Tax and Budget

Utah Poverty Advocates Call for Fairer Taxes and Restoration of Public Revenues

Salt Lake City - Today (September 26, 2019) at the Utah State Capitol, a group of two dozen non-profit organizations that provide services to and advocate on behalf of Utah's low- and moderate-income population released a letter to the Tax Restructuring and Equalization Task Force. The letter calls on the Task Force to consider the impact on low-income Utahns as they consider tax changes that could, in the worst case scenario, make Utah's tax structure more regressive and less able to generate the revenues needed to make critically important investments in education, public health, infrastructure, poverty prevention, and other foundations of Utah's future prosperity and success. 

The text of the letter and the list of signatories appears below (and is accessible as pdfa pdf at this link): 

 Open Letter to the Tax Restructuring and Equalization Task Force (TRETF)

Tax Reforms for Low- and Moderate-Income Utahns

September 2019

Dear Senators, Representatives, and Other Members of the TRETF:

We, the undersigned organizations that work with and advocate for low- and moderate-income Utahns, urge you to consider the impact on the most vulnerable Utahns of any tax policy changes that you propose this year.  

We urge you to address the two major challenges facing our tax structure as it impacts lower-income Utahns:

1)     Utah’s current system of taxation is regressive, in the sense that it requires lower-income Utahns to pay a higher share of their incomes to state and local government than it asks of the highest-income Utahns, even though about 100,000 lower-income Utah households are forced into – or deeper into – poverty by their tax burden every year. 

           ITEP Utah WhoPays graphic

This regressivity could be addressed with tax policy changes including the following: 

  1. A Utah Earned Income Tax Credit (EITC) to allow the working poor to keep more of what they earn.
  2. Remove the sales tax entirely from food, as 34 other states have done.
  3. Remove the state income tax on Social Security benefits for low- and moderate-income seniors; Utah is one of only 13 states that tax these benefits.
  4. Restore the income tax rate to 5% or increase it above that level. (Because the majority of all Utah income is earned by the top quintile of taxpayers, and because the Utah income tax more closely matches Utah’s income distribution than any other tax, most of such an income tax rate increase would be paid by the top-earning 20% of Utahns, while most lower-income Utahns are shielded from income tax rate increases.) 
  5. Disclose and evaluate the effectiveness of tax expenditures (revenue lost to the taxing system because of tax deductions, exemptions, credits, and exclusions); Utah’s lack of transparency in this area of taxation earned us a C grade from the Volcker Alliance, a leading evaluator of state budgetary practices founded by former Federal Reserve chairman Paul Volcker. 

 

2)     For decades, Utah’s overall level of taxation relative to the state’s economy has been dropping, as illustrated in the chart below from the Utah State Tax Commission:

USTC Tax Burden chart

The unfortunate result is that we are left with a tax structure that fails to generate sufficient revenues to allow our state and local governmental entities to properly meet their responsibilities and fulfill their appropriate role in a number of critical areas, including the following:

  1. Education: Utah ranks last nationally for our per-pupil investment in K-12 education. Particular areas of weakness include:
    •  · Teacher turnover rates are higher than the national average. One study found the majority of new teachers leave within seven years.
    •  · Pre-K: Utah ranks 36th for our percent of lower-income 3- and 4-year-olds attending pre-school, private or public. We are also 1 of only 7 states not to have statewide public preschool programs. (The state offers only small-scale programs in a limited number of local school districts.) Yet we know from multiple research sources that every dollar invested in high-quality day care and preschools produces at least a $7 return on that investment in future years. 
    •  · Kindergarten: Only a third of Utah kids participate in full-day kindergarten, less than half the national average, because local school districts can’t afford to offer it. Voices for Utah Children estimates that it would cost at least $75 million to offer full-day K to all Utah kids (not including potential capital costs). 
    •  · According to the January 2019 report of the Utah Afterschool Network, the need for after-school programs exceeds the supply many times over, leaving tens of thousands of children completely unsupervised, meaning they are less likely to do their homework and more likely to engage in unsafe activities.

In addition to these input measures, Utah is also lagging behind in terms of several significant educational outcome measures:

    •  · Our high school graduation rates are lower than national averages for nearly every racial and ethnic category, including our two largest, Whites and Latinos.
    •  · Among Millennials (ages 25-34), our percent of college graduates (BA/BS or higher) lags behind national trends overall and among women.

Moreover, Utah is in the midst of a demographic transformation that is enriching our state immeasurably but also resulting in majority-minority gaps at a scale that is unprecedented in our history. For example, in our education system:

    •  · Our gap between White and Latino high school graduation rates is larger than the national gap. 
    •  · Education Week recently reported that Utah ranks in the worst 10 states for our growing educational achievement gap between haves and have-nots.
    •  · We are beginning to see concentrations of minority poverty that threaten to give rise to the type of segregation and socio-economic isolation that are common in other parts of the country but that Utah has largely avoided until now.

B. Infrastructure: Utah’s investment has fallen behind by billions of dollars. This is another area where the Volcker Alliance ranked Utah in the worst nine states for failing to track and disclose to the public the dollar value of deferred infrastructure replacement costs. In addition. Internet infrastructure is lacking in some rural counties, limiting their integration into Utah’s fast-growing economy.

C. Mental Health and Drug Treatment: Utah was recently ranked last in the nation for our inability to meet the mental health needs of our communities, according to a recent report from the Kem C. Gardner Policy Institute. Underfunding of drug treatment and mental health services costs taxpayers more in the long run as prison recidivism rates rise because the needed services are not available. Estimates are that Utah meets only 15% of the need for these vital, life-saving services. 

 D. Affordable housing units fall 41,266 units short of meeting the need for the 64,797 households earning less than $24,600, yet the annual $2.2 million state allocation to the Olene Walker Housing Loan Fund has not changed in over two decades, despite inflation of over 60%. Among extremely low-income renter households, 71% pay more than 50% of their income for housing, which is considered a severe housing burden. This year, the Olene Walker Housing Loan Fund used up most of its annual $14 million budget at its very first meeting of the fiscal year (made up of both state and federal funds). 

E. Health care: Our rates of uninsured children are higher than national averages – and rising – especially among the one-in-six of our children who are Latino. In Utah 35,000 or 5% of White children are uninsured (national rank = 36th place), compared to 31,000 or 18% of Latino children (rank = 46th = last place in 2017). 

 F. Disability services: The 2018 annual report from the Utah Department of Human Services’ Division of Services for People with Disabilities reports that the wait list for disability services grew to a record level of 3,000 individuals last year and that the average time on the wait list is 5.7 years. 

 G. Seniors: The official poverty measure undercounts senior poverty because it does not consider the impact of out-of-pocket medical expenses. A 2018 study found that seniors spent $5,503 per person on out-of-pocket medical expenses in 2013, making up 41% of their Social Security income. (For most seniors, Social Security is the majority of their income, and it makes up 90% or more of income for 21% of married couples and about 45% of unmarried seniors.)  

 H. Domestic Violence: Although Utah's overall homicide rate is significantly lower than the national average, domestic-violence-related homicides constitute over 40% of Utah's adult homicides compared to 30% nationally. Several thousand women continue to be turned away annually from crisis shelters because of lack of capacity. Additional state funding would make it possible to substantially increase the capacity of overburdened crisis shelters. We are one of the few states without domestic violence services in every county.

Given the large number of urgent needs that are not being met because of our chronic shortage of public revenues, we are concerned that Utah is missing the opportunity to make critically important upfront investments now that would allow us to reap substantial rewards in the future, and that our most vulnerable neighbors will pay the greatest price as a result.

Thus, we urge you to consider the ways that the state tax structure impacts single parents, disabled adults, low-income children, seniors on fixed incomes, and other vulnerable population groups as you decide on your tax restructuring and equalization proposals.

 Finally, thank you for all the time and effort you are personally investing as volunteer members of this important Task Force, and for all that you do for our state through this and other forms of public service. 

Yours truly,   

American Academy of Pediatrics Utah Chap.

Catholic Diocese of Salt Lake City

Coalition of Religious Communities

Community Action Program of Utah

Community Development Finance Alliance

Community Rebuild

Comunidades Unidas

Crossroads Urban Center

Epicenter

First Step House

League of Women Voters Utah

Legislative Coalition for People with Disabilities

ICAST

Habitat for Humanity of Southwest Utah

Moab Area Hsg Task Force

Provo Housing Authority

RESULTS Utah

Rocky Mountain CRC

Self-Help Homes, Provo, UT

Utah Citizens’ Counsel

Utah Coalition of Manufactured Homeowners

Utah Community Action

Utah Food Bank

Utah Housing Coalition

Utahns Against Hunger

Voices for Utah Children

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The 2018 Legislative Session is over. Voices for Utah Children worked tirelessly to advocate for Utah’s children and families, and we had some great wins and some painful losses. Nonetheless, Utah children and families are in a better place now than they were in January.

Health

WIN: HB12 Family Planning Services Amendments (Rep. Ward)

  • This legislation was championed by a number of Voices allies (YWCA, Utah Women’s Coalition, ACLU, and Planned Parenthood) to provide family planning services to low-income individuals through Medicaid

WIN: HB325 Primary Care Network Amendments (Rep. Eliason)

  • This bill will direct the Department of Health to get a waiver to expand current PCN services for adults receiving coverage from the state. 

DEFEATED: SB48 Medicaid Waiting Period Amendments (Sen. Christensen)

  • This legislation would have re-imposed a five-year waiting period on legal immigrant children before they could enroll in health coverage. Our advocacy work helped ensure this bill never got heard

DEFEATED: SB 172 Medicaid Waiver (Sen. Hemmert)

  • This bill would have done away with Medicaid’s children’s health benefit and EPSDT. This would have caused 2,600 parents and former foster youth to lose their health coverage. Voices  defeated it in the House Health and Human Services Committee and again in the House Revenue and Taxation Committee.

LOSS: Keeping Kids Covered – 12-month continuous eligibility on Medicaid

  • Rep. Ward appropriation requested wasn’t prioritized high enough to receive funding this year.

LOSS: Dental hygiene check-ups for kids in public education settings

  • Dental Code for use by dental professionals providing hygiene check-ups for kids in public education settings - did not get prioritized high enough to be funded for this year - but we’ve strengthened our relationship with a huge association of highly motivated dental hygienists!  

LOSS: HB472 Medicaid Expansion Revisions (Rep. Spendlove)

  • HB472 seeks a waiver, that is highly unlikely Utah will receive from the Trump Administration. This waiver would provide Medicaid benefits to eligible individuals below 95% of the federal poverty level.

The Utah Decides Ballot Initiative is now our last hope to get Medicaid expansion done in 2018.

Early Childhood 

LOSS - HB319 Early Care and Learning Coordination Amendments (Rep. Chavez-Houck)

  • A priority bill to form an Early Childhood Commission for better governance and coordination among agencies offering services to Utah’s youngest kids (0 to 5).

WIN - HB380 Utah School Readiness Initiative Amendments – (Rep. Last)

  • With a close collaboration with United Way of Salt Lake, this bill will continue the school readiness program, Pay-for-Success. Since 2014 this has provided thousands of at-risk kids in Salt Lake county with high-quality pre-school.

WIN - SCR11 Concurrent Resolution on Awareness and Treatment of Maternal Depression and Anxiety (Sen. Zehnder)

  • With the efforts of the Maternal Mental Health Coalition, this resolution energized and inspired story-sharing and education on maternal mental health.

WIN: SB161 Nurse Home Visiting Pay-for-Success Program (Sen. Escamilla)

  • This legislation will fully fund the Nurse Family Partnership by putting it forward as a Pay-for-Success Program.

Juvenile Justice

WIN: HR1 House Resolution Urging Restorative Justice in Utah’s Education System – (Rep. Sandra Hollins)

  • Resolution to encourage the use of restorative justice practices in Utah schools

NOT A WIN BUT NOT A LOSS: HB132  Juvenile Justice Modifications (Rep. Snow)

  • Updates to last year’s big juvenile justice reform effort - we fought hard with our allies (ACLU, Libertas Institute, YWCA, Racially Just Utah) to keep the changes to a minimum. This bill gives school a limited amount of time to update their programs to comply with HB239 from 2017.

WIN: SB198 – Public School Disciplinary Action Amendments (Sen. Anderegg)

  • This legislation requires the Board of Education to produce an annual report looking at law enforcement and disciplinary action in schools. This data will be helpful as we work to reduce racial disparities in school discipline and work to build a system that produces better outcomes for all kids.

Tax and Budget

NOT QUITE A WIN BUT OH SO CLOSE: HB57 Utah Intergenerational Poverty Work and Self-sufficiency Tax Credit (Rep. Westwood/Sen. Vickers)

  • This bill would have created a $6 million Earned Income Tax Credit (EITC) for 25,000 working families identified as being in the Intergenerational Poverty (IGP) cohort by the state Department of Workforce Services. These families, which pay tens of millions of dollars in state and local taxes every year, would have been able to keep more of what they earn with a tax credit averaging $240 (and up to $600 maximum). This legislation received unanimous support in both House and Senate committees, passed the House, and received a 22-4 vote on 2nd reading in the Senate. But on the final day of the session, leadership decided to leave it out of the final tax package.

NOT QUITE A WIN BUT COULD HAVE BEEN A LOSS --SCHOOL FUNDING

  • The most notable fiscal outcome of the 2018 Legislative Session was a deal between legislative leadership and education funding advocates. The compromise deal included two big choices:
    • Investing up to about $350 million in new education funding dollars – which should move Utah up one position in the national rankings for per-pupil K-12 funding, from 50th place to 49th if it is fully implemented.
    • Shifting who pays these new dollars in a way that unfortunately more negatively impacts poor and middle class families. The Our Schools Now initiative proposal that was set aside in favor of this compromise would have raised over $700 million mostly from an income tax increase paid by the top 20% of Utahn (those who earn over $115,000). The compromise shifted these funds to come from more regressive gas and property tax increases.

LOSS: HB 148: House Bill 148 Tax Revisions- Sales Tax on Food (Rep. Quinn)

  • Sought to eliminate the state sales tax on grocery food items (currently 1.75%) and make up for the $88 million in lost revenue by slightly increasing the general state sales tax rate from 4.7 to 4.92%. One underappreciated benefit of this tax change would have been to shift 20% of the $88 million, or $17.6 million, off of state residents and onto tourists and out-of-state residents who purchase Utah exports.  The bill passed the House but was killed by the Senate Revenue and Taxation Committee.

WIN: Two Significant Intergenerational Poverty (IGP) bills

  • HB 326 Intergenerational Poverty Initiative (Rep. Redd) establishes a one-time $1 million grant program for local IGP initiatives.
  • SB 162 Intergenerational Poverty Matching – Education Savings Plan (Sen. Vickers) establishes a $100,000 matching grant program for IGP families that invest in a Utah Educational Savings Plan for their children's post-secondary education. 

VUC leg summ p1 graphicVUC leg summ p2 graphic

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New Economic Benchmarking Report Finds Utah Ahead of Arizona in Most Key Metrics of Economic Opportunity and Standard of Living

Salt Lake City, May 6, 2021 - Voices for Utah Children released today the fourth in its series of pdfeconomic benchmarking reports that evaluate how the Utah economy is experienced by median- and lower-income families by benchmarking Utah against another state.  This year's report, authored by Taylor Throne and Matthew Weinstein with support from interns from the University of Utah Department of Economics, compares Utah to its southern neighbor, Arizona.  Utah and Arizona have a nearly identical proportion of working age adults (18 to 64 years), increasingly diverse populations, and ready access to outdoor recreational opportunities here in the American Southwest.  The findings in this year's report shed light on some of Utah's greatest strengths as well as where we can continue to improve. 

Voices for Utah Children's State Priorities Partnership Director Matthew Weinstein commented, "The main takeaways from this report and the others in the series are that Utah's economic successes put us in a position to make the new upfront investments we need to make now -- in education, public health, poverty prevention, and closing majority-minority gaps -- so that we can achieve our true potential and follow in the footsteps of states like Colorado and Minnesota that have become high-wage states and achieved a higher standard of living, and do it in such a way that all our children can have a better future."  

