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Thursday, January 19, 2006"Utah Rocks," or How to Spend a Billion DollarsA quick look at major points in Governor Huntsman's refreshingly brief State of the State speech, delivered Tuesday evening. Tuesday evening Utah Governor Jon Huntsman delivered his State of the State address from Washington Elementary School in Bountiful. From that you already know a major topic of his address: education. Before we turn to substance, however, let's do some housekeeping. You can watch streaming video of the speech (the video quality is typical, as in low, but the audio is fine) or read the text at the state's excellent Web site. We're accustomed to Presidential State of the Union addresses which run on for 60 to 90 minutes or more. Governor Huntsman struck a symbolic blow for smaller government Tuesday by speaking for only 28 minutes -- which is plenty. Said he,
Income Tax: Flatten and Trim Utah's income tax is already much flatter than federal income tax; Governor Huntsman proposes to make it still flatter. He also wants to make it simpler, which is good for one obvious reason and one less obvious reason. The obvious reason is that time is valuable, and the simpler the income tax is, the less time we spend every year doing the paperwork and insuring that it is error-free. The less obvious reason is that when tax rates are relatively simple and flat, it's harder for government to increase our taxes without us realizing it. Speaking of changing rates, Governor Huntsman proposes a decrease in the state income tax rate which applies to most of most Utahans' income, from 7 percent to 5 percent. That might look like to you like a 2 percent decrease, but to me it looks like a 28.57 percent decrease. That's huge. What about education, which state income tax funds? you wonder. And what about the Governor's stated intention to increase education funding? The short answers are: We have a large budget surplus for the short term, the economy is already growing well in the state, and tax cuts like that tend to stoke up the economic fire considerably, which produces more revenue. So it probably works. Sales Tax on Food Another luxury of the budget surplus is that we can talk about removing the "onerous" sales tax on food. Numerous other states with sales tax don't tax food. Supposedly it's fairer, and it also slightly eases the economic lot of seniors and poor families. As long as we're talking about cutting a tax for everyone, I guess I'm for it. But my support is not very enthusiastic. Here's why. First, the sales tax is already the fairest and wisest tax of all. It doesn't punish hard work, like the income tax does, and if you want to save instead of spend some of your money, you can give yourself your own tax cut by not spending as much. So the sales tax is a small incentive to save. In general, Americans don't need any encouragement to spend, these days, but we do seem to need some incentives to save. This includes saving for a rainy day (or year), so we need less help from the government or elsewhere during the lean times. More saving also makes more money available for investment, which contributes to economic growth. Second, the sales tax is an almost daily reminder to many people that the benefits they receive from government have a price. This is a needed reminder for all of us, but especially for the poor, nearly poor, and some seniors, our "most vulnerable citizens." Those groups pay a lot less tax overall, but receive a disproportionate share of government benefits, at the expense of everyone else. So the frequent reminder sales tax provides is a small, frequent blow struck against the entitlement mentality. This matters because people who rely wholly or partly on the government for their income and medical care are especially prone to that mentality. In part, the entitlement mentality is like Utah's sales tax on food, as the Governor explained: a legacy of the 1930s. (The Governor said that about the tax; I'm saying it about the welfare state mentality.) In case you don't remember the 1930s, think of the Great Depression. Think also of the New Deal. The latter prolonged the Depression until World War II finally pulled us out of it. At the same time it vastly increased the size and cost of government and advanced the very expensive idea that it's the government job to take care of people, from the cradle to the grave. The Governor promised to increase the share of sales taxes which goes to local governments -- otherwise, the local governments will oppose removing sales tax on food, because it will negatively impact their revenues -- and to collect sales tax already due the state from online purchases, which is a subject for another day. More Money for Education Governor Huntsman advocated a 5.5 percent increase in per-pupil spending on education, the formation of optional all-day kindergartens in some schools (principally to help at-risk children get a more solid start on formal education), and improved teacher training (see yours truly's Monday post) and incentives, especially in math and science -- all of which is great if it the money actually goes where it's supposed to and accomplishes its purposes. He promised that Utah would "carefully expand on the success of our many charter schools," which is also a good thing. (The more competition there is for the regular public schools, the more incentive there will be for them to compete well.) Transportation, Nuclear Waste, Etc. The governor promised "unprecedented increases in transportation spending," including, apparently, both roads and mass transit. We can afford these infrastructure investments now, so now is the time. When you have a surplus this year which you may not have later, he explained, it's wise to put it into infrastructure -- "maintenance capital," he called it. He touted the Legacy Parkway, which is part of the longer planned Legacy Highway. It's certainly a legacy Salt Lake Mayor Rocky Anderson would like to celebrate; it's a noteworthy instance of environmental extortion costing government massive amounts of money. In the end, a needed highway becomes about half of a highway, despite its vastly increased price. You know who pays the price, right? He praised his administration's victory in making Utah unavailable for the storage of radioactive waste. He said, "We do not produce spent nuclear fuel, we do not benefit from it, and we will not store this deadly material in Utah!" I'm all for alternative fuels -- alternatives to petroleum, that is -- but I don't share the governor's nuclear paranoia. In practice, nuclear energy has proven to be one of the most promising and cleanest alternative energy sources, as long as you don't do it the way the Soviets did, with their badly-designed, primitive reactors and their exquisitely incompetent management. (Chernobyl tells us more about the viability totalitarian government than it does about the safety of nuclear power.) On the subject of avian flu, and the pandemic that is allegedly threatened, he said, "On this important issue, we in Utah will lead out, rather than stand back and react." Fine. I'm pro-research, anti-panic, and skeptical of many things, including the latest future pandemic du jour. In Conclusion All in all, it was a good speech, competently delivered. It was pleasingly brief yet substantive. And we now have some idea how the Governor wants to spend that extra billion dollars: give part of it back to the taxpayers in ways which will lead to economic growth, and spend part of it on our intellectual and physical infrastructure (education and transportation). Now let's see what the legislature can make of all that. Feel free to write your representatives about any of these issues. We hired 'em, and we pay 'em. We have a right and a responsibility to make our preferences known. Oh, one more thing: "Utah rocks" (in my title) is an actually quote from the speech. Copyright 2006 by David Rodeback. |
