Budget Growth Done Right
Gov. Huntsman announced his new proposed budget and after some time to digest it, it's looking like it's going to do things right. It's heavy on spending on one-time capital improvements while being modest with increases in annual expenditures. Way to go, John. It's wise accounting to control continuing spending while still taking advantage of the huge windfalls our state is enjoying.
Not all is said and done, however. House leaders are pushing for triple the tax cut that the Governor is pushing for, and there's still just under $40M still sitting on the table. Any bets as to how nasty that battle royale is going to get even with all of the feel-good surrounding this package? While $40M may seem like table scraps in comparison to the $10.7B total package, those relatively small amounts seem to end up being the most divisive. I'm completely prepared to see pet projects paraded around like some kind of dog and pony show.
I do have some concerns. I'm not too keen on expanding government social services no matter how the Legislature got pilloried for it last session. I'm also wondering if the tax cuts are well-timed. I think the money would be better spent on finishing expensive transportation projects now to save us a lot of long-term money. We're in the middle of a robust economy, one so good that we're limited now by a shortage of workers. This would hardly seem the time to try and spur more economic growth. I think some of the money should go into advertising to workers in other states how good the times are here to try and alleviate our employment crunch. After all, no amount of extra disposable income is going to make the economy any better if we can't spend it.
Education is also going to be on notice now. With these big increases in funding, we'll see if teachers will stick around or come to our state, and we'll also see if the increased funding results in improved results. The UEA and associated organizations have been asserting that money is the answer. If they're right, the next 5 years should show increases in student performance. If we don't see increases, you can bet they'll continue to claim that it's because we didn't give them enough money. The problem with them is that it's never enough. We could drop $20,000 per student and still hear clamoring for more funding. I say that we, as voters, hold education accountable to their claims of funding and performance being tied together.
As a package, I think this budget is pretty sound. It addresses a lot of critical needs while not getting way too crazy. I'm hoping it makes its way through the legislature with minimal fuss.
(See articles here, here, here, here, here, here, here, here, and here.)
Jesse
Shauna
I disagree with you on the tax cuts. The governor has repeatedly stated that we need to improve our tax situation to allow us to be competitive with other states. Economists know how this works.
Why is it important to be competitve with other states? Although we’ve got a robust economy now, that will not always be the case. States that do not become competitive with their neighbors eventually end up in economic doldrums from which they find it nearly impossible to escape. Both Reresentative Urquhart and Frank have had good posts about this in the past year (sorry, don’t have time to hunt down the links).
Also, if we do not cut taxes in the face of massive over collection (resulting in massive surpluses), why is there any reason to think that we would ever cut taxes when times are leaner? This is the classic liberal approach. It makes no sense to cut taxes when the good times are rolling, and we certainly can’t afford to cut taxes when times are lean. Go figure.
I’m with you 100% on holding education accountable. I do believe that some of the legislators in leadership positions have made it clear that they plan to do just that. There will be much weaping, wailing, and gnashing of teeth from the education bureaucracy and its minions.
I can see the point of doing the tax cuts, though Utah is already sitting very well in the nation and in the West. We rank 34th in terms of tax burden, comfortably in the bottom third of states. We’re 22nd in terms of state and local tax burdens, though this is probably due to being a largely rural state with a lower per capita income than many other states. Looking at our neighbors, I don’t think we have a whole lot to worry about. Our overall tax burden is lower than Nevada, Arizona, Colorado, and Wyoming. New Mexico and Idaho are slightly lower as is Montana. (See data from The Tax Foundation.)
The question is which is a higher priority: restructuring the tax system or finishing road projects early? Tax cuts obviously have an immediate positive economic effect by spurring long-term higher revenues from the increased commerce. On the other hand, finished road projects early is hedging against the rising cost of construction, a cost that will most assuredly continue to climb as developing nations (like China and India) consume more and more construction material.
The bottom line is this: will the increased revenues from a tax cut exceed the increased costs of construction? Given the meteoric price increases in cement and petroleum products like asphalt, I’m not confident that this would be so. I think we would save a lot more money by finishing road projects early rather than by doing a tax cut. Either way, it’s a gamble.
I have no problem with spending money on roads. In California however a road project is the addition of a High Occupancy Lane or sound walls. Such lanes & sound walls do nothing to relieve the traffic problems and seem to be governments favorite way to spend road construction dollars. That is the same in schools. Rather than pay teachers more, or doing improvements around the school with increased funds, increases are spent to reduce class sizes to 20 (proven to have no benefit other than needing more teachers and getting more union dues) or supporting the latest liberal speaker DeJour.