The 2016 Real State of the State
Last night, Governor Gary Herbert addressed government officials and members of the public to deliver his annual “State of the State” address. He touched on job creation, education, air quality, self-reliance, and health care, among other issues. Below, we present the real state of the state—one that does not rely, in whole or in part, upon politically popular issues that poll well with key constituencies.
What is the state of the state?
Governor Herbert posed this question to the assembled audience, answering it in the affirmative—that the state is strong, and even “outstanding.” Nevertheless, the state faces significant challenges that were not addressed in the speech, and need serious scrutiny in order to protect the rights of each Utahn. We would disagree with the Governor’s assessment; while it’s easy to point to the growth of the market as a leading indicator of the government’s performance, this data point is peripheral to the underlying issues where the state is not performing very well.
While it is true that new jobs are being created in the state, and that Utah’s economic growth is performing better relative to other states, this is an inadequate metric to determine overall economic health—specifically, the state of the job market itself.
Governor Herbert noted that unemployment in the past few years has declined, and now stands at 3.5%. This low number relies on narrowly defined—and highly misleading—data points that are not indicative of the overall employment rate. Utah’s unemployment rate is higher than was stated.
Those who employed are likewise shackled by the overbearing nature of the regulatory state, most specifically in the form of occupational licensure. Half a century ago, only one in 20 workers in the United States needed the government’s permission in order to work in their chosen field. Today, nationwide, that number is around one in every three workers.
A detailed report of occupational licensure throughout the nation ranks Utah as the “12th most extensively and onerously licensed state”—a statistic that is not found in any press releases discussing the state of Utah’s economy. As the report concludes, “Utah’s low- to moderate-income workers could enjoy better employment prospects if the state reduced onerous or needless barriers or removed them completely.”
A sound economy?
Governor Herbert claimed that Utah has the “most fundamentally sound economy,” and yet just last year the legislature passed (and the Governor signed into law) two significant tax increases, despite a significant surplus in tax revenue.
The property tax increase was particularly problematic, and increases the annual property tax of a $250,000 home by roughly $50. Billy Hesterman, vice president of the Utah Taxpayers Association, said in response that the Governor “could have protected Utahns from higher taxes but decided to increase the tax burden on the state’s families and businesses. To think such tax increases right now are necessary begs the question if the governor and the Legislature really were as fiscally responsible in creating the state budget as they claimed to have been.”
The Legislature also passed a law last year allowing counties to raise their sales tax rate. The measure was defeated in several counties, and was successful in others—creating a widening disparity in the tax base and funneling tax revenue to the Utah Transit Authority, whose bloated budget and highly controversial spending practices suggest that the prudent course of action is to withhold further funding, pending significant changes.
The Tax Foundation’s annual report also suggests that our tax burden needs improvement—Utah ranks 12th for the best individual income tax rate, 16th for sales taxes, and 19th for unemployment insurance. Overall, Utah ranks 9th best compared to other states.
Education as an investment
Governor Herbert asked the audience, if they were going to only remember one thing, to remember this: that “education is the most important investment we can make in Utah’s future.”
Unfortunately, government in education has becoming highly industrialized, restrictive, and top-down heavy. The Common Core standards championed by the Governor have removed innovation and empowerment from the classroom, preventing teachers from dynamically responding to the needs and interests of their students. Undue emphasis has been placed on being “college and career ready,” rather than equipping children with a liberal education to be pioneers of their own destiny. And central planning is rampant in the state, whether from the Legislature or the Utah State Office of Education; empowerment and experimentation is abandoned in favor of top-down, controlled and regulated standardization through which children are corralled.
Further, the highlighted increase in education funding ignores the fact that very little of it makes its way to the classroom. For example, a 2013 funding increase for government education was funneled to the retirement system and health care coverage of education employees, rather than increasing classroom funding.
Additionally, a two-year effort to allow families to retain more of their tax dollars to education their own children—a direct expenditure not diluted by bureaucracy and waste—has proved unsuccessful, with the Legislature defeating the proposed bill in both years. Throwing more tax dollars at the government education system means little if it is not leading to a demonstrated increase in efficiency, innovation, and quality.
After repeated, unsuccessful attempts to promote Medicaid expansion in the state of Utah—a result that has been a proverbial “budget buster” in other states—the Governor is now seeking a compromise solution to the problem of health care affordability and access for Utahns who don’t qualify for free coverage.
