In my personal interactions, I’m hearing some people talk in apocalyptic terms, wondering if this could be either the beginning of a new Great Depression or even the beginning of the end of the world as we know it. I enjoy listening to the radio show “Marketplace” on NPR, and this week, they had a very interesting article on how many Christians see the recent economic events as sign of the coming “Rapture.” The fact that the Dow dropped 777 points one day fueled the flames of that discussion. It’s a great piece — click the link and either read it or listen to it.

So, I want to know what you think is coming. How bad is the situation for America? You may not think it’s financial Armageddon, but could it be a depression? Or a serious recession? And how do you think Utah will fare in this downturn? We’ve had an economy outpacing the nation for a number of years now, and it still is. But it’s slowly grinding to a halt; the Tribune and Deseret News both reported today that Utah’s job growth is slowing to almost nothing. Soon, it will probably begin to go negative compared to a year ago.

We’re also seeing foreclosure rates in Utah that have risen very quickly this year. This is surprising to me, because I thought Utah was late enough to the housing boom that we weren’t going to see as much of a “bubble” here as in other states. But Utah ranked 12th in the nation for foreclosure rates last month. What do you think? Do we have much of a housing bubble here in Utah?

Post your comments, and let’s start a discussion about all of this. I’m eager to read your thoughts.

There is a difference between looking at the federal problem of illegal immigration and any state’s problems associated with illegal immigrants already living side-by-side with citizens – and this difference, at least in the current public dialogue, isn’t altogether understood by policy makers.

At Sutherland, we have tried to focus on the latter scenario. Given that Utah has zero power over the federal jurisdiction regarding illegal immigration, state policies necessarily must focus on how Utahns cope with illegal immigrants already living here. In this context Utahns have two options: first, we could be unwelcoming, hunt them down and report them to federal authorities until they are all removed, or starve them out until they leave on their own; or, second, we could be welcoming, make the best of a difficult situation, help lift them to the surface of society, and view them as fellow human beings not much different than the rest of us.

The Sutherland Institute has written extensively on this issue and we have chosen the latter path. In fact, we have argued that the authentic conservative position in Utah is the latter path.

Just the other day, two of my Sutherland colleagues presented a recent in-house publication before the Immigration Interim Committee in Park City. The Committee agenda was filled with anti-immigration advocates who had been waiting to be heard by the Committee – and us. While I was not there physically (which was probably a good thing as I’ll explain) my colleagues reported to me that the evening was very contentious when Sutherland stepped to the microphone.

There are two particular points to note. First, retiring State Senator Bill Hickman, primary author of SB 81, was not fond of Sutherland’s conclusions. I should also point out that there was no dispute in the meeting over the findings in our new report – only dispute over our conservative philosophy on immigration. Hickman was particularly dismayed by our position that “we should welcome all people of good will to our state.” This sentiment, he said, he didn’t understand.

Here is the sentiment: as explained, we have two policy options at our disposal – we will be, as a people and a society, unwelcoming or welcoming. Frankly, the choice for us is easy. We have fought two world wars against enemies who employed the tactics of the former option – round up people and starve out people – and that option we are not willing to choose.

A second point of interest during the Committee meeting was State Representative Chris Herrod’s presentation that seemed to be focused exclusively as a response to the Sutherland essay last May. Full of quotes from LDS Church leaders (odd for a public meeting where many non-LDS folks were in attendance) to justify a strict “rule of law” approach, Rep. Herrod’s presentation projected the sentiment of most anti-immigration advocates: what don’t we understand about the word illegal?

Of course, the response is that the rule of law must be reflective of human experience and human nature and, as Sutherland’s May essay explained, the narrow view of anti-immigration advocates in Utah reflects neither.

As policy, the Sutherland Institute sees only one reasonable option, if a primary goal of ours is to make Utah an example of good government to the rest of the nation – welcome all people of good will to our fine state. The federal government with Constitutional jurisdiction over the issue of immigration, legal or otherwise in all its facets, will do what it will do. Utahns, dealt the cards of failed federal policies, must do what we will do – the right thing, the authentic conservative thing, the humane thing, the productive thing – and make the best out of a difficult situation.

