Unlike in recent years, Utah’s state government is not projected to end the fiscal year with a surplus. Instead, revenues are expected to be about $950,000 less than projected. That may be little more than a rounding error in a $29.5 billion operating and capital budget, but it’s far less than last year’s projected $3 billion surplus.
Consequently, Gov. Spencer Cox has no big tax cut built into his yearly budget proposal, which he unveiled this week.
Last year, he proposed lowering the state’s flat-rate income tax from 4.85% to 4.75%. State lawmakers did him one better, passing a final package that lowered it to 4.65%.
But this year, Cox’s proposed budget is devoid of any substantive tax relief. Lawmakers have placed a constitutional amendment on the November ballot to remove the education earmark from the income tax and, as a sweetener, have coupled that with a measure to remove the state’s sales tax from groceries, which would amount to a $200 million or so tax cut. Otherwise, revenues have become precious as interest rate hikes slow economic activity.
But without the distraction of tax cuts, the hard work of governance can take center stage. That is, so long as the economy doesn’t take a serious turn for the worse.
Cox calls his latest budget “Utah Home,” and he hopes that has a literal meaning. Home ownership, specifically for first-time buyers, and his plan for state-funded incentives, is what the governor termed “the big one,” as he discussed his budget with the Deseret News.
It’s a worthy focus, even if its resolution rests primarily with city and county governments. That’s where planning and zoning takes place. It’s also where issues such as high-density housing and minimum lot sizes can decide political careers.
Cox has a goal of incentivizing the construction of 35,000 new starter homes in Utah by 2028. He sees this as a market void — something neither local governments nor developers find attractive to build.
He would endeavor to fill this void through a combination of financial assistance to homebuyers, and the introduction of a state-financed bank that would provide low-interest loans to developers for bringing infrastructure — sewer, water and electricity, primarily — to the state’s approximately 190,000 empty lots, many of which have no access to such things.
“Sweat equity” programs, giving credit to homeowners who can build parts of their houses themselves, also would be boosted, as would a community land trust fund and money for innovative starter home ideas. Cox has appointed former state Rep. Steve Waldrip to coordinate it all.
The governor makes good arguments for why homeownership is important. He calls unaffordable housing the greatest threat to prosperity over the next 20-30 years. Owning a home is key to wealth creation and civic involvement, he said. It can even help solve a projected decline in the state’s school-age population.
“So many young people don’t want to have kids until they can own a home,” he said, following up with a thoughtful question. “What does it mean if we have an entire generation of Utahns who never owned a home? What does that mean 50 years from now?”
His concerns are echoed by many experts. Writing for Forbes.com, Lawrence Yun said the positive effects of homeownership go far beyond mere economics. “Research on the subject has found that, other things being equal, children of homeowners do better in school (higher test scores and lower antisocial behaviors),” he wrote. “Lower crime and lower drug usage were among the findings for the children of homeowners.”
But homeownership isn’t the only housing issue vexing the state today. Cox also wants to focus on helping the homeless, leading a statewide effort to fill what he calls gaps in services. In addition to incentivizing more behavioral health workers, and adding shelter space and intermediate housing, he would establish a parallel court system focused on providing mental health and addiction recovery services for the unhoused.
This, too, is a worthy idea, so long as it doesn’t deprive society of the justice due to those who are guilty of serious crimes. But this initiative, too, would require significant support from other government leaders.
We were particularly disappointed that no elected official from Utah County — a place consistently reluctant to provide homeless services — attended the governor’s press conference to announce this effort earlier in the week.
But that was, perhaps, an unintended symbol of the challenges ahead. Cooperation, persuasion, old-fashioned cajoling and even political pressure will be needed to bring about much of the governor’s budget agenda.
Cox said he already has had many meetings with the League of Cities and Towns, local governments and developers regarding starter homes. He has met with state lawmakers to hammer out goals and reconcile philosophies.
This is the type of hard work that leads to positive outcomes.
Like the rest of us, Utah’s political leaders can’t always predict economic conditions. Last year’s surpluses have evaporated into a more-or-less flat revenue picture. State coffers are prepared for a worse scenario with healthy budget balances and rainy day funds. No one knows if those will be needed.
But there is no shortcut for the hard work of hammering out solutions to the state’s biggest problems. In Washington, politicians often prefer to posture rather than to engage in such things. States don’t have that luxury, which is a good thing.