The report release presentation took place online and can be viewed at https://fb.watch/5jZBVxpKOY/ . The presenters included both Taylor Throne and Matthew Weinstein as well as a special guest, David Lujan, Director of the Arizona Center for Economic Progress, to share the Arizona perspective on the report. 

 

Utah's Top Economic Advantages: Hard Work & Strong Families Allow Utah to Enjoy High Household Incomes and Low Poverty 

Utah enjoys a higher real median household income than Arizona, ranking #11 nationally, although there are significant gaps between the median wage of different racial and ethnic groups.  Utah's higher incomes are due largely to our high labor force participation rates and our preponderance of two-worker (often two-parent) households.  

med house incomea

 LFPR sex

Ut Mn hrly wage plus

Utah Has Lower Poverty Rates Overall But Still Suffers from Large Racial/Ethnic Gaps 

pov rates

child poverty rates

adult pov race

child pov race

single parent families

single fam race
Educational Attainment: Utah Ahead of Arizona But Falling Behind the Nation

The charts below from our latest benchmarking report compare Utah, Arizona and the nation as a whole on educational attainment. Historically Utah was well ahead of the nation, but more recently evidence has mounted that the younger generation of Utahns is not keeping up with the nation's gains at the level of higher education.  Moreover, there are stark racial/ethnic gaps in both states and the nation as a whole. 

Ut Mn educ attainment 

Utah's high school graduation rates are at or below national averages for most racial/ethnic categories, including our two largest groups, Whites and Latinos. 

HS grad rates

We're also very concerned that Utah's gap between high school graduation rates for Whites and Latinos is larger than nationally. 

HS grad rate gaps

  The chart below illustrates the way that Utah's younger generation of adults has fallen behind the higher education attainment of the Millennial generation nationally.

higher ed race ethn grp

higher ed race ethn grpa

Can Utah Learn Any Lessons from Arizona's Strengths?

Besides Arizona's #11 rank for equal gender wage ratio (while Utah ranks #49), Arizona has more of its children in full-day kindergarten, has a lower 10th percentile hourly wage, and higher productivity.  Arizona's higher 10th percentile hourly wage is likely due to their higher minimum wage, although they do have more people earning poverty level wages overall.  Meanwhile, Utah has fewer people earning poverty level wages overall, but those at the 10th percentile for hourly wages earn less than their Arizonian counterparts. 

min wage

pov level wagesa

gender wage gap

kindergarten

 

Summary of Key Findings

 Ut Mn big chart 1 econ oppty

 

Ut Mn big chart 2 std of liv 

The full 56-page report is pdfavailable here as a pdf download.  

Policy Implications

Racial/Ethnic Gaps

Racial and ethnic gaps remain a major challenge in the nation overall, and Utah and Arizona are no exception. Disparities in Utah between minority racial & ethnic groups compared to their White non-Hispanic peers are evident in high school graduation rates, wages, gender pay gaps, poverty rates, and uninsured rates. Addressing these gaps through an upfront investment in education would likely increase educational attainment, wages, and standard of living overall and would therefore contribute to reducing racial and ethnic gaps in the future.   

The Link Between Education and Income

The link between education and income is well-established. States with higher education levels generally have higher levels of worker productivity, wages, and incomes. In the current comparison with Arizona, Utah’s higher education levels make for higher levels of wages and income. The lesson for Arizona would be raise education levels to raise the state’s standard of living. The same applies to Utah, where the Legislature has struggled to turn seemingly large dollar increases in education funding every year into increases in real per-pupil investment sufficient to get Utah out of last place in the national ranking.

The latest data from the Census Bureau reports that Utah remains in last place in per-pupil education investment at $7,628, with Arizona only slightly better at $8,239 and 47th in the nation (for FY 2018). While Utah has done well for its meager investment levels, achieving impressive gains in educational performance as measured by NAEP 4th and 8th grade math and reading scores (see Figure 31, page 25), will we be able to continue to advance while remaining in last place?  

