Opinionated @ CFE

Fixing the 2010 Budget

Dec
10

Utah finds itself in yet another deep budget hole, this time to the tune of nearly $1B. This, of course, sets of the debate of if the Legislature should cut spending, raise taxes, or a bit of both. Sen. Steve Urquhart, who I have tremendous respect for, has called for his colleagues to oppose any new tax increases, focusing instead on finding places to make cuts. His rationale is that the rate of growth in state government expenditures has outpaced population plus inflation. While this sounds like a sound argument, it doesn’t mesh with some stark realities.

The demand for state services is not a function of just population and nowhere is this more obvious than in our transportation budgets. As we continue to live in the burbs and commute to work, vehicle miles driven has actually grown as much as twice as fast as population. The cost of construction materials has also risen dramatically higher than inflation as China and India consume more of the world’s steel and concrete supply. Education has also taken a hit as more ESL students enter our school systems, students that have a significantly higher cost to educate. (Large immigrant populations account for a significant part of New York’s high education spending and drag their results down.) A rigid formula leaves little room to address these kinds of variances.

We should also consider that despite all of the posturing, Utah’s state budget has been fairly stable as a percentage of state GDP. During the last two decades, it has fluctuated from a low of 15.5% to a high of 17.2%. That is an amazing amount of restraint given the large surpluses that we had just a few years ago. Whether this is because of or despite the hand-wringing about state government spending is anyone’s guess, but the caricature of free-spending double-talkers seems better suited to Congresscritters than it does our state government.

While I can certainly appreciate the sentiment against raising taxes unnecessarily, you can’t just sweep that option off of the table wholesale. I hope our state representatives and senators will bear this in mind as they start making tough decisions next month.

2 Responses to Fixing the 2010 Budget

  1. Sen. Steve Urquhart has told me I can count on a 8% cut to education, this time around the school has already let go every last bit of “excess” staff(come on who needs janitors). After you factor in matching federal grants and private donor match’s the number coming out of higher education in much higher then 8%. The smaller cut last year resulted in a 10% tuition hike and a chunk of the hit was hidden in staff reductions. I am hearing that the tuition hike this year will be much much higher(18%+). I wonder how many people will still be able to afford college next year.

    Their also playing musical chairs with the tax’s, return the unprepared food tax to lower the income tax(education comes out of the income tax). Removing 1% tax on restaurants and replacing it with 0.1% increase on general sales tax.

    I will also Note that the $1 Billion figure is an Out Right Lie, They still are not adding the additional cost of the underfunded state pension plan. Which depending on return rates to the plan (7.75%) $6.5 Billion underfunded to (6.0%) $30 Billion underfunded. They won’t be able to hide this in the 2011 budget as they will have to bring an additional funds to payout all obligations.

  2. As usual, Jesse, your point is well articulated and concrete. However, it doesn’t play well with the right-wing GOP delegates that decide who will make it out of convention, and since we’re in that part of the election cycle where courting delegates is key, prudent public policy is out the window and delegate suck-up is in.

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