Calling for “constructive, practical solutions” to the problem, Governor Herbert suggested “roll[ing] up our sleeves and work[ing] together to actually do something.” We caution elected officials who think that a new program or policy will substantially resolve the many complex issues at the heart of the health insurance problem. We encourage, to the contrary, that the free market be protected such that market forces can—as they do in other sectors of the economy—increase quality and decrease costs.
Unfortunately, these options are rarely, if ever, discussed or proposed. Utah’s health care system is mired in regulations and policies that violate market principles, increase the ultimate cost to the patient, and exacerbate the very issues needing to be resolved. Forcing taxpayers to fund new or expanded entitlement programs is a band-aid at best; long term solutions are needed in order to ensure that health care is affordable for, and accessible by, all Utahns. That will properly come not through government largess, but through the free market.
“If we truly believe in limited government,” Governor Herbert stated last night, “then now is the time to show it.” He called out the Legislature for the large number of bills being proposed, and called on lawmakers to do “something entirely different”—finding areas of state law that “can not only be updated and improved, but where possible, deleted altogether.
We welcome all who wish to see Utah’s voluminous laws and regulations minimized (combined, they exceed 10 million words in length). To that end, it would be encouraging to see the Governor not just call for the Legislature to repeal laws, but for him to veto more than a small handful of bills each session.
Expressing concern that we “can’t wait for the next Zenefits or Tesla to come along,” Herbert encouraged a forward-thinking approach to revising state law to prevent such situations in the future. Uber/Lyft, Airbnb/VRBO, and other businesses have likewise been targeted by the government.
More recently, a local vehicle manufacturer has been caught up, forcibly prohibited from selling its vehicles to Utahns. The need is clear for a significant revamp of state law, yet influential forces and legislative inertia are unlikely to allow the result the Governor seeks; protectionism and crony capitalism—even in conservative Utah—will surely perpetuate a government that is anything but limited.
Family proximity and property rights
“A high quality of life,” Herbert stated, “should mean parents don’t have to watch their children leave and go to another town or another state because there are no jobs available where they live.” While the Governor’s focus in this remark highlighted the need for “an economy strong enough that [children] always have the choice [in employment],” another problem prevents many young adult children from living near their parents: property rights.
Affordable housing is an issue in many communities; restrictive zoning ordinances and land use regulations exclude certain residential structures and drive up the cost of housing while suppressing its supply. Many property owners do not desire apartment complex near their home, and therefore use city ordinances to prohibit such projects from entering their community. Property rights are violated in the name of property value, and home owners alienate property development that would provide their young adult children an opportunity to affordably live nearby.
Many of these issues stem from an underlying problem with property rights in Utah. Specifically, the state’s constitution does not protect the right of an individual to actually use their property, and thus residents can organize and, through political pressure, forcibly deny the property owner from doing certain things on the property—such as building a high density housing complex.
Criminals, Not Patients
Absent from last night’s remarks was any mention of medical marijuana—and rightly so, perhaps, given the Governor’s recent media misstep. And yet, assessing the “state of the state” necessarily entails reviewing the ways in which the state is affecting the individuals which comprise it.
Sarah Ellett, like many Utahns, is terrified of the Division of Child and Family Services agents taking her children away because she uses cannabis for her sick young daughter—who thrives when administered this medication. Yet DCFS has opened an investigation, potentially triggering that outcome, and/or a law enforcement investigation into her illegal activity.
Enedina Stanger, charged with a felony for using medical cannabis, has now fled the state and is forced to live apart from her family, her caretakers, and her support system. She, too, is worried about DCFS and anxious to find a resolution that will allow her family to return home.
This unconscionable legal limbo treats patients as criminals, threatening peaceful people with fines and jail time—and in some cases, removal of their children—simply for trying to be healthy and survive. The “state of the state” for such individuals is anything but “outstanding.” The urgency of the plight of so many Utahns in this situation calls for a swift resolution through passage of legislation designed to remedy the law and restore justice.
It is easy to focus on accolades and accomplishments. Our task is to focus not just on the seen consequences of government actions, but more importantly on the unseen consequences rarely noticed and often ignored. The metrics by which we judge government should not be manipulated or narrowly tailored; a broad view of the impact of government on each Utahn is necessary to understand the true “state of the state.” Much more work is needed to protect the lives, liberty, and property of all Utahns. We look forward to seeing the legislature support—and the Governor sign—proposals we’ve offered this year to do exactly that.