For the past three years, the Salt Lake Chamber has been at the forefront of pushing for greater and greater funding for transportation - both highways and transit. The reason for this has been made abundantly clear in all of the Chamber’s prior efforts - the huge funding gap of over $16 billion over the next 20 years that Utahns will face. This continues to be an economic imperative. We must continue to invest in transportation now or accept an underperforming, less competitive economy in the future.

Granted, we have made great strides in obtaining significant transportation funding. In 2006, the Salt Lake Chamber formed the 2015 Transportation Alliance. This business-led effort led to accelerated transportation investment in Utah. Through the efforts of the Alliance, funding was secured for selected projects identified in the 2030 transportation plans in half the normal time.

The most significant Alliance success was the approval by voters of a 1/4-cent sales tax increase in Salt Lake and Utah Counties to pay for additional transit lines, including for light rail lines in Salt Lake County and commuter rail in Utah County. We have also been successful in obtaining the Legislature’s huge ongoing support for highway finding to the tune of over $300 million new dollars annually plus over $1 billion in bond authorization.

So you may wonder, since we have been so successful at getting new money into the pipeline, why is there still such a huge funding gap? The simple answer is inflation. Material costs have skyrocketed, from steel girders to concrete to asphalt. The overall costs of construction and labor have escalated to the point that the majority of the new funding will have been eaten up by the time new construction begins. We are not doing much more than keeping pace with growth.

In addition, because of the higher cost of gasoline, Utahns are driving fewer miles. While this may lessen the pressure on new construction, it also means that fewer gas tax dollars are coming in, leaving fewer dollars for road maintenance, let alone new construction.

Add to all of this the fact that highway and transit funds coming from the federal government are drying up. In a matter of a few short years, states will be left to fend for themselves in funding their transportation needs.

The harsh reality is that in the next 20 years …

• Another one-and-a-half million people will live in Utah.
• Travel demand will continue to increase. While this will increase at an admittedly lower rate, it is still putting us on a course for a transportation meltdown.
• Even at the new increased funding levels, increases in transportation capacity will barely keep pace with travel demand, resulting in a still unmet funding gap.

A severely under-funded transportation system will result in significantly more congestion, reduced worker productivity, and an impaired business environment and quality of life. We will lose our ability to be competitive in a highly competitive world. This scenario is unacceptable to Utah’s business community.

Ongoing Efforts

The business community cannot sit on its hands. Aggressive funding packages must continue to be considered by the Utah Legislature in its 2009 General Session. This should include discussion of additional motor fuel tax increases, a sales tax on gasoline, and some way to tie highway funding to inflation. Congestion pricing is also a viable alternative that should be seriously considered.

The Crossroads of the West is at a Transportation Crossroads. Are we going to be content with past successes or are we going to continue the fight until the job is done? We all need to step up and do what is necessary to keep a strong economy and enviable quality of life. We support a combination of increased highway and transit funding to meet our needs.

Brian King is a trial attorney, and he described his work as largely representing clients who have been denied insurance claims. He has lived in the district for 22 years. He focused most on the balance of power in the Legislature (Dem vs. Rep), public education, public transit, and ethics. He describes himself as somewhat independent, with much that he agrees and disagrees with in both major party’s platforms. On education, he’s alarmed by Utah’s low per-pupil spending, wants to see better teacher pay, and generally wants Utah to invest in education, calling it an infrastructure need. He sees a “basic lack of commitment” to education in this state. He was gratified to see vouchers defeated at the polls. He wants to see Utah children prepared better to deal with the information age and sees that as the most important economic development strategy the state could pursue.

Mr. King feels that if two candidates are equally qualified for an office, voters should give the tie to the Democrat, to try to even out the imbalance of power in the Legislature. He also wants to see better balance between land development and open space preservation, cleaner air, stronger ethics rules in the Legislature, and healthcare reform. On healthcare, he said his experience in insurance law would help him contribute to sensible reforms, especially when it comes to the federal ERISA law and how it governs large employers’ healthcare decisions. On ethics reform, he cited problems that have been in the news this year with specific state legislators as well as his concerns about the new use of omnibus bills at the end of the legislative session and about Utah politicians being allowed to use leftover campaign funds for personal use.

