Primary Election Issue: Yes, The 2018 Utah Legislature Raised Taxes On Middle Class Families

If you haven’t noticed yet, take a look at your recent paycheck. If you have a family and have a middle class income, you may notice that your take home pay went down. But how can this be? We were told the legislature (slightly) lowered the income tax rate from 5.00% to 4.95%. Yes, but they also knowingly did nothing about the removal of personal deductions. The Trib article,“Utahns with large families could be paying a lot more in state taxes next year”, and it’s associated impact table (be sure to look at it!) sum it up:

The Utah Legislature passed a 0.05 percent income tax cut this year but took no action on changes in federal tax law that eliminated personal deductions. The decision means most Utah taxpayers will pay more in state tax in 2019 even though their overall tax bills will be lower because of the federal cuts.

Legislators and he Governor were well aware of the need to address the changes and certainly better not claim ignorance:

For example, an $80,000-a-year family of seven with one disabled child might currently itemize deductions equal to about 20 percent of income and end up with a state tax bill of $2,200. Next year, that family will do better claiming the standard deduction. But they will lose $17,000 in other deductions, and their tax bill could jump by $1,000, or 45 percent.

Lawmakers knew all this back in January, when the state Tax Commission reported a potential $80 million windfall for the state thanks to federal tax changes and outlined the “average Joe” impacts. The cost of the income tax cut the Legislature eventually approved was about $55 million — an amount more than offset by that windfall.

But for about the same cost, lawmakers could have taken action to preserve the state personal exemption and pass along those savings to taxpayers — something that neighboring Idaho did this year by creating a state child tax credit.

House Bill 385 was such a bill. Introduced by first-termer Rep. Tim Quinn, R-Heber City, it didn’t even get out of committee, a victim of other priorities.

Yes, they had “other priorities”…like helping political cronies such as UTA with millions for a name change. Maybe another priority was creating a bridgehead for an education ‘head tax’ on children but they didn’t have the guts to debate it in the open. Instead, they chose to sneak one through on taxpayers and Governor Herbert went along with it.

Since it’s primary season and an election year, this issue would be a good one to bring up to incumbent state legislators (such as Ray Ward in South Davis County) and opposing candidates.

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2018: Utah’s Tax And Spend Legislature, Governor, Our Schools Now and the Salt Lake Chamber Of Commerce

Next time someone wants to tell me Utah has a conservative legislature, they can shove it. They’re either GOP(e) party hacks or entirely clueless.

At the end of the legislative session, the GOP-Governor-Chamber of Commerce group managed to jack up your taxes and enable a flimflam scheme to trick people into raising them further…all during a year of budget surpluses (because it’s not your money and labor, it’s really their money to play with).

Here’s what they did: The Salt Lake Chamber of Commerce created yet another front group (Our Schools Now) led by a group of Utah’s wealthy elites. They started a ballot initiative pushing for another big tax increase on everyone but themselves. Then they could count on  their “Available Jones” (aka Governor Herbert) along with their shills in the legislature to cut a deal with them – much like the tactic used to begin to crush Utah’s neighborhood caucus system (in the form of SB54 a few years ago). Herbert is now out there on some dog-and-pony show about how he ‘saved’ everyone from some big tax increase. It’s total baloney.

What Herbert and the legislature did (again) is save the Salt Lake Chamber of Commerce from spending their own money to run a ballot initiative that was likely to fail. Instead, they passed a couple of increases and will also use your money to fund a tax increase question for the next election. C’mon, when you’re a special interest group tied with the political elite, someone else pays for your initiatives.

So here’s the damage:

  1. They will encourage local governments to further raise the sales tax to dish more cash to the corrupt and fiscally irresponsible Utah Transit Authority (UTA) or its new name, the Transit District of Utah. UTA is (surprise!) promoted by the Salt Lake Chamber of Commerce and politically well connected.
  2. They “froze” the rate of the state property tax dedicated to education for five years thereby exempting it from truth-in-taxation hearings . Sounds good, right? Nope. Normally counties drop the tax rate as your home valuation increases as they have a cap on how much they can collect each year. This ‘freeze’ holds the rate regardless of valuation which will result in a surplus (of your money) they will harvest.
    Tip: Be on guard for them extending the freeze in perpetuity and expanding it to other entities that take property taxes. Also watch for an increased tempo of home value evaluations to further boost their take. Face it, property taxes combined with spendthrift politicians mean you never really own you home.
  3. They will shove a question on the next election ballot asking for a 33% increase in the gas tax from $0.29/gallon to $0.39/gallon.
    Here’s the flimflam: A few actual conservative legislators asked that they phrase the ballot question to include the percent increase (33%) or the old/new rate (0.29-0.39/gallon), thus giving voters clarity and context. Niet! said our liberal GOPe legislators and blocked the motion. Now the Chamber et al. can try to pull the wool over naive voters and spin the increase as ‘just a small 10 cent increase’. It’s a significant increase ($2.00 per fill-up) and will impact family budgets. In addition, it will not add even one penny to road funds since the amount going to roads from the general fund will be reduced by the amount of the increased fuel tax.
  4. There’s no guarantee the Chamber/Our Schools Now won’t press for more tax increases…which their politicians can then again cave on to ‘save us all from a bigger tax increase’.

