Response to an angry UTOPIA

After much citizen input from a historically attended Orem City Council meeting on the evening of Aug. 14 (and into the wee hours of the morning on Aug. 15) to decide the fate of a proposed 50 percent increase in property taxes, largely to pay for the debt on the UTOPIA fiber-optic project, the City Council settled on a 25 percent property tax increase. City Councilman Hans Andersen, who opposed any increase, initiated a referendum on the matter and is collecting signatures to put the tax increase on the ballot.

For Sutherland Institute’s efforts – we made thousands of robo-calls to the residents of Orem notifying them of the proposal and meeting time – UTOPIA took to its official blog site to chastise us for our characterization of the situation and also to challenge us on our core governing principles as they relate to UTOPIA.

I thought I’d take a minute to respond to UTOPIA.

Citing Sutherland’s emphasis on encouraging free markets, UTOPIA challenges that commitment by arguing that UTOPIA is an essential ingredient in the free market of broadband options and, if Sutherland were truly supporters of free markets, it would equally criticize Comcast and CenturyLink for their government-driven benefits and relationships.

A government program is not part of the free market – ever. UTOPIA is a government program (municipalities [i.e., taxpayers] “own” UTOPIA) and its existence is justified as “infrastructure” – except broadband Internet service isn’t a “public good” and, hence, not infrastructure.

There is a difference between a private company working with state and local governments to overcome zoning and regulatory impediments and government ownership and funding of a not-so-private company. To the degree that Comcast and CenturyLink receive actual tax support in the form of government subsidies or property tax breaks, Sutherland Institute would oppose those agreements.

Quoting from something called the Institute for Self-Reliance, UTOPIA insists that its product provides “a more vibrant market for broadband” than would otherwise exist without it. OK, thanks for the opinion. Our beef with UTOPIA is not the product; it’s the government support of the product.

UTOPIA then accuses Sutherland of violating another of the Institute’s core principles (limited government) because we dared to let Orem residents know what their City Council was about to do and that Sutherland opposed that action. Somehow UTOPIA insists that our efforts are the equivalent of the “nanny state.” UTOPIA writes, “If a handful of Utah cities want to do something on their own initiative and decide what’s best for their communities, who [is] the Sutherland Institute … to say otherwise?”

The problem is that governments do not act “on their own.” Every government in America acts with the consent of the governed. The money being poured into UTOPIA was not harvested from a money tree; it is collected as taxes from real human beings. It was interesting to hear so many Orem residents speaking at the City Council meeting complaining how insulted they were to find out about the proposed property tax increase from Sutherland Institute and not their own elected officials.

Sutherland Institute acts, under federal law, to support the public good. Not only is Sutherland’s voice appropriate, it is obligatory to the degree of our capabilities. To take on the form of a “nanny state,” Sutherland would have to be a government entity – a ridiculous implication that reveals the confusion on the part of UTOPIA: Because it can’t decide whether it’s a private company or a government program, it projects that confusion onto Sutherland Institute.

UTOPIA accuses Sutherland of being “condescending and paternalistic” because we challenge the wisdom and “acumen”  of city managers who support UTOPIA. Evidently, according to UTOPIA, well-managed cities (congratulations) are sufficient justification for cities to do whatever they like with taxpayer dollars. But that’s not how government should operate – a fact that not only challenges the UTOPIA decision but even the entire premise that those cities are well-managed. Sutherland argues that a well-managed city includes responsible and prudent decisions to stay within proper roles of government. Clearly, one of the huge problems to surface in this debate is that government employees think they’re businessmen and confuse private sector enterprises with legitimate functions of government.

UTOPIA challenges Sutherland’s claim that UTOPIA is a “failed” project. We simply point out that failing to meet its construction goals, financial goals, subscriber goals and “take rate” goals while racking up $120 million in debt is, in our opinion, a failure. UTOPIA argues that it’s at halftime in its plans and that the deal was to give it 20 years to succeed – a point we don’t argue because it’s irrelevant to our objections (much like saying Social Security just needs another 50 years to make the math work). Sutherland’s primary objection is that government should not be in the broadband Internet business, period.

UTOPIA then challenges Sutherland on a death scenario: What happens if voters don’t approve moving forward with UTOPIA? What would that decision do to the bond ratings of these participating municipalities? Is Sutherland recommending that cities default on their obligations? Our answer is that cities should pay their debts and not incur more foolish debt. Yes, that means continuing to pay for a foolish decision even though there is no new benefit coming for the payments. In other words, those UTOPIA cities should do just what regular people do when they make foolish financial decisions: Don’t continue to make foolish decisions, don’t spend even more money on foolishness, and pay the debts that have accumulated. And, yes, that means that city managers and councils who made the foolish decisions will look foolish themselves, perhaps even lose their jobs, but that is the nature of public stewardship.

Even if cost-benefit was even an important issue, and it’s not because UTOPIA is a government program, the reality is that all Orem city residents are not realizing a benefit in the cost all pay for UTOPIA. (And, yes, we understand how “public goods” work for taxpayers but, again, argue that UTOPIA is not a public good.)

Lastly, in an attempt to smear Sutherland’s integrity, UTOPIA accuses us of “shilling” for “incumbent telecommunications companies.” Of course, anyone who really knows Sutherland knows we don’t shill for anyone – one of the unique advantages and charms of Sutherland Institute.