January 13, 2021
This week Gov. Spencer Cox released his fiscal year 2022 state budget recommendations. Highlights in the news include its overall size ($21.7 billion) as well as new spending on pandemic response ($250 million), public schools (over $600 million in new ongoing and one-time funding) and rural economic development (over $300 million spent across 25 separate rural Utah initiatives).
So, what did the governor’s budget proposal get right, and what is it missing?
What it got right: Fiscal stewardship
One thing that the governor’s budget proposal did right was propose various measures that could help avoid fiscal excess. In a year with nearly $2 billion in new taxpayer dollars to potentially spend, prudent fiscal stewardship via avoiding excess is no simple task. The governor’s budget proposal takes steps in this direction in three primary ways: lowering taxes, avoiding new debt and boosting savings.
Lowering taxes: The governor proposes returning $80 million to taxpayers by increasing tax credits. Enacting regular tax reductions in good budget years helps improve fiscal stewardship by serving as a reminder – to both lawmakers and voters – that funding allocated by the state comes from taxpayers, not the state government itself.
When spending tax dollars, it can be all too easy to forget that most of those funds would otherwise be helping house, feed and educate Utahns, or would be invested in ways that help grow the Utah economy. From that perspective, it might be worth asking whether $80 million in tax relief is too low. After all, that figure represents only 0.4% of recommended state spending in the budget proposal. It seems possible that further tax relief is possible without putting undue pressure on the state budget.
Avoiding new debt: The governor’s budget proposal wisely recommends issuing no new general obligation bond debt, instead recommending that infrastructure be paid for with available revenues. Utah’s experience has shown that well-timed uses of bond debt to fund infrastructure improvements (e.g. road construction) can be a boon to the economy in both the short and long term. However, now may not be the right time for new debt.
When the state has large amounts of one-time funding like it has this year (an estimated $1.2 billion in new one-time funds), using those funds to pay for things like road construction, building construction/improvements, etc., allows the state to continue paying down its debt. Paying down debt in good years improves the ability of lawmakers to use debt during times of deep economic recession – continuing critical infrastructure improvements when demand for construction (and often the price of construction projects) is lower and its value in terms of jobs for construction workers is highest. From this perspective, paying down debt this year in order to have more debt in difficult times is wise fiscal stewardship.
Boosting savings: The governor’s budget notes an increase in state rainy-day funds of more than $150 million for 2021, bringing the total to just under $1 billion, or 13% of the state’s ongoing general and education fund budget. Additionally, the proposed budget would create $667 million in “working rainy-day funds” – spending on infrastructure or capital improvements that could decrease in bad budget years without significantly harming regular state programs and services such as public education, health coverage for low-income families, state parks management, etc.
Having significant fiscal reserves has helped Utah achieve the status of one of the best-prepared states to face the economic downtown brought by the pandemic. Healthy levels of budget reserves do not mean that budget reductions will be unnecessary in hard economic times, but they can help the state avoid the need for sudden and crippling budget cuts to essential government programs and services.
What it needs: An approach to solving deeper problems
One of the deeper problems facing society today is an insufficient understanding among Americans (and Utahns) of what citizenship and political leadership require in our system of rights, responsibilities and representative government.
Citizens must learn to respect and defend basic rights such as religious freedom, free speech, and equal protection of the law, even in instances in which those rights are protecting those they disagree with. We must understand that when others lose basic rights, it jeopardizes the rights of everyone else. Elected leaders must also understand and accomplish the practical and symbolic responsibilities of their office at least as much as they fulfill their political responsibilities. It’s vital for them to accept the critical role that principled compromise plays in a government tasked with representing a people as diverse and varied as ours.
The violence and rioting we’ve seen from various segments of the American people in the last year is a symptom of insufficient civic education. When people understand and respect the responsibilities of citizenship and serving in elected office, and are properly taught to cherish the values of democracy – including equality, freedom, strong civic institutions and the rule of law – they do not turn to violence in the face of injustice or unfavorable political outcomes. Rather, they engage passionately and constructively with their fellow citizens and in our electoral and policymaking systems to effect change. From Abraham Lincoln to Martin Luther King Jr. to Ruth Bader Ginsburg, American history is full of people turning away from violence and instead engaging America’s political and governance systems to improve American democracy while strengthening the republic.
The state budget is an important part of the process to restoring rigorous and effective civic education in its rightful place in schools and society. This is, by nature, a long-term task. But that fact only emphasizes the need to start moving down this path.
Future budget proposals from Utah’s governor should begin charting that course.
As lawmakers continue the process of determining the state’s fiscal priorities, we should recognize the need to address the deeper problems – such as insufficient civic education – that are sowing division. The more we put our money where our mouth is, as it were, the better hope we have for the future of our state and our nation.
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