The Coming Battle Over Tax Increases/Spending Cuts In Utah

They ain’t taxes if we call ‘em fees, right? At least, that’s how many members of the political class see it.

As the St-Ex reports, the State of Utah is facing a budget shortfall of somewhere around $650-$850 million. Politicians must be longing for the heady days of ’05-’07, when figuring out how to spend multimillion- and billion-dollar budget surpluses were among their biggest headaches.

Here’s how economic cycles work in government. When times are good, you grow government as much as possible. It’s easy and gratifying for politicians to do so. Times are good for taxpayers, so they don’t pay much attention to government growth.

Politicians get to play hero by doling out money to as many of the perpetually outstretched hands as possible. The willing media plays this up (i.e. spending someone else’s money to make yourself look good) as altruism. Some of this bread cast upon the water comes back buttered in the form of campaign contributions and other perks. During these times, politicians are even known to occasionally throw out the bone of a small tax cut from time to time.

When lean times hit, as they inevitably must, politicians find themselves in the unenviable position of cutting spending. State politicians, that is. Federal politicians increase spending instead. They call this “stimulus,” which is similar to what my farmer neighbor says about the stuff he spreads on his fields in the spring. It smells similar too. Only his, uh, fertilizer actually helps grow a productive crop.

During austere times, some politicians inevitably argue, as does state Sen. Stuart Adams as quoted in the St-Ex article, that “There is only so much you can cut” from the budget. You see, increasing spending brings the politician a lot of friends. These fair-weather friends (and their lobbying dollars) dry up when spending is cut.

The natural alternative is creatively increasing taxes. It’s so much easier to look longingly at the pocketbooks of people you will never know than to tell people with whom you’ve developed a relationship that their funding is being reduced.

But ‘tax increase’ is the phrase that must not be uttered by politicians, because it tends to anger constituents. That can mean popularity challenges, perhaps even to the point of having to worry about being re-elected.

The Salt Lake Chamber of Commerce, which has proven itself to be a reliable supporter of big government, has “offered its budget plan, outlining what it called “targeted” fees.” SLCoC President (and former Utah Senate President) Lane Beattie says the plan includes a 10-cent/gallon fuel tax increase and yet another tobacco tax increase. Others also want to roll back the 2006/7 sales tax decrease on unprepared foods.

Gov. Gary Herbert is talking tough against tax increases at present. He says, “With the down economy right now, raising taxes would have a dampening effect on economic growth.”

Herbert has more incentive to not raise taxes than many members of the state legislature. Although he served as lieutenant governor for over four years before assuming the governor position when Jon Huntsman, Jr. left to become ambassador to China, Utah voters don’t know Herbert very well yet. He will face voters to keep his assumed office in a special election just under 12 months from now.

This next legislative session will be a major factor — perhaps THE major factor — in determining how voters feel about Herbert. While legislators in ‘safe’ districts can get by with raising taxes, Gov. Herbert knows that he probably can’t. At least, not this session. And probably not in 2011 or 2012 either, if he hopes to be re-elected in the 2012 regular election.

This may pit the governor against the legislature. The budget shortfall has to be made up somewhere. If cutting spending becomes too painful to endure and tax cuts are too politically unpopular, be on the lookout for California style book cooking on a smaller scale.

It doesn’t take a crystal ball to predict that the dependent class will be on full parade during the legislative session decrying the evils of ‘heartless’ and ‘severe’ budget cuts. The competition between members of this class in the halls may resemble a roller derby. But most players will be competing with the real giant — the UEA-PTA team.

For Utah political hacks, the 2010 legislative session will likely be a great spectator event.