"Education has been my number one budget priority since I've been in office, and we've done very good by education." Governor Herbert
NARRATOR: PBS Utah presents The Governor's Monthly News Conference. An exchange between Utah reporters and Governor Gary Herbert.
GOVERNOR HERBERT: Good morning.
REPORTERS: Good morning governor.
GOVERNOR HERBERT: Great to see you all here. As you know this Monday will be the beginning of the next legislative session. A lot of issues to be talked about, education, how we're going to fund education. Not only public but higher education. Health and human services, transportation, issues that we typically take on every year, so nothing will change in that regard, but as some of you know already, we've had the announcement go out that the first topic of discussion will be repealing Senate Bill 2001, known as the Tax Reform, Tax Modernization Bill.
As we've gone through this process the people have in fact not agreed with the tax reform proposal based on the referendum and the signatures that have been gathered, and rather than have a cloud hanging over the legislative session as far as what does that do to our budget, what's the long-term ramifications, in talking with the senate president and speaker of the house yesterday, we decided the best course of action, reflecting the will of the people is in fact to go back and push the restart button. Go back to square number one, repealing the Senate Bill 2001 and starting over. I think we've learned some lessons in this process and I think that will in fact serve us well going forward.
I'd like to make just a couple of comments, one the legislature took on a very difficult task as you can imagine again this is a complex, it had tax increases here, and tax decreases there, and even though there was a net tax cut of $160 million, the tax increase on food was one that the people I think really objected to, but taking on tax reform, I would like to give kudos to the legislature. It's not an easy thing to do, I've mentioned here before, I think they'd rather have taken a beating than have to take on that task.
But to their credit they didn't shrink from the challenge, tax modernization, tax fairness, equity, reflecting our modern economy is something that needs to be done. In fact that will continue to be a challenge for us, going forward. We'll repeal it but we still have that issue that's there before us that needs to be addressed in some form or fashion sometime, and sooner rather than later. So I give credit to the legislature for taking on a very difficult task. Sometimes doing the right thing, is not necessarily the popular thing.
Secondly, I think it's an opportunity for those running for governor, who in fact have been critical of this process. It's time for them to step up and let the public know what are your ideas on tax reform, how are you going to address the new modern economy and what are your proposals for tax reform? I think the public deserves to hear what their ideas and thoughts are in that regard, and so would hope that they would in fact engage in this conversation as the campaign for this great office of governor.
So with that I think we're actually doing the right thing in the right way. We've got to lead and we've got to bring those who we lead into some type of consensus if we're going to do anything on tax reform, and tax modernization. That will be the challenge for all of us going forward. With that, what questions do have for me today?
REPORTERS: Which one killed it?
BEN WINSLOW, FOX-13: Did you blink?
GOVERNOR HERBERT: I don't know what that even means, blink?
BEN WINSLOW, FOX-13: Did you blink in the face of a referendum, is this basically, backing down from the referendum?
GOVERNOR HERBERT: I don't think blinking, I think we're accommodating the will of the people. Blinking puts it in like, we're in some kind of big fight here. We're all Utahns, we want good policy on everything including tax policy, so the fact that we have pushback, means we've not done our job as far as convincing the people this is the right thing to do, or the right way to do it. Maybe all of the above. So it's a matter of saying okay let's see if we can't come back together, working together and find the right tax policy that everybody can embrace.
BOB BERNICK, UTAHPOLICY.COM: What do you think killed it, the sales tax on food seemed to me to be really the big one.
GOVERNOR HERBERT: I think you're right Bob, I think the increase of the sales tax on food was really probably the catalyst that drove this issue. Even though there was an attempt to say look, you get a $40 million credit now with not paying the tax on food with all the things we're going to be doing, and redirecting moneys to the poor, you'll have $135 to $140 million benefit, it didn't translate, people didn't agree with that solution and so I think that's the biggest issue and we'll see what comes in the future. Clearly the need to have structural balance, making sure we have fairness and equity in the system is a needful thing, and that quest will continue. It's not going to go away so we just need to see what we can do to bring people together and find a better way that everybody can agree to.
REPORTERS: So that was one of--
LISA RILEY ROCHE, DESERET NEWS: Is that better way going to come during this upcoming legislative session or is it going to take more time? That's one of the concerns I know a lot of people had, is there really wasn't a lot of time, once the proposal was in place to comment on it.
GOVERNOR HERBERT: Yes so I think the legislature worked very hard, even the session here a year ago, 45 days. Working very hard with the house and the senate. They couldn't come to an agreement, on things and concerns were raised at that time even though we had 17 public hearings and 62 hours of commentary and discussion. It was not enough. I think who knows what the legislature will do, my crystal ball is a little foggy in that regard, but my belief would be it's probably not only pushed the reset button but maybe the pause button, and let's take a breather, and let's reflect upon where we've been and what we're trying to do and see if there's a better way to do it. I don't know if there's going to be a lot of energy to say let's jump right back into the fire here and create some new policy.
MICHAEL ORTON, CAPITAL PRESS CORPS: Is that easier in light of traditional over budget and what I mean by that is, it easier since you have a surplus and--
GOVERNOR HERBERT: Well the good news is we are financially stable, and the good news is we have the best, healthiest, the most diverse economy in America. So we've got a lot of good things going for us. This was an attempt to say we can see around the corner here we have some troubled waters, and is there an ability for us to be proactive before we hit the troubled waters and minimize whatever problem would occur? And I think you know we have a couple of years before that problem becomes a real acute problem. Whether it's a crