Center for Free Enterprise
In addition to seeking an increase in the sales tax to help improve its services, the Utah Transit Authority has doubled the amount of bonuses awarded to its managers since last year.
A total of $1.74 million in bonuses was awarded to 389 employees, for an average of $4,473. Of course, most bonuses fell below that average, because many others were substantially higher: $30,000 to the General Manager, General Counsel, Chief Operating Officer, Chief Communications Officer, Chief Capital Development Officer, Chief Safety Officer, and the Chief Planning Officer. Three other managers received bonuses higher than $20,000, and another 21 were awarded bonuses higher than $10,000. All of this is on top of high base salaries.
The Salt Lake Tribune‘s editorial on this issue focused primarily on the public relations problem that such bonuses has generated. But the problem here is fundamental, not superficial. Throwing so much cash at the upper echelons of a bureaucracy is objectionable not only because it’s allegedly excessive or generates bad press—it’s bad because it’s our money.
Today, April 15, is known as “tax day”—the deadline to file one’s income taxes. We are compelled by the government to furnish detailed, personal information regarding our economic activities for the year 2013, 100 years after the passage of the 16th amendment.
That’s right: this country has had a constitutionally authorized federal income tax for less than half the duration of its existence. Despite its now longstanding existence in America, its ideological proponents include folks like Karl Marx who, in his Communist Manifesto, listed “a heavy progressive or graduated income tax” as one of the central planks of his central planning philosophy.
It’s no surprise that his sympathizers in the progressive era of the early 20th century acted earnestly to see this policy adopted in America. It began, like most new government programs, in modest fashion; the income tax was only a small part of total government revenue. That changed after World War I, when the income tax furnished a significant portion of total taxes. Within a matter of years, it became an irreplaceable and largely accepted method of financing the federal government’s operations.
Part One in the “Dollars and Nonsense” Series. Click here for part two.
In a recent op-ed we highlighted the importance of paying attention, pointing out that government’s actions, whether transparent or deceptive, pose a threat to our liberty. Of all the things we should pay attention to, the budgeting and appropriations process is among the most critical. This, of course, is the process whereby your elected representatives spend your money after confiscating it from you through taxes.
Sifting through and understanding the legislative budgeting process can be complicated as all the relevant information is not necessarily in one place. In an effort to help taxpayers make better sense of where their money is being spent outside of core government activities—and to peel back the curtain on the sausage grinder that is the legislature—we have compiled relevant data from multiple sources into the following document:
In addition to the “base” annual budget for recurring and ongoing expenditures, legislators can request appropriations to expend money on specific spending items in either “one-time” or “ongoing” amounts. When dollars are set aside for a very specific purpose or program we call it an earmark because those funds are reserved for that particular purpose, as opposed to general budget funds for an agency or department that might be used on any number of programs at the discretion of the agency.
President Obama has recently decided to make it illegal to buy, sell, or trade ivory that is less than 100 years old. International trade of “blood ivory” has been illegal since 1989. According to unnamed conservationists, illegal poaching and trafficking have exploded in recent years despite scientific studies showing African elephant populations have generally stabilized across the 35 elephant range states in Africa. So, in an attempt to deal a fatal blow to illegal trafficking of ivory, the president decided to take the 1989 restrictions a step further and deal with the contraband at home that feeds a black market internationally. In recent years he has destroyed the supply of all seized ivory and artifacts and is now further restricting its interstate trade.
These sorts of special interest mandates carry wide popular support because they tap into emotion. This is evidenced by the international public outcry over the routine killing of a genetically compromised giraffe at a zoo in Denmark a few weeks ago. It’s the same with Arctic polar bears, tigers, pandas, gorillas, or blue whales. People place higher emotional value on that which is exotic.
Last year’s convention center subsidy proposal is back, and it passed unanimously out of committee yesterday. Remarks made during the discussion make clear our point, once again, that legislators should not be economic developers.
Trained economists who (claim to) understand market trends consistently fail in their predictions. Why, then, do we place any stock in the predictions of politicians who do not have sufficient training and background to even make an educated guess? More importantly, why do we allow them to use the tax base as a slush fund with which to incentivize certain businesses in hopes (yes, mere hope) that their predictions are correct?
“Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic.”—Frederic Bastiat, The Law
This week during debate over HB 96 (to fund preschool programs using a new “post-performance” funding model), Representative Dan McCay asked a prescient question: “is post performance becoming the new way to grow government?”
The question can be answered in the affirmative. In the case of post-performance funding models for government programs, the critical debate is shifted from whether government should be involved in something to whether the program will effectively meet its goals—effectively surrendering the fight over the former by only focusing on the latter. In other words, addressing efficiency and funding sidesteps and thus ignores the underlying question: does the program fall within the proper role of government?
These creative funding models help progressives (as they’re generally called) shift the debate away from the proper role of government to the effectiveness of government programs in solving social ills. For progressives it is unacceptable that government be constrained to a narrow set of activities; such persons believe that public policy must philanthropically help those in need. Thus they seek to change the question from if to how.
Update: The article has been edited to include reference to a second audit conducted.
We have often argued that government agents are not economic developers, though they often engage in the practice. And despite repeated boondoggles and bad policies, the practice continues.
The latest example comes from USTAR—the Utah Science Technology and Research initiative at the University of Utah. Created in 2006, the Utah legislature passed Senate Bill 75 that allocated $179 million to USTAR along with $15 million in ongoing annual funding. Its purpose, in theory at least, is to “enhance Utah’s economy with high-paying jobs and keep the state vibrant and competitive in the Knowledge Age.”
But like many other economic ideas originating from and controlled by the government, this one’s a dud. A recent audit highlighted severe mismanagement and underperformance on USTAR’s part. Here’s just one of many problematic aspects, as reported by the Salt Lake Tribune:
The most well known case in this regard is the ongoing lawsuit by Hobby Lobby against the contraception mandates in the (so-called) Patient Protection and Affordable Care Act. This company is owned by the Green family, who are devout Evangelical Christians who believe that life begins at fertilization. As such, they object to being compelled to offer health insurance plans that offer all forms of contraception—including abortifacients that prevent a fertilized egg from implanting in the uterus.
Three options are available to the Green family: comply with the law and violate their religious beliefs, break the law and face severe fines, or sell or close the business. Thus, the lawsuit.
Let’s get our biases out of the way first: we’re not fans of the Governor’s Office of Economic Development (GOED). While we all want to see new job creation, a healthy economy, and companies choosing to locate in this state, we emphatically reject the idea that these praiseworthy ends justify whatever means are deemed necessary to obtain them.
This article focuses on those means.
Libertas Institute has obtained and analyzed the minutes of GOED’s Board of Directors meetings since its inception in 2005. These minutes document all of the various incentives GOED has offered to private corporations and other organizations, as well as the votes taken on each.