By Scott Jenkins
Senate Majority Leader
Our success in weathering the great recession had more to do with what we did between 2003 and 2008 than anything we did during the recession itself. We should begin preparing for the next down-turn by carefully positioning ourselves as we did last time.
That’s why we need to override the governor’s veto of SB229. It’s not personal; it’s just smart fiscal policy.
You may remember, after the 2001 — 2002 recession, the Utah Legislature invested cash in roads rather than borrowing money at high interest. Between 2003 and 2008, cash funding for road construction went from $80 million to almost $800 million. Legislators did so consciously.
Instead of building all the temporary surplus into ongoing programs we created what we sometimes call a working rainy day fund — a source of revenue to which the state could go if/when things got bad again.
And aren’t we glad we did.
The first thing we did when Utah faced a growing revenue shortfall in FY2009 was take cash out of transportation and use it to shore-up other programs ($35 million in HB2005, 2008 Second Special Session).
Cash funding of transportation again became crucial in FY2010, when then-Gov. Jon Huntsman and then-Lt. Gov. Gary Herbert proposed increasing the motor vehicle registration fee. Revenue from this fee is designated for transportation.
Because we had other revenue in transportation, the Legislature could take the available revenue out of transportation, replace it with the motor vehicle registration fee, and spend it on other general government programs ($39 million in SB239, 2009 General Session).
A third time — in FY2011 — the state used transportation cash for other budget areas — this time higher education and the National Guard. Legislators moved $113 million in sales tax revenue from road construction to new buildings at Utah Valley University, Dixie State College, Salt Lake Community College as well as Armory upgrades and repairs (HB440, 2010 General Session).
We could do this because between FY2003 and FY2008 we began spending cash on infrastructure for which most other states were borrowing.
When the economy hit bottom in 2008, we used the cash to stabilize other government priorities and programs. Utah was able to take advantage of our bonding capacity, a great credit rating, and historically low interest rates to bond for roads projects.
We were grateful to be able to keep construction jobs going during the economic downturn.
Had we built the 2003-2008 surplus cash into government programs, we would have had to cut those programs’ budgets instead.
But now we’ve maxed-out our credit cards. Next year we’ll be at our self-imposed ceiling equal to 85 percent of the constitutional debt limit. The one-time money we borrowed for roads will largely be spent. And the formerly discretionary cash we set aside for roads will be committed to paying back our loans.
Unlike the federal government, we don’t print money and we won’t continue to borrow.
As our economy revives, we should begin again to set-aside a portion of that growth for cash investment in infrastructure and rebuild our working rainy day fund. Careful, forward-looking, conservative fiscal policy is one thing the Utah Legislature does right and I hope each citizen would support us in that endeavor.
Originally published in the Standard Examiner, 5/4/11.