tax restructuring and equalization task force · other programs funded by sales tax. • because of...
TRANSCRIPT
TAX RESTRUCTURING AND EQUALIZATION
DEFINING THE
PROBLEM
• Due to Utah’s rapidly growing population and shifting demographics, there are increasing demands on the General Fund and other programs funded by sales tax.
• Because of shifts in the economy, growth in sales tax revenue is not keeping up with the needs of our growing state.
Sales tax is capturing a declining share of total consumption.
• Revenue silos limit the flexibility needed to address structural funding imbalances as they arise.
FACTOR #1
• A growing state places additional demands on the state General Fund.
GENERAL FUND PROGRAMS
• Air Quality
• Medicaid
• Transportation*
• Public Safety
• Recreation
• Support for Children, Disabled, and Elderly
• Homelessness and Affordable Housing
*Transportation receives a portion of its funding through General Fund Revenue Earmarks
POPULATION TRENDS
• Between 2010 and 2018, Utah was the fastest growing state in the nation
• Utah grew by 14.4%, or nearly 400,000 people
2,200,000
2,300,000
2,400,000
2,500,000
2,600,000
2,700,000
2,800,000
2,900,000
3,000,000
3,100,000
3,200,000
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10
20
11
20
12
20
13
20
14
20
15
20
16
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-5,000
5,000
15,000
25,000
35,000
45,000
55,000
65,000
75,000
85,000
95,000
Tota
l P
op
ula
tio
n
Po
pu
latio
n C
ha
ng
e
Total
Change
Natural
Increase
Net
Migration
Total
Population
SIGNS OF SIGNIFICANT GROWTH
920,000
940,000
960,000
980,000
1,000,000
1,020,000
1,040,000
1,060,000
1,080,000
1,100,000
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Housing Units in Utah
15,000,000,000
16,000,000,000
17,000,000,000
18,000,000,000
19,000,000,000
20,000,000,000
21,000,000,000
22,000,000,000
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Vehicle Miles Traveled in Utah
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
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Recreation Visitors to Utah's
National Parks
FACTOR #2
• Growth in General Fund revenue is not keeping up with the needs of our growing state.
CHANGES IN U.S. CONSUMER SPENDING PATTERNS
73%
40%
27%
60%
20%
30%
40%
50%
60%
70%
80%
1947 1960 1968 1970 1980 1990 2000 2005 2010 2012
Goods
Services
UTAH SPENDING PATTERNS
34%
66%
% of 2017 Personal Consumption
Services
Goods
SALES TAX BASE AS A PERCENT OF THE UTAH ECONOMY
0%
10%
20%
30%
40%
50%
60%
70%
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Sa
les
Tax B
ase
as
a %
of
GD
P
GENERAL FUND SHARE OF THE BUDGET IS DECLINING
Transp. (fuel)
General (sales)
Education (income)
Local (property)
0%
10%
20%
30%
40%
50%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sh
are
of
Sta
te B
ud
ge
t
STATE REVENUE AS A PERCENT OF THE UTAH ECONOMY
0%
1%
2%
3%
4%
5%
6%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total Sales Tax Income Tax Gas Tax Other Revenue
Total
Income
Tax
Sales
TaxGas Tax
Other
Revenue
FACTOR #3
• Revenue silos limit the flexibility needed to address structural funding imbalances as they arise.
FUNDING SOURCES, OTHER THAN THE GENERAL FUND, ARE SILOED
Local Revenue
Education Fund
General Fund
Transportation Fund
GasTax
IncomeTax
SalesTax
PropertyTax
Medicaid
Transportation
General GovernmentHigher
EducationPublic
Education
PublicEducation
Public Safety Social Services
ALMOST ALL HIGHER EDUCATION FUNDING HAS BEEN SHIFTED TO THE EDUCATION FUND
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% o
f H
igh
er
Ed
Ap
pro
pri
atio
ns
General Fund Education Fund
LEGISLATIVE RESPONSE
PREVIOUS EXAMPLES OFPROACTIVE PROBLEM SOLVING
• Moved to a calculation based on average price per gallon, with minimum and maximum average price
• Indexed minimum average price
Gas Tax
• Required collection by remote sellers and marketplace facilitators
Remote Sales – Response to Wayfair
• Set a rate floor for five years
• Established a rate calculation that holds constant the property tax share of the minimum basic program year after year
Minimum Basic Tax Rate
POSSIBLE SOLUTIONS
Do Nothing
Expand Tax Base
Eliminate Silos
Add New Type of Tax