I will acknowledge that there was a small decrease in the income tax but overall the average citizen came out on the losing end since all this, along with the last few years of tax increases, is going to hit your family budget. But so long as our political betters and their buddies can continue to spend your cash like drunken sailors, we totally have the most fiscally conservative politicians….ever!

 

UTA Joined By Governor Herbert To Fleece Taxpayers

Governor Herbert came out with another bright idea for his Utah Transit Authority (UTA) buddies: More money!

Utah’s governor proposes taking gas tax money to pay for transit improvements

Tucked into the governor’s annual budget recommendations is a proposal to dip into funds normally earmarked for road repairs to pay for improvements to mass transit…

…The gas tax that you pay when you fill up your vehicle is normally spent at the Utah Dept. of Transportation to fix roads. Shifting some of the funds toward improvements in bus and train service might help get people out of their cars.

The governor detailed his idea while speaking to the Salt Lake Chamber earlier this week…

So Herbert (while hanging out with his co-Governor, the Salt Lake Chamber of Commerce) would like to pilfer road repair funds and funnel them to the UTA. The same UTA that comes with baggage such as travel and land deal scandals, waste highlighted by the State Auditor, and getting sweet tax-funded bailouts.

If they manage to pull off this stunt, the next ruse, when road repairs are delayed due to ‘lack of funding’, will be to cry about the desperate, unforeseeable need to raise the gas tax to fund the roads in critical need of repair. Of course, they’ll expect everyone will have forgotten the transfer to UTA by then.

It’s another episode of cronies paying off cronies.

*This post has received the Available Jones (TM) seal of approval.

Prop 1: Funding The UTA Money Pit With Government Kickbacks

Back in June, I warned that I would be surprised if city and county governments didn’t put the UTA tax on ballots because of the “incentive” the legislature gave them. It’s a fiscal incentive better known as a ‘kickback’ which would normally be highly unethical if not illegal but since the legislature did it, it’s ok…  Please read the above linked post for details on the kickback along with a list of the other tax increases this year and links to UTA’s bad financial audits. You can also go directly to the 2014 audit here or read a related article from the Salt Lake Tribute here “Audit blasts UTA, says it gave millions in sweetheart deals

Rather than reinvent the wheel and post my own summary on why we should oppose Proposition 1, let me paste in an excellent summary I was sent in an email (original author is Heather Williamson):

…Also, we are concerned that another tax is being considered against us. And I mean against, not FOR us. Taxes take more dollars out of our pockets which we can simply can not afford. Governments should be expected to work within their existing budgets just like my family and I have to.

However, I am equally concerned with where our tax dollars are going. Almost half of the tax proposal will go to the Utah Transit Authority. UTA has been less than frugal with their funds. I find it offensive that I am being asked to be more frugal with my money, so UTA doesn’t have to be with theirs.

At the end of 2010, UTA was millions of dollars in debt, and the debt continues to rise. The following year over $600,000 was spent on international travel, which an audit released called these ‘work trips’ unnecessary and a misuse of public funds. UTA also signed a deal with a contractor in Draper, which according to another audit, lacked the proper legal documentation and defied UTA’s own rules and regulations. After the deal experienced failure after failure, UTA lost roughly $2 million dollars and did not seek compensation. The auditors concluded that this put “tax dollars at an unnecessary risk.” According to the same audit, UTA legal counsel advised to recover the $2 million, however the executive board decided that the loss was acceptable.

UTA executive bonuses have totaled close to $2 million dollars a year, and that is not including the bonuses that UTA is withholding to report on. According to the same audit, UTA has not reported all compensation to Utah’s state transparency website. Two years ago, General Manager of UTA made over $400,000; General Counsel made over $350,000; and the Chief Operating Officer made over $300,000 and their compensation continues to rise. This government entity is asking for more money, because it has paid itself into debt. And now they are asking me and the other county residents to restrain our budgets even more to pay for their lack of basic budgeting skills. This sales tax, if approved, will increase UTA revenue by millions a year. However, when does it stop?

