When Utah created its rainy-day funds, some thought it foolish to save while current needs were so great. What a blessing these funds have been in softening the impacts of the Great Recession! Amendment A's trust fund will benefit current and future generations of Utahns even more.
Amendment A is good, bipartisan policy, and we urge all Utahns to vote for it
The amendment requires the Legislature to deposit a portion of severance taxes into Utah's Permanent State Trust Fund as an investment for future generations. Utah created the Permanent State Trust Fund to receive revenue from the Tobacco Master Settlement Agreement. Since 2008 it has also received limited severance tax revenue.
Mining, oil and gas companies pay severance taxes (when they "sever" oil, gas and minerals from the earth) in addition to property, income and sales taxes that other Utah businesses and individuals pay. By definition, severance taxes can't last forever. There is only so much oil, gas, copper, molybdenum, etc., in the ground. When those resources are gone, severance taxes will also be gone.
Before 2008, the Legislature spent all severance taxes for ongoing programs. Fortunately, an overwhelming majority of Utah voters amended Utah's Constitution in 2008, thereby allowing, but not requiring, the Legislature to save severance tax revenues in Utah's Permanent Trust Fund. However, less than two years later the Legislature stopped investing severance tax revenue in the Permanent Trust Fund and instead went back to spending it all each year.
By requiring the Legislature to save a fixed amount of severance taxes in the Permanent Trust Fund, Amendment A helps guarantee that Utah pays for ongoing programs with ongoing revenue.
The earnings generated by the Permanent Trust Fund are ongoing. Depending on the state's needs, the Legislature can spend the earnings for continuing programs, or reinvest that interest in the Trust Fund. By depositing severance taxes annually, the size of the Trust Fund, and the earnings it generates, will grow steadily.
As long as the Legislature doesn't spend the Trust Fund's principal, the earnings it generates will continue. If Utah continues to spend severance taxes as if they will never go away, at some point we will either need to cut programs or raise taxes. Neither of those options is appealing. By treating severance taxes as temporary rather than ongoing revenues (which they are!) and investing them in the Trust Fund, Utah can avoid either of these painful options.
In emergencies, Amendment A lets the Legislature spend from the Trust Fund's principal, but only in a real emergency. Spending any of the principal requires approval of three-quarters of the members of the Senate and House, plus the governor.
Keeping government spending low and planning for future needs is part of the reason why Utah is perennially the best-managed state in the nation, and why our economy is one of the strongest in the country. Without Amendment A, the Legislature may easily put future generations at risk by raiding severance tax revenues before they go into the Permanent Trust Fund.
If Utahns had approved Amendment A or something like it years earlier, today we would have a billion-dollar trust fund resulting in millions of dollars in ongoing revenues, just as Wyoming and New Mexico have.
Amendment A passed unanimously in the state Senate and with the support of more than two-thirds of the House. We ask all Utahns to join us in voting FOR Amendment A.
Rep. Jim Nielson, R-Bountiful, represents District 19 in the Utah House of Representatives; Sen. Lyle Hillyard, R-Logan, represents District 25 in the Utah Senate; and Sen. Ben McAdams, D-Salt Lake City, represents District 2 in the Senate.