Jeff Morrow is a real estate broker who also teaches marketing at SLCC. He is on the Envision Utah Steering Committee. He grew up in the district and has lived in Chicago, New York, and Washington DC as an adult but has been living back in the district for more than a decade. His main campaign theme is “reclaiming Foothill’s influence,” which is partly a reference to winning this seat back for Republicans and that a Republican can benefit the district more by being part of the majority party and having more influence over policies that matter to the district. He also said it was as if the state capital had moved to Sandy, Draper, or even Utah County, and he wants to increase the influence of Salt Lake City in the Legislature and in his party.

Mr. Morrow also outlined four policy areas he would work on to reclaim Foothill’s influence: 1) Promoting downtown economic development, which benefits all of Salt Lake City. He is troubled by business going to other places, such as Sandy or Ogden, while properties are vacant in downtown Salt Lake. He believes we need to focus on one major downtown for this region, which can be supported with mass transit options for workers like the new FrontRunner commuter rail. 2) Promoting economic development related to the University of Utah, which has been successful at spinning off business enterprises and benefits his district with good jobs. He would work to ensure sufficient funding to maintain the quality of the university. 3) Promoting quality education by reducing dropout rates, addressing the needs of diversity, increasing guidance counselors, providing merit pay for good teachers and increasing the pay of teachers of math, science, and technology. He also agrees with the defeat of vouchers at the polls. 4) Promoting fiscal restraint by placing limits on state spending, coupling economic development with cost controls for state government, budgeting with a longer horizon to avoid surpluses and deficits, and evaluating agencies’ return on investment.

Overall, it was a very cordial forum, with the candidates speaking to and about each other in complimentary, civil tones.

Please post your comments about either candidate, about these forums, the kinds of questions you’d like us to ask, or any other thoughts prompted by this report. We’ll try to report here in the Town Hall about each of these forums as the campaign season progresses.

- Steve Kroes

I enjoy reading different perspectives about state government spending. It is a very complicated issue and when you try to isolate one part, it does not always fit. While government spending increased a lot from 1992 to 2001, you may remember Gov. Leavitt pushed for a budget buffer program where we took on-going revenue and spent it on what have traditionally been one-time projects, namely on-going revenue for roads. This turned out to be a godsend (even though the wisdom of that action was challenged by the educational community with the catchy phrase that we were paving over children).

When the revenue dropped so dramatically after 2001 we were able to pull out that on-going revenue and move it into areas like public education and really soften the cuts they would have otherwise taken. Most states did not have that luxury and the consequent combination of program cuts and tax increases were serious. We were able to use one-time moneys or even some bonding to keep the funding up for the one-time road projects.

Some argued that we should have cut taxes or spent the money on true on-going programs but in hind sight, we did not really grow government with the excess money but used it as a sort of savings account.

I struggle trying to limit government spending with only growth in population and inflation. Let me illustrate. If we lose an engineer working at UDOT because we are not paying enough, his or her replacement may cost us at least the same or even more in today’s employment market. Then we have the loss of experience and cost to train a new employee. I think that growth in incomes should also be included because public employees are such an important part of the services government provides. The Utah Foundation Report, Spending your Tax Dollars: Two Decades of Utah Tax and Spending Trends, illustrates this.

When you put time frames on the figures, you have to assume that the level being spent at the beginning is the right amount. If it is low, then the growth may not be just more spending but a catch-up with where we should be but could not because of funding limits. Analyzing budgets based on categories is also problematic because not all categories have clear lines. For example, adult education – is that part of public education, higher education, corrections, or work force services, all of which have programs that cover adult education.

Having stated my concerns with what can be concluded with the information, I welcome the analysis. There are more meritorious requests than we could ever afford even with major tax increases. I feel very confident with where Utah is going when I see how hard each group fights for more public moneys but they all keep an eye on being in balance and protecting the state from losing its Triple A bond rating. They generally only ask to be treated fairly and I often hear positive reports after the session that is how they felt they were treated.

One of the more often-cited wage measurements is average wage data from the Bureau of Labor Statistics (BLS). That data shows that Utah’s average wages are only 82% of the national average — the culmination of a slow and steady deterioration from the 96% average that Utah once enjoyed in 1981. Several years ago a fellow economist, looking at this data, asked me, “When will this turn around?” Something within that question instantly brought an answer to mind that I hadn’t seen before. My response, “Not in my lifetime.”