I have nothing further to add other than to ask you to please vote NO on Prop 1.

Early Warning: City Tax Increases For UTA And Kickbacks (Update)

The Bountiful City Council is poised to pursue recommending tax increase on the November ballot.  Likely they used this vapid, boilerplate resolution provided to them from the Utah League of Cities and Towns (ULCT – a tax-funded municipal lobbying group that lobbies the legislature to increase you taxes – go figure).

Basically, if they are able to pass the tax increase, UTA  (Utah Transit Authority) will get 40% of it for improving their service (…and free up funding for more outrageous executive bonuses). Meanwhile cities get 40% of the take and counties get 20%. Effectively, the legislature set this scheme up so everyone get’s a juicy kickback by getting this thing passed. As one person I know put it: Imagine if the city were to agree with Comcast to slap a fee on every homeowner for Comcast internet improvements under the agreement that Comcast will give the city/county 20-40% of the fee?

Of course, if Comcast and the city rigged a deal like this, there would be an investigation and things would not be pretty.  However, since government and a government-spronsored private organization (UTA) is involved, this is somehow kosher.

This tax will be on top of several new, and proposed 2015 taxes/fees (note there may be more, these are just off the top of my head):

  • Statewide property tax increase of $46/average home ($250K, I think) (SB97)
  • State gas tax increase (now 12% which also automatically increases the revenue as wholesale price increases up to a threshold of $0.40/gallon (HB362)
  • Directed by the Utah Legislature (SJR6) Chaffetz has proposed a law that would require all online businesses to collect Utah sales tax from Utah citizens

Fortunately for cities, ULCT (along with Utah Chamber of Crony Capitalists-afilliated groups and front organizations) is going to help cities with the get-out-the-vote campaign (see the “When” section). Based on the aforementioned resolution and linked document, cities are likely to make hay of their road maintenance shortfall to convince you to spit up 40% overhead to UTA. Quite frankly, the shortfall is of their own doing – if they would’ve focused on core government functions instead of pet projects like recreation centers, theater for plays, art displays/festivals, special-interest museums, etc (see the tags linked above). Maybe it’s time they check their priorities and adjust such first before further burdening families.

Unfortunately, for those who expect some fiscal responsibility and oppose these intra-governmental kickback schemes, things will be tough. The above crony groups will use their coffers to swamp the media with ads etc as they will see a return on investment (at your expense) and attack opponents as ‘miserly’ for such a small increase (again, ignore the other increases this is heaped on).  Plus, they also have the advantage of  the “Concentrated versus Diffuse Interests” effect so eloquently identified by Milton & Rose Friedman many years ago.

Good times ahead, or something.

UPDATE (8/18): The Davis County Commission voted to stick the measure on the ballot:

The motion was unanimous with votes from Commissioners.
Milburn – on the UTA Board of Trustees.
Smith – CEO of  Davis Chamber of Commerce – Chambers are involved in PR for the tax increase (see my above link), I’m betting Davis Chamber will chip in too…
Petroff who stated: “putting the sales tax increase on the ballot is not a hard decision for me.”

UTA’s ‘not so dazzling’ State audit reports can also be found (via Evelyn Everton’s twitter) at the links:
2014
2012

UPDATE (10/17): The ballot proposal is known as Proposition 1 (“Prop 1”).  Please vote NO on this most recent piece of crony capitalism (see also today’s post: Prop 1: Funding The UTA Money Pit With Government Kickbacks).

UPDATE (2016): For historical reference, Bountiful’s City Council passed the “vapid resolution” unanimously on June 23, 2015.

Going For Broke: UTA Demands Tax Increase, Parties In Europe (UPDATE)

Just off the high of a sweat cloaked bailout from the 2013 Legialature, news came out that UTA wants a 66% increase in it’s share of sales tax. It seems they were unable to properly plan for and budget for their various high profile line (rail etc) expansions. The PR of new goodies is just too tempting, I suppose. Despite the apparently poor planning, UTA execs got large bonuses on your dime:

The Salt Lake Tribune reported this month that top UTA executives split $750,000 in bonuses last year by meeting goals that critics say are too easily met. Even former UTA Chief Executive Officer John Inglish received a $22,700 bonus even though his then-mostly advisory job had him mainly traveling to represent UTA at industry meetings, while receiving other compensation of $364,000 a year…

Better yet, Utah Transit Authority execs and their legislative supporters decided now would be a great time for a European vacation:

The day after the Utah Transit Authority began seeking a 66 percent increase in its share of sales taxes, four top UTA officials — including the same person who asked legislators for that increase — jetted off to Switzerland to look at mountain transportation systems.

