Gov. Gary Herbert’s latest budget is a celebration of all things Herbert:
— State tax revenue has been growing with Utah’s robust economy to the point where there will be $1.3 billion in new money coming in. That is an impressive sum, and the governor can rightly credit careful and conservative management.
— Kindergarten through 12th grade will continue to see the bulk of the largesse, as it has in recent years. Four years ago Herbert pledged to raise education spending by a billion dollars in five years, and with this budget he would make it a year early.
— The budget does not allocate $200 million of that new money — on the hope that legislators will instead decide to give taxpayers a break. He is also hoping that the good times will finally allow the state to overhaul its sales tax approach. “Lower the rate and broaden the base” has been his mantra for years.
Herbert came to office in 2009, and he had the advantage of starting at the bottom of the recession. Utah’s annual gross domestic product has gone from $113 billion in $164 billion in that time — a 45 percent increase — and Herbert has had budget surpluses every year he has been in office.
You can argue, and we have, that Utah is missing out by not investing further in our children’s minds. Schools have received the bulk of the new money, but more is available to shore up the future without shortchanging the present. Even with that billion dollars that has been added in the past four years, Utah will remain dead last in the nation in per-pupil spending.
With the extra billion or so in new money, Herbert’s budget has something for just about everyone. There would be $100 million for air quality. Teachers would get bonuses. Schools would get counselors. The state’s portion of Utah’s per-pupil expenditures would rise four percent. And $50 million would be put in a new state endowment for scholarships in hope that it will encourage private-sector donations.
The state also will get a boost from the Medicaid expansion voters passed in November. Herbert had nothing to do with that, but Medicaid’s injection of another $1 billion into the state’s economy will help him keep his winning streak going.
The big question is whether the breathing room of a big surplus is enough for Utah to revamp its sales-tax structure. Sales tax is withering because of societal changes. People are buying less goods and more services, many of which aren’t taxed.
On that Herbert plays politics. He is all in on lowering the rate, but he’s declining to say where he would broaden the base. He’s floated a couple of minor examples — taxing limousine rides and e-cigarettes — but they won’t make much difference.
It’s the Legislature’s decision if a new tax is introduced, but Herbert could still make firm recommendations. Instead, he wants legislators to take the heat.
Nowhere was that more evident than where his budget recommendation mentions a uniform tax on consumption, “including food and residential fuel.” That appears to be support for raising the sales tax on food, but when asked about it his office says it’s only “an option” for legislators.
Both Herbert and the Legislature are caught in a trap of their own making. Broadening the base means taxing something that wasn’t taxed before, and no Republican wants to be known as a tax creator. Sales tax reform is an absolute necessity, but it will take more fortitude than has been shown so far.