in a single day or sometimes two. Taxpayers and ordinary citizens are almost always losers in special sessions.
Special sessions are pressure cookers where the will of the loudest and most persistent often carries the day, instead of wise decisions being made on sound principles with adequate time for debate and public input. Often, as the special session extends late into the evening and early morning hours, legislators give in to agreements which the next day they wish they had not made. For example, a few years ago there was a special session regarding sales tax exemptions and the legislature was deadlocked on the solution. Leadership kept both bodies up past midnight. Around 1:00 a.m., seeing no end in sight, many legislators became grumpy and wanted to go home. They successfully pressured other members to capitulate. This is not how the people’s business should be conducted.
The challenges to legislative staff by special sessions are even greater than challenges to legislators, as amendments which during the general session might be drafted and vetted over a few days, are required to be drafted in hours or sometimes minutes. Accurate fiscal notes are even more difficult to obtain than quality drafting.
Special Sessions often lead to embarrassment for the legislature. For example, in the last special session the press had a field day with the legislature regarding our refusal to fund Medicaid dental. It is possible and perhaps likely that the public will have similar criticisms of the legislature in a September special session.
Special sessions should be avoided like the plague. They are dangerous places. The legitimate purposes of special sessions include natural or economic disasters which need immediate attention, or for correcting mistakes made in general sessions on issues for which delay would cause undue harm.
The Dual Income Tax – More Questions than Answers
It has been proposed that a dual income tax system be considered at a September special session. While tax reform is essential to improve Utah’s economy, a special session is not the time to consider it. To attempt complex tax changes in a one or two day session is a dangerous thing. Mistakes can be made even in a 45 day session, but when an issue as complex as dual track income tax is decided in a matter of days, we are inviting mistakes. The idea of a Revenue & Taxation Committee meeting two weeks prior to the special session helps a little, but it does not provide the safety valve of a general session with days of informal interaction on the hill between committee hearings and the separate days for the floor debate. Also missing is the day by day press coverage of legislation slowly winding its way through the process, enabling essential citizen input. The interested parties do not have sufficient time for input and legislature does not have the normal timeframe to process the feedback in their decision making.
You will remember the erroneous fiscal note during the 2006 general session regarding the H3 income tax proposal. A special session makes possible even bigger mistakes, and some have already been made in the analysis regarding the proposal for the dual system.
If the dual income tax is adopted in the September special session there may not be sufficient time for the Tax Commission to prepare the changes in the tax forms which need to be mailed before the first of the year for tax filers, and working under such a time crunch there is potential for the Tax Commission to make mistakes.
The special session would be a disaster if the dual system is rejected and replaced by a simple rate cut from 7% to 6.95% as proposed by some legislators. This would be the worst case scenario because it would do nothing to improve Utah’s competitiveness that a 5% rate would accomplish and would use up the $70 million cushion which could otherwise be used to achieve a competitive income tax.
Some supporters of a special session believe the income tax cut should be given before the November elections. However, it should be noted that taxpayers will not know what kind of tax cut they received because it won’t be known until they file their taxes in 2007. No one will know before the November election, and frankly, they may not believe it applies to them. Others may see the timing of the cuts as political pandering.
Enabling a Sales Tax Hike for Salt Lake Transit
A second item for the special session has been suggested to change the Salt Lake County ballot proposition for $900 million dollars for a Trax property tax bond to be a sales tax bond instead. I won’t take time to enumerate all of the problems associated with this proposal, but I do want to point out that to make a decision of this magnitude in a special session is very dangerous, and is fraught with potential for mistakes because of the time crunch, and potential amendments whose effects may not be known for months.
Some have suggested that this special session is absolutely essential because of the potential loss of federal money and the increased costs that could be associated with the projects. These claims are groundless. Unless someone has an amazing crystal ball, the four month window between a November election and the end of the 2007 general legislative session do not pose a threat to federal funding or to costs of construction.
There is a question, however, about the immediate need for three of the four proposed light rail spurs. Even though the federal government, which is big on mass transit, dedicating 25% of all federal gas tax dollars to mass transit, the feds are funding only the Daybreak line. The real reason the other lines are proposed to be built now, ahead of schedule without waiting to justify federal support, is that supporters think the ballot needs to include projects around the valley to win voter support.
Because of the fact that UTA and UDOT exist in separate silos, there is no motivation for a cost-benefit analysis of transit and road projects side by side, yet taxpayers pay for both. Because of the mistakes experienced with highly political Centennial Highway Fund, which spread projects around the state to win legislative support, the legislature has directed UDOT to prioritize highway projects based on scientific need, not politics. The same process should be used to prioritize transit projects together with roads – on a statewide basis. This plan should consider congestion pricing such as tolls and HOT lanes, requiring downtown property owners for whom light rail saves millions of dollars in parking costs to share in the costs of transit, and full-fare transit pricing. But a special session is no time to make these kinds of comprehensive decisions. For example, it could take days to debate whether the state should give up to transit another 1/4 cent of the headroom of its only non-earmarked major funding source — the sales tax — a source whose base is diminishing, not expanding.
Whether the November property tax vote passes or fails the legislature should come into the general session with a comprehensive statewide transportation funding plan which includes corridor preservation for the next 20 years or more and funding for the most critical projects including, if necessary, a significant gas tax hike, offset by income tax cuts for a net tax reduction.