While Utah “does more with less” in education compared to other states, we have growing challenges to address. Utah has racial/ethnic education gaps which are larger than the national average, for example for Hispanic and American Indian high school graduation rates (see Figure 33, page 26). Utah’s pupil-to-teacher ratio is 22.9, ranking 48th while the national average is 16 (see Figure 22, page 21). Moreover, Utah teacher pay has also fallen over the past 50 years by 1.8% while nationally teacher salaries have increased 6.7% (see figure 24, page 22). 

At the college level, Utah historically was always ahead of the national average for attainment of bachelor’s degrees and above. But Census data show Utah’s lead shrinking relative to the nation with each successive generation, to the point now that Utah millennials (ages 25-34) are behind their peers nationally, despite relatively generous state support and low tuition levels.

Can Utah Become a High-Wage State?

For many years, economists have debated whether Utah is a low-wage state, as the Utah Foundation discussed in their 2008 report, “Is Utah Really a Low-Wage State?”[1] That report argued that our seemingly low wages were explained by our younger demographic profile and lower cost of living. While this report does not examine how wages intersect with age demographics, Utah ranks 29th in median hourly wages, compared to 41st in 2004 (see chart below).  When adjusted for our low cost of living, Utah’s median hourly wage in 2019 was $19.17, just 16 cents lower than the national level. These data seem to demonstrate that Utah has gone from being a low-wage state a generation ago to middle-wage status today, a considerable accomplishment.

UT rank in median wages

One question Utah leaders may now wish to consider is, is that good enough? Should we declare, “Mission Accomplished”? Or is Utah in a position, like Colorado and Minnesota before us, to become, over time, a high-wage state and set our sights on taking the necessary steps today to achieve that goal over the years and decades to come? 

Similarly, how do we include those earning the lowest wages in the gains Utah has made and will potentially make in the future?  Utah is not even a half percentage point lower than the national share of workers earning poverty level wages (see Figure 55, page 38) and lags behind the nation’s 10th percentile wage, ranking 30th (see Figure 54, page 37).  Even as the state with the lowest income inequality ranking in the nation (see Figure 45, page 31), Utah suffers from a tremendous gap between low-income workers and the rest of the income scale.

The main lesson that emerges from the Working Families Benchmarking Project reports comparing Utah to Colorado, Minnesota, Idaho and now Arizona is the following: Higher levels of educational attainment translate into higher hourly wages, higher family incomes, and an overall higher standard of living. The challenge for policymakers is to determine the right combination of public investments in education, infrastructure, public health, and other critical needs that will enable Utah to continue our progress and achieve not just steady growth in the quantity of jobs, but also a rising standard of living that includes moderate- and lower-income working families from all of Utah’s increasingly diverse communities.

 

MEDIA COVERAGE OF THE BENCHMARKING PROJECT:

KUTV-2:  https://kutv.com/news/local/utah-vs-arizona-new-report-shows-utah-leads-neighbor-in-most-economic-categories

Facebook Live Event discussing the report overall joined by David Lujan, Director of Arizona Center for Economic Progress at Children's Action Alliance: https://fb.watch/68E_JarLMT/

Facebook Live Event focusing on women in higher education, the gender pay gap, and income equality with panelists: Dr. Susan Madsen, Founder and Director of the Utah Women & Leadership Project; Marshall Steinbaum Ph.D., Associate Professor at the University of Utah's department of Economics; and Gabriella Archuleta JPP MPP, Policy Analyst with YWCA Utah.  https://fb.watch/68FoEVvGwY/

Facebook Live Event focusing on Utah's economic success and economic development strategy with panelists: Howard Stephenson MPA, former Utah Senator; Phil Dean MS MPA, public finance senior research fellow at the Gardner Institute; and Thomas Maloney PhD., Professor, Department of Economics, University of Utah. https://fb.watch/6r25O5rdDd/ 

Facebook Live Event focusing on education in Utah from pre-school to higher education, focusing on educational attainment & closing racial and ethnic gaps with panelists: Carrie Mayne, Chief Economist for Utah System of Higher Education; Andrea Rorrer PhD., Director of the University of Utah's Education Policy Center; and  Anna Thomas MPA, Senior Policy Analyst at Voices for Utah Children.  https://fb.watch/7iKYaR9Zy4/

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