They are spending $1,600 each for round-trip airfare and $200 each per night on hotel rooms for five nights, plus food and other incidentals, the UTA acknowledged in response to Tribune inquiries. They also took six legislators and a lobbyist with them — but UTA said they are paying their own way.

As for the “paying their own way” line, I can’t help wonder if the legislators (Representatives Greg Hughes, Brad Dee, Don Ipson, Brad Last and Johnny Anderson and Senator Evan Vickers) used campaign funds to ‘pay their own way’. Such funds are often provided by lobbyist donors such as Jeff Hartley, who is UTA’s lobbyist…and also on the trip.

Representative Janice Fisher summed it up well:

“I question their judgment on spending this kind of money on top of the firestorm that’s going on concerning bonuses and the cutting of services and the debt they are in…”

Just wait ’till she hears about how much UTA’s blowing on travel:

International travel has been among controversies UTA has faced recently. Last year, the Tribune reported that UTA had spent $600,000 in a year and half on travel. For example, former CEO John Inglish had traveled to Belgium, China, France, Germany, Hong Kong, Italy, Mexico, Spain (twice), Switzerland, Sweden, the United Arab Emirates and 17 U.S. cities. He averaged 1.6 trips a month.

Hughes traveled for UTA to Switzerland, Hong Kong, Australia, San Antonio, Sacramento, Portland (three times) and Washington, D.C.

Not to worry though, we’re being so tough on them that UTA felt it necessary to petition their board to lower targets for bonuses.

UPDATE: Freshly back from their trip, UTA reps and legislators proudly declare blowing tax money and lobbyist funds on the junket was totally worth it. Note that this time the reporter did mention that ‘pay their own way’ really means lobbyists paid their way through legislators’ campaign funds:

…Accompanying them were six legislators — including Hughes, who is also the House Republican whip — who said they paid their own way, or used a mix of personal and campaign funds.

In more local news, Bountiful feels icky about it but decided to drop $15,000 to UTA anyway.  At least that will pay for one Swiss trip costs.

Utah’s Clean Air Dupe: Endless Tax Increases, CNG Monopoly, And UTA’s Stealth Bailout

UPDATE: Herbert has signed the bill.  He’s bailed out his buddies and created a new, cloaked and uncontrolled taxation vehicle.  Progressives rejoice.

Who can say they don’t want clean air?  So that should justify any action that would creates a government-ordained monopoly and open a larger avenue for tax increases that entirely undermine truth-in-taxation?  Apparently.  Just look at the end result of SB275 (“Energy Amendments”).

The legislation gives Questar (“a gas corporation”) a virtual monopoly on CNG (natural gas) stations and infrastructure.  CNG vehicles are an increasing market and prime for expansion.  Rather than allow free enterprise and businesses (small and large) to enter the market and ensure competition, the legislation will strangle the market and provide significant advantage for what will amount to a state utility company (Questar).  Instead of using a competitive process for infrastructure and allowing gas stations meet CNG demands,  the legislature and Governor Herbert are primed to severely restrict entry in the market.    All this amounts to is a juicy shade of big government intervention and crony capitalism.

As a “double whammy”, the legislation allows all layers of government to increase gas rates (“in the public interest”, of course) when they feel like it.  As I’ve well documented Utah cities with a municipal power company are notorious for manipulating rates (overcharging) and transferring the excess into their general funds (see here too).  They then turn around and speciously tout low property taxes (without factoring in the rate manipulation).  If signed by Governor Herbert, the barn door will be thrown wide open for not only cities but also counties, special districts, and the quasi-private Utah Transit Authority (UTA). This action will also surreptitiously help bail-out a financially foundering Utah Transit Authority.

The end result is and end run around truth-in-taxation requirements, gas rates for your home as well as CNG vehicles will rise, and government runs on the Questar bank (while claiming your taxes are low)…with the added bonus of a constriction of market entry and competition.  Milton Friedman in “Free To Choose” warned about the unintended consequences of government-corporate regulatory development.  This is just another case study in the making.

Please call Governor Herbert (801-538-1000) immediately and ask him to veto SB 275 (this is your last chance). Too late – see the update at the top.

For more detailed background information, see this post.