Herbert decries sales-tax earmark to transportation
Veto override • Governor says committing 25 percent could hurt other state programs.
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Gov. Gary Herbert said Thursday that legislation earmarking a portion of sales-tax revenue for transportation is "bad policy" and could deprive other state programs, particularly education.

"I just simply believe it's bad policy to earmark, particularly this large of a portion of the general-fund budget, to transportation. It would be inappropriate to earmark anything of this size," Herbert said during his monthly KUED-TV news conference. "I just think it's unwise for the Legislature to come with a preconceived notion of transportation at that level of funding."

But the governor's veto of SB229 appears in jeopardy of being overridden by the Legislature next week, when it meets in a rare override session.

The measure was aimed at dedicating 30 percent of the growth in sales tax — an estimated $60 million, beginning next year — toward road projects. Herbert said that, should it take effect, $1 of every $4 in sales tax collected by the state would be earmarked for road projects.

That presumption could make it harder to fund other state programs, including higher education, health, social services and prisons, Herbert said.

"Having flexibility — having the ability to come into session and look in real time at what are the issues of the day and then prioritize accordingly — is good budgeting practice," he said. "That's why I stepped into this despite the overwhelming passage. I think there's been a little groupthink on this."

Senate President Michael Waddoups, R-Taylorsville, said $1 of every $6 in sales tax now goes to roads, but there are additional needs, so the bill bumps it up to 25 percent. But lawmakers' hands wouldn't be tied, Waddoups said. Legislators can dip into the funds as they see fit, and they have dipped into road funds in recent years to pay for other programs.

"What the governor is telling you — and no one seems to be listening to — is it makes it harder for him to budget, not us," Waddoups said.

That's because Herbert is supposed to follow current tax laws when he submits his recommended budget to the Legislature in December, but legislators can change the rules.

"It's helpful for us, and it makes it harder for him and he doesn't want to do it," Waddoups said.

Late Thursday evening, Herbert sent a letter to legislators reiterating his opposition to the override.

"Bottom line: SB229 creates NOT ONE NEW DOLLAR of funding," he wrote. "It simply creates a super-priority for transportation. Economic tides can turn quickly and the State of Utah must be fiscally agile to safeguard both our priorities and our resources."

Failing to invest in roads might lead to an increase in the gas tax, said the bill's sponsor, Sen. Stuart Adams, R-Layton.

Herbert said that is a false assumption, and he opposed a gas-tax increase during the legislative session and still does.

"I would have vetoed [a gas-tax hike]. Our fragile economy right now would not warrant that," the governor said. "It's not about a gas tax. I believe that's a red herring."

Leaders in both the House and Senate are confident they have the votes to override the governor's veto when they meet next Friday.