by Howard Stephenson
Last week this column focused on reasons to vote “against” Initiative 1, the measure that would impose new, punitive taxes on one Utah business.
This week’s column will explain why you should vote “for” six important amendments to the Utah Constitution.
Amendment Number 1 would amend the Education Article of the Utah Constitution to provide greater flexibility in utilizing the interest and dividend earnings of the permanent State School Fund. This is the fund that was created at statehood in 1896. At that time the federal government granted certain federal lands to the State of Utah for the support of public schools. The Constitution provided that interest earned on the fund must be distributed to the public schools. In 1994 the Constitution was amended to require retention of a portion of the interest to ensure that there was no erosion of the corpus of the fund due to inflation. The inflation protection amendment has now become redundant and threatens to require that most or all of the interest from the School Fund be held in the fund, and not distributed to schools. The voter information pamphlet contains no arguments against the measure. It deserves a “for” vote.
Amendment Number 2 would authorize counties sharing a common boundary to make a minor adjustment, as defined by statute, to their common boundary. The amendment would also change the vote required to approve any other proposal to move part of one county to another. A prime need for the minor adjustment provision is demonstrated in the new subdivision in Draper at the top of Traverse Ridge. Due to errors in platting, some of the homes straddle the county line. Part of the family may sleep in Utah County and the rest in Salt Lake County. Where do they vote? To which county are property taxes paid? Which school district is responsible for the education of the children? These questions will be resolved by the minor changes in county boundaries allowed by this amendment. Additionally, more significant changes in county boundaries under this amendment will be decided by a majority of those who vote on the proposal in the “receiving” county and not a majority of registered voters. I’m voting “for” this one.
Amendment Number 3 would change provisions of the Tax Article of the Constitution which now require county commissioners to sit on the boards of equalization which hear property tax appeals to include “elected county officials as provided by statute.” Several counties have changed from the commission form of government to county councils. This change will allow other elected officials to be named to the boards of equalization. Vote “for” this important change.
Amendment Number 4 would prohibit the Legislature from transacting legislative business during a special session unless the governor gives 48 hours advance public notice of the business to be considered. This prohibition applies unless there is a declared emergency or unless each house of the legislature decides to consider business without the 48 hour notice by an at least two-thirds vote of each house. This provision prevents last-minute additions of items for consideration at special sessions called by the governor. Originally some legislatures wanted this amendment to also empower the legislature to call itself into session. I strongly opposed this because of my fear that a legislature that can call itself into session will only do more mischief. As Oliver Wendell Holmes once said, no man’s life, liberty, or property are safe while the legislature is in session. Consequently, they ought to be in session very infrequently and when they are, the people should have at least 48 hours to know what they’re up to. The protection provided the people by this amendment deserves our support.
Amendment Number 5 deals with debt limits of local governments. First, it would give the legislature flexibility in classifying the debt limits of cities. Second, it would clarify that the 2% debt limit for counties is based on the taxable property within the boundaries of the county. These are technical changes and don’t place taxpayers at additional risk. Therefore, the measure should be supported.
Amendment Number 6 would provide a mechanism to ensure that the property that is not owned but is used, controlled, and possessed by the state or by a local government entity qualifies for the same property tax exemption as property owned by the government entity. The amendment itself does not create the exemption but allows the legislature to create the exemption.
This provides a tremendous opportunity for Utah to fund needed educational expenses and expand basic infrastructure without costing Utah taxpayers a cent. Simply stated, by clarifying the property tax issue, the Utah legislature could pass legislation allowing government entities to sell their fixed assets and lease them back and claim depreciation tax benefits against the federal treasury. This would essentially be a sale “on paper” for a fixed term to obtain federal depreciation tax benefits which would not be possible with government entities retaining ownership of the property. Many entities outside Utah are already using this tool with the blessing of Congress. However, in the future Congress may shut down this option, so we need to act while the opportunity is available.
At first blush this sounded to me like a gimmick, but upon further study I realized that this is the perfect tool to finally get back more of the dollars we send to Washington and thereby reduce the taxes on Utah taxpayers. It’s sort of a back door approach to the old sagebrush rebellion only this time we win. With the feds owning 2/3 of the land of Utah and paying little toward our education system or paying any of the taxes which would otherwise be paid if these lands were in private ownership, it’s only right that we, of all states, use the sale-lease-back tool to capture more federal dollars. The legislature could allow school districts to use this tool to reduce the costs of building new schools. Or the tool could be used by our universities to reduce their capital outlay costs to taxpayers. The most common use of this provision around the nation is for using the sale-lease-back for mass-transit rail cars, thereby reducing the tax requirements on local taxpayers.
by Howard Stephenson