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Front Page » August 20, 2009 » Carbon County News » Watchdog group evaluates Huntsman's fiscal performance
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Watchdog group evaluates Huntsman's fiscal performance

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Elected in November 2004, Gov. Jon Huntsman assumed office in January 2005, and resigned in August 2009 to become United States ambassador to China.

The state experienced several changes during Huntsman's four and one-half years as governor, pointed out the Utah Taxpayers Association.

Huntsman's single most positive fiscal accomplishment was reforming Utah's individual income tax, indicated the independent public policy watchdog group.

Prior to the reform initiated by Gov. Olene Walker, Utah had a bracketed income tax system with a top marginal tax rate of 7 percent.

Since the state's tax brackets were not indexed to inflation, Utahns experienced automatic increases of several million dollars per year.

While Utah's top marginal rate had been 7 percent or more since the early 1970s, most states were reducing rates.

Utah's 5 percent individual income rate currently registers less than the national average of 5.3 percent, noted the association. The national average includes nine states that impose no individual taxes on ordinary income.

With the elimination of brackets and the indexing of thresholds and credits, Utahns no longer experience automatic tax hikes due to inflation induced wage increases, continued the independent public policy organization.

Since credits are phased out as income increases, progressivity is established even though there is only one tax rate.

According to the association, the changes during the Huntsman years also included:

•The state's sales tax on food was reduced from an average rate of 6.5 percent to 3 percent.

•The sales factor on corporate income tax apportionment was increased from 33 percent to 50 percent.

•The state's rainy day fund grew to $418.5 million, up from $146.1 million in 2005.

•Taxes were reduced by $400 million annually.

•Severance tax revenues exceeding certain thresholds began to be deposited in the state's permanent trust fund.

•State income tax spending per kindergarten to 12th grade student grew slightly faster than inflation.

•Sales tax exemptions for business inputs were expanded.

•By most measures, state government spending grew slightly faster on an annualized basis during the Huntsman years than it did during the Leavitt-Walker years.

•Transportation reform, including congestion pricing and side-by-side prioritization of roads and rail projects did not go very far.

•The state budget became more dependent on federal sources.

However, the situation may be a temporary phenomenon, noted the taxpayers association.

•Transportation funding became more reliant on general fund dollars, peaking at nearly $800 million in 2008.

•Government spending grew slightly faster during the Huntsman years than during the Leavitt-Walker years.

Total state spending increased at a faster annualized real per capita rate during the Huntsman years at 1.5 percent versus 1.1 percent. However, education and general fund spending grew at a slower negative rate at -0.6 percent versus 0.7 percent.

The higher total growth rate and the lower education/general fund growth rate may be attributable to significant increases in federal funding in 2009 and 2010, explained the watchdog group.

In 2008, Utah received about $2.5 billion in federal funding. The level increased to $3.2 billion in 2009 and 2010.

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August 20, 2009
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