You see, I was born in 1958. I am a Baby Boomer. Keep that in mind. As for BLS and how it measures average wages, it is calculated by taking total wages earned in a quarter and dividing by total workers. Pretty simple. This can be done at the state level as well as the national level. In fact, it is Utah’s state average compared against the national average that produces the 82% shortfall. But that simple a calculation implies that all economies are equal. Experience reveals otherwise. Utah, I will show, is unique, and that uniqueness subtly underscores our statistics.

According to BLS, Utah has the highest percentage — 25% — of part-time employment in the nation. The way BLS calculates average wages — which makes no adjustments for full-time or part-time employment — means Utah naturally is going to be negatively impacted. That’s one uniqueness. But the bigger uniqueness comes within Utah’s demographic structure. We are the nation’s youngest state, with the nation’s youngest labor force. To enumerate, 47% of Utah’s labor force (age 16-65) is 35 years of age and younger. No other state tops 40%. The national average is 36%. Utah stands alone.

That national average is Baby Boomer dominated. They are in their prime earning years. Survey a room full of 30-year-olds (a proxy for Utah) and a room full of 50-year-olds (a proxy for the national average) and calculate the average wage. Bet you find the room full of 50-year-olds has a higher average wage than the room full of 30-year-olds, due to tenure, experience, and advancement. That’s the light bulb that clicked in my mind. It’s not so much a wage problem, it’s an experience shortfall.

Baby Boomers have dominated the national statistics from the time they entered the labor force in totality in the 1980s to their yet-to-happen labor force exit. Twenty-five years ago, when we Baby Boomers were the same age as Utah’s perpetually young population, Utah’s and the national averages were nearly equal. As we Baby Boomers aged and Utah’s high birth rate kept it young, average wages diverged as Baby Boomers became experienced and earned more. Unlike the nation, Utah birthed a second baby boom in the 1980s, and those young workers now impact heavily upon Utah’s average wage calculation. The U.S. aged while Utah stayed young. So as time progressed, Utah’s relationship to the nation moved down to 82%. Until the Baby Boomers no longer dominate the national picture, Utah’s wage in relation to the nation’s will not change, “in my lifetime.”

When state policy makers discuss public school funding, three questions commonly arise. First, does money matter? Next, how much money is enough? And, finally, what could schools do with more money?

Does money matter? Research is sometimes cited that shows a weak statistical link between funding and student achievement. Readers of this research then conclude that the amount we spend on public schools makes no difference. On its face, this conclusion is absurd. Why spend any money at all on public schools if the amount makes no difference? A more careful reading of the research makes clear that, while the statistical link to student achievement may be weak, the operational link to services and opportunities to families and students is strong and real. Where there is more money, class sizes are lower, curricular offerings are broader, more counseling and guidance services are available to students, and the list goes on. The expansive effect of funding on services to students is explicit and unambiguous.

How much money is enough? The question is usually posed in terms of adequacy, as in, “What is an adequate education?” This is a good and challenging question, and has its parallels in every part of our society. We ask, “Is our health care adequate?” “Are our cars as safe as they could be?” “Are our children properly protected in our parks and neighborhoods?” “Could children be safer?” In every case adequacy is a judgment, but one we usually make by comparisons. In our schools, do our children have what most American children have? The facts show that they don’t. They are in larger classes. They are less likely to be able to see a counselor. There are opportunities they won’t have in a Utah school.

What could be done with more money? Much can and should be done. Utah’s students are, on average, in the largest classes in the country. We know exactly how to reduce class size, but it will cost. We struggle to keep some of our finest teachers. We can change that, but it will cost. Each year the Utah State Board of Education proposes specific and detailed programs to improve opportunities for students across our state. The proposals are made based on experience of practicing educators and careful review of what works. These proposals always come with a price tag and, when funded, are carefully and efficiently put in place to improve schools. Many are not funded, but some are. Among the programs already funded and implemented: full-day kindergarten for the most challenged children in the state; accountability programs that ensure that parents are informed of the quality of neighborhood schools; educator compensation programs designed to attract and retain highly skilled teachers.

Utah’s education leaders have created one of the most efficient school systems in the nation, with the lowest administrative overhead in the nation and an unparalleled return on our tax investment. But is it enough? Ultimately, the fiscal questions in a system of public schools are answered through the democratic process. Each citizen must respond to the question “What is good enough for the children in our state?” And, like good health care, quality roads, effective law enforcement, good schools are not free.