Matthew Weinstein: The high price of lower taxes in Utah

The Legislature should have other priorities than ‘the year of the tax cut.’

(Rick Bowmer | AP file photo) In this Aug. 20, 2020, photo, the Utah House of Representatives convenes for a special session of the Legislature at the Utah State Capitol in Salt Lake City.

Legislative leaders have said that 2021 should be “the year of the tax cut.” Numerous public opinion surveys show that Utahns disagree. This may come as a surprise to policymakers, who have been in the habit of handing out tax break after tax break for decades. But there seems to be an increasing public awareness that Utah is now paying a price for decades of tax cutting that have left us with the lowest overall tax level in 50 years relative to Utah personal income.

We all like being able to pay less in taxes. But there is a growing understanding that tax cuts are leaving us unable to address the long list of urgent unmet needs in education, infrastructure, social services, air quality, public health and many other areas that affect our standard of living and quality of life.

What are those urgent unmet needs? Here is a list:

  • Education: Envision Utah estimates that we need to invest an additional $500-600 million each year just to reduce teacher turnover, where we rank among the worst in the nation. Our leaders’ unwillingness to solve our education underinvestment problem is why our high school graduation rate is below the national average (after adjusting for demographics) and why our younger generation of adults (age 25-34) has fallen behind their counterparts nationally for educational attainment at the college level (BA/BS+).

  • Full-day kindergarten: Voices for Utah Children estimates that it will cost $52.5 million to make full-day K available to all Utah families who would choose to opt in to it.

  • Pre-K and childcare: Well over $1 billion is one estimate for a comprehensive system of early childhood care and education in Utah.

  • Health insurance for kids: It would cost Utah about $59 million each year to cover all of our 82,000 uninsured children. The longstanding preference for tax cuts over covering all kids is why we rank last in the nation for covering the one-in-six Utah kids who are Latino and why the state as a whole ranks in the bottom 10 nationally for uninsured children.

  • Mental health and substance abuse treatment: Utah ranks last in the nation for mental health treatment access, according to a 2019 report from the Gardner Policy Institute. A 2020 report from the Legislative Auditor General found that Utah’s Justice Reinvestment Initiative had failed to achieve its goal to reduce recidivism — and actually saw recidivism rise — in part because “both the availability and the quality of the drug addiction and mental health treatment are still inadequate.”

  • Infrastructure: The American Society of Civil Engineers gives Utah a C+ grade for infrastructure in its December 2020 report. The Utah Transportation Coalition has identified a funding shortfall of nearly $8 billion over the next two decades.

  • Air quality: The Wasatch Front ranks as the 11th worst air quality in the nation for ozone and 7th worst for short-term particle pollution.

  • Affordable housing availability falls far short of meeting the need lower-income Utahns. The FY21 affordable housing appropriation request for $35 million from Sen. Jacob Anderegg, which was already just a small step in the right direction, was reduced to just $5 million.

  • Disability services: The DSPD disability services waiting list has doubled in the last decade from 1,953 people with disabilities in 2010 to 3,911 in 2020. The FY20 $1 million one-time appropriation made it possible to provide services to 143 people from the waiting list.

  • Domestic violence: The Utah Domestic Violence Coalition 2017 Needs Assessment identified insufficient funding for shelters, affordable housing, child care, legal representation, and mental health and substance abuse treatment services as major obstacles to protecting women from domestic abuse.

  • Seniors: The official poverty measure undercounts senior poverty by about a third because it does not consider the impact of out-of-pocket medical expenses. For most seniors, Social Security is the majority of their income, and it makes up 90% or more of income for 21% of married couples and about 45% of unmarried seniors.

Some legislators have said to us. “What’s the big deal about $100 million of tax cuts out of a $22 billion budget?” The big deal is that we’ve been cutting, on average, about $100 million every single year for the last 25 years.

Voices for Utah Children’s research has found that the tax cutting of the last 25 years has left us short $2.4 billion each year, amounting to an 18% cut to public revenues. One could even call us a “slow-motion Kansas.” Kansas was the state that in 2012 cut taxes overnight by 15%, leading to an economic slump and political backlash that saw the Republican legislature reverse the cuts in 2017 and the public elect a Democratic governor in 2018.

But here in Utah, we’re like the proverbial frog in the pot of water heating on the stove. The devastating impacts of these revenue reductions have been slow and incremental, so we’ve come to accept as normal a state of affairs that Kansans quickly reversed.

Instead of figuring out the fairest way to restore some of those lost revenues so we can address our most urgent challenges, Utah’s political leadership continues to pass new tax cuts every year, generally skewed toward the top of the income scale. For example, Voices for Utah Children analyzed two of the tax cuts proposed this year and found that they excluded lower-income Utahns completely and mostly went to the highest-income households – even though their supporters said publicly that they are intended to help low- and middle-income Utahns.

Public opinion surveys conducted last year by the Deseret News and Hinckley Institute, by the Utah Foundation, and by Envision Utah all found a strong popular preference for public investment over tax cuts. Same thing with surveys this month by the Deseret News-Hinckley Institute again and by Voices for Utah Children.

Breaking old habits can be hard. As is often the case, the public appears to be ahead of our political leaders. Let’s hope that they will eventually come to appreciate the wisdom of their constituents, who are increasingly aware of the high price Utah is paying for lower taxes.

| Courtesy Matthew Weinstein, op-ed mug.

Matthew Weinstein is fiscal policy director at Voices for Utah Children.