Tribune Editorial: Utah Needs to Raise Taxes, Not Cut Them
The 2010 general session of the Utah Legislature opens Monday, and Utahns are holding their collective breath, waiting to see how deep the budget ax will cut. As effects of the Great Recession drag revenues down, to the tune of about $700 million dollars, give or take a few million (we won’t have final projections for another month), legislators are digging in their heels, resisting any tax increases.
That’s shortsighted and dangerous, especially when it comes to public and higher education.
Utah public schools, already the most crowded in the nation, will welcome approximately 11,000 new students next fall, and many of them will be from immigrant families, where English is not the first language. Latinos make up about a fourth of new student enrollment. We already spend the least per pupil in the nation, by a growing margin. We’ve dropped from near the top to 34th in the nation in public “effort” to fund K-12 education; that’s the amount spent per $1,000 of personal income. Cutting fat is not an option.
This Tribune editorial does exactly what a good newspaper should do. It gives serious thought to serious matters and comes up with serious suggestions. This is substantial journalism.
All Utahns should read this carefully. This editorial isn’t something that was typed quickly in a moment of angst, or to fill a daily hole in the newspaper. The editorial evaluates where we are, where we need to be, and how to get there. It was hard work and required research, collaboration, and leadership.
If the readers will carefully read and evaluate this editorial they will be hard pressed to find areas of disagreement. The facts are there and the solutions are reasonable and doable.
People are naturally reluctant to raise taxes, but the arguments in this case are compelling. The governor and legislature won’t go for this, but they will not come up with a better overall result.
We could go for this result 100%, but even more, we would like to commend the Tribune on offering such a great community service. It once again has displayed the importance of a good newspaper. If you find anything as constructive and thoughtful, that requires thinking and hard work, from the other newspaper in town please let us know. We will be happy to celebrate if that ever becomes the case.
Gov. Gary Herbert proposes no further direct cut to public education after the current year’s 5 percent cut, but he would not fund the enrollment increase, the equivalent of a cut. Legislators are talking about an additional 4 percent cut. That would mean even larger classes, layoffs, furloughs and possibly fewer school days.
For higher education, the cuts being proposed by some legislators are even deeper and could have serious long-term consequences. Although Herbert has recommended replacing the $66 million in federal stimulus money that backfilled about half of a 17 percent higher-ed cut for the current year, the legislative branch may not be so generous.
A contingent of lawmakers is saying they would not replace the federal funding and would also mandate a further 5 percent cut. That action would be devastating to every state institution, from technical schools, to Salt Lake Community College and other two-year colleges, to the state’s two research universities. SLCC says it will close one campus and could cap enrollment; the very existence of Snow College and College of Eastern Utah would be threatened. It would be especially counterproductive to shortchange the research at University of Utah, a powerful economic engine that creates thousands of jobs and brings millions in donations and federal grants to the state.
On top of the 900 laid off in the current fiscal year and enrollment cuts at the U. Medical School, this proposal could mean layoffs of 700 to 800 more, including tenured professors. Class offerings would be reduced, requiring students to put off graduation in order to get the classes they need.
But there are alternatives, in the form of tax increases that make sense.
Here are some possibilities:
» Pump up the motor fuel tax of 24.5 cents per gallon by 10 cents. That would raise an estimated $100 million. It would allow Utah to pay more in cash for the I-15 rebuild through Utah County and other projects, rather than bonding. Because it amounts to a user fee, some people could control their outlay by driving less, which also would improve air quality. Utah has not raised this tax since 1997.
» Increase the top marginal income tax rate from 5 percent to 6 percent for people making more than $250,000, and to 7 percent for those making more than $750,000. That would raise an estimated $350 million for education.
» Puff up the cigarette tax from the current 69.5 cents per pack to the national average of $1.34. This tax is regressive, but it would discourage smoking. It would make Utah’s tax higher than all surrounding states except Arizona, which charges $2. It would raise an estimated $40 million to $60 million.
» Create a severance tax on coal and raise rates on oil, natural gas, and sand and gravel mining. Taxing coal could raise $12 million. Increasing rates on oil and natural gas companies could raise additional millions.
» Restore the full state sales tax on groceries. The current rate on groceries is 3 percent; the full state rate is 4.7 percent. Ending the partial exemption would cost the average family an estimated $240 a year. This is highly regressive, meaning that it hurts the poorest Utahns most because they spend a bigger chunk of their disposable income on unprepared food. The partial exemption for groceries has cost the state an estimated $180 million. A state earned-income tax credit could help make some low-income people whole. However, giving the exemption to everyone, regardless of income, may cause more damage to the poor because social services suffer from resulting budget cuts.
» Apply the sales tax to providers of professional services, such as lawyers and accountants. That would broaden the tax base, as recommended by former Gov. Olene Walker’s tax reform commission, and it would hurt low-income people least, because the biggest consumers of these services are the well-heeled.
» Reduce income-tax breaks to large families. Utah’s high birth rate drives large school class sizes and low per-pupil spending, yet the families that impose the largest burdens get a tax benefit for doing so.
There are as many ways to raise taxes as there are stars in the Milky Way. The goal should be to enhance revenues just enough to get the state through the current emergency, but no more, in order to keep the drag of higher taxes as light as possible as the economy still is struggling. That’s a difficult balance. But we believe it can be done.