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This is one year that Utah should take a break from tax cuts, and if anything do more to invest in infrastructure to ensure its future prosperity.
The Beehive State is something of a poster child for tax cuts. Utah has cut taxes for three years running. The results? We had a red-hot economy in 2007, with unemployment at 2.7 percent. The boom sent money rolling in to the state treasury. The Rainy Day Fund is expected to reach nearly $400 million in the next fiscal year, enough to give Utah a top credit rating and plenty of cash for emergencies.
Gov. Jon Huntsman chilled out on tax cuts in his proposed budget for next fiscal year, saying he sees no need for them. Several factors buttress this view.
There seems to be little need for the stimulus tax reductions bring. The national economy faces questions, but Utah's was so strong in 2007 that a cooling off would probably be healthy. A less frenetic pace may head off a labor shortage, in the long run bolstering the economic outlook.
The governor's budget predicts that Utah will continue to rank among the best economies in the nation. Unemployment likely will remain under 3 percent, which in most eras would be a reason to break out the champagne and party hats. All in all, there's reason to conclude that just as there's no need to force medicine down the throat of a healthy man, there's no reason to juice up Utah's economy through tax cuts.
The governor also notes that reductions in the state income tax and the sales tax on food kick in Jan. 1. It would be wise to wait and see what effect they have.
But the state coffers seem to be more than adequately filled. We agree with Huntsman that it's time to invest in key areas, to bolster the "pillars of strength" in our state. In fact, we'd like to cheer him on: The state should invest every available dollar in transportation.
The need for better highways and mass transit is undeniable. Utah's population grew by more than 80,000 people last year, and there's no end is in sight. Anyone who's driven in Utah recently has seen how roads are becoming clogged. Traffic congestion strangles economic growth.
The governor's budget includes $220 million in added funding for transportation -- more than a drop in a bucket but only a small splash. Much more is needed. For example, in the Department of Transportation's plan for Utah County alone through 2013, $220 million would pay for only a third of the projects, not counting mass transit or statewide highway work.
It's a very big bucket. And while it's true that other sources help fund transportation projects, the state should pour more into this key area. The right kind of investment now could save money later.
Mark Twain once counseled, "Buy land. They've stopped making it." As the years roll by, property costs generally go up. Subdivisions and shopping centers sprout on what had been empty fields. If UDOT could move ahead faster, Utah would save money in the long run.
Providing for transportation -- building roads and providing mass transit -- is government's core function. And it can do it better than anybody else.
Next year may be a better time for tax cuts or major changes. Waiting will bring greater clarity on a number of important issues. For example, the governor and civic groups are calling for new programs to make health insurance available and affordable for all Utahns. Homeowners are clamoring for relief from rising property-tax bills. The economic picture, for good or bad, will resolve over time. By this time next year, it should be more apparent what the state needs to spend, or what it should return to the wallets of taxpayers.
Right now Utah should focus on efforts that will really pay off. Tax breaks should go on vacation.
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