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We've come a long way, baby

Recently, we’ve written about the significant increases in state tax revenues and expenditures. Click [here] to read about increased education expenditures, [here] to read about state revenue increases, and [here] to read about increases in rainy day fund balances.

However, it was just a few short years ago that the talk was about increasing taxes, not cutting taxes. In February 2003, the Salt Lake Tribune editorial board, arguing in support of tax increases, wrote the following:

“. . .Kent Michie, big time banker and the state of Utah's official expert on managing its debt, has called for increases in the state's big four taxes -- income, sales, property and gasoline -- in order to balance its books and cover its debt. He also suggests a temporary hike in the state's property tax to replenish the state's "Rainy Day Fund," a reserve that has dwindled from $120 million to only $20 million in just a few months.”

This is an example of the intense pressure to increase taxes in 2002, 2003, and 2004. Several legislators proposed bills to increase individual income taxes, property taxes, restaurant taxes, phone taxes, state sales taxes, local sales taxes. Some of these proposals included increasing rates while others proposed expanding bases. Fortunately, a majority of legislators rejected these calls for massive tax increases.

Some taxes were increased, but the 1987 disaster was avoided
The spending lobby argued that taxes should be increased because taxes were cut during the good times of the 1990s. However, the tax cuts of the 1990s were in response to the massive tax increases in 1987.

In the mid-1980s, the state economy tanked as Geneva Steel and Kennecott Utah Copper shut down (temporarily in Kennecott’s case) and construction on the Intermountain Power Project was completed. Back then, the state was a lot smaller so these events tremendously impacted the state's economy. The Legislature responded by increasing taxes by $150 million: $50 million in individual income taxes, $50 million in sales taxes, $40 million in gas taxes, and $10 million in cigarette taxes. These tax increases would be more than $550 million in today’s economy.

When the economy tanked a couple of years ago, the state was in a better position to deal with the revenue shortfall. The state had built up a rainy day fund of $120 million and had been using $150 million in cash for state roads and millions more in state building projects. The rainy day fund was tapped, and the cash appropriation for roads was reduced to $64 million for three straight years. (Roads, not K-12 education, took one for the team during the recession.)

With the exception of not annually adjusting individual income tax brackets for inflation, the state successfully avoided raising general taxes, but the state did raise some selective taxes during the last recession, including tobacco, cigarettes, beer, cable and satellite TV, and other taxes. The total net tax increases were as follows:

FY2003 (passed in 2002 session) $13.8 million
FY2004 (passed in 2003 session) $28.4 million
FY2005 (passed in 2004 session) $15.6 million

A lot of people deserve credit for resisting the call for massive tax increases during the last recession, but Speaker of the House Marty Stephens deserves special recognition.

Whatever happened to Marty Stephens? He just disappeared from politics.

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