Utah state and local governments continue to spend a higher percentage of their direct general expenditures for education, transportation, and government administration than the national average while spending less than the national average on public welfare, public safety, and debt interest. During FY 1999-2000, Utah’s percentage of total general expenditures for transportation was 139% of the U.S. average, government administration was 130% of average and education spending was 111% of the national average. However, spending on debt interest was just 75% of the U.S. average and welfare spending was 86% of the national average of spending as proportion of total state and local direct general expenditures.
When measured as a percent of personal income, Utah state and local governments spend more than the national average in almost every major area except debt interest. When compared to personal income UtahFY1999-2000 transportation spending was 162% of the U.S. average, government administration was 152% of average and education spending was 129% of the national average. At the same time, Utah spending on debt interest was just 87% of the U.S. figure.
Utah’s Relative State and Local Tax Burden Basically Unchanged Since 1985
Last week in this column I reported that Utah’s state and local tax burden as a percent of personal income rose from 10th highest in FY 1999 to 9th highest in FY2000.
It is interesting to note, however, that Utah’s state and local tax burden as a percent of personal income has varied little since 1985, according to calculations from the Utah Taxpayers Association based on Tax Commission and U.S. Department of Commerce data. In 1985, Utah’s state and local tax burden was 11.1% of personal income. Seventeen years later, Utah’s tax burden was 11.0% of personal income. During this time, Utah’s tax burden peaked at 11.7% in 1988 as a consequence of the massive Bangerter tax hikes combined with slow personal income growth. Three years later in 1991, Utah’s tax burden dropped to its lowest point, 10.9% as corporate income taxes dived due to the recession.
In FY2000, Utah’s state and local tax burden reached 11.6% but slid to 11.0% in just two years.
Just as the recession of the early 1990s caused corporate income taxes to fall, the current recession has had a similar effect. After rising significantly during the 1990s individual income taxes as a percent of personal income have decreased for two reasons. First, capital gains income and dividend income have decreased by more than $1.2 billion. Second, the legislature adjusted tax brackets in 2001 by 15%. This long overdue bracket adjustment reduced effective tax rates by taxing a slightly smaller percentage of individual income at the highest rate.
Included in this tax burden calculation are state corporate and individual income taxes, state and local sales taxes, property taxes, motor fuel taxes, and several other smaller taxes. Excluded from the tax burden calculation are impact fees ($30 million), building permits ($31 million), utility franchise fees ($72 million) tuition at public colleges and universities ($220 million), hunting licenses, and many other user-based fees.
Enough is Enough!
It should be clear to everyone that Utah Taxpayers are already giving their pound of flesh to the worthy causes of state and local government. They shouldn’t be asked to shoulder a greater burden for any purpose. If additional money is needed, it is time that it come from more efficient government, not higher taxes.