The burdens of taxes and fees levied by state and local governments on Utah families and individuals are dropping, a new Utah Foundation study shows.
In fact, such tax burdens are lower today than any time in the last 20 years, the study released Wednesday found.
The non-profit foundation does not take stands on political issues of the day.
But UF president Stephen Kroes hopes the new information will be valuable in tax reform/hike debates coming to the 2015 Legislature.
In comparison with the tax and fee burdens people bear in other states, Utah now ranks 21st in the nation, way down from just a few years ago when Utah ranked 13th in tax burden.
The drop, for the most part, comes because of two actions in 2007, when lawmakers and then-GOP Gov. Jon Huntsman Jr. lower the state personal and corporate income taxes to 5 percent and the sales tax was taken off of unprepared food.
Then, in 2008, the Great Recession hit. And the lower tax rates combined with less tax revenue required state government to cut out about $2 billion from state budgets over several years.
While many other financially-struggling states raised taxes during the Great Recession, Utah did not.
All together, by 2012 (the latest figures used in the foundation study) Utah’s tax burden on families has dropped considerably.
Outside of the foundation’s report, several groups, including the business-driven Education First, is calling for tax hikes in the 2015 Legislature to help fund Utah’s public education programs.
Key points in the new study:
— Utah ranks 21st in overall tax and fee burdens.
— The state tax and fee burden equals $112 for every $1,000 of personal income, the lowest in 20 years.
— In the last 20 years, facing opposition to general tax hikes, state and local governments have trended toward increasing specific fees rather than a tax hike.
— The Utah state government burden has been dropping steadily, if somewhat minor in nature, while local city, county and school district tax burdens have increased, if rather small in nature.
— The Great Recession had little impact on tax burdens in Utah – mainly because the Legislature did not raise taxes during that time and didn’t authorize local governments and school districts to raise their taxes, either.
Kroes noted in a Capitol Hill press conference that local governments’ and school districts’ main source of revenue is the property tax.
And if a local entity wants to raise its property tax it must go through Truth in Taxation public hearings. Those are politically painful.
So instead of taking on those fights, local officials tend to raise fees levied on specific services – which they can do with no required public hearings.
While that may be a sound general policy – people who don’t use those services don’t have to pay for them – in reality many of the fees – like utility fees, sewer or garbage pick-up fees – really can’t be sidestepped by residents.
They really have to pay those fees, just like they would have to pay a general income tax, sales tax, or property tax hike.
Part of the new study specifically addresses the state’s per-gallon gasoline tax – a very timely issue considering the 2015 Legislature will look at restructuring that tax, with the ultimate goal of having it increase systematically as road repair and replacement costs escalate through inflation.
Matthew Weinstein of Voices For Utah Children – a nonprofit group that advocates for children and their families – said while it is great Utah’s tax and fee burden has dropped over recent years, it is clear that many Utah children, either through their public education or Human Services or other needs, are suffering.
And it is time for lawmakers and citizens to take a hard look at the state of Utah children with an eye towards greater funding and government help.
This report, and others like it, “should send off alarm bells,” said Weinstein.
“We used to be on the Top 10 lists” in a number of good areas concerning the welfare of children, he said. “But we’ve been falling off in recent years. We used to be in the Top 10” in education excellence. No more.
“Now in (education) performance we are in the middle” of the states, he said.
Utah used to be in the Top 10 in childhood welfare. “Now our children are paying the price; and not all children have an equal opportunity to achieve the American Dream,” he added.
“As the Bible says: So as you sew, so shall you reap.”
“If we want to reap the benefits” of being a low-tax state, then somehow “we have to make investments in our children.”
Krose said that not so many years ago Utahns paid around 5.5 percent of their incomes into supporting public schools.
That is now around 4.5 percent.
And while not directly mathematically related, interestingly enough “that drop mirrors the fall in our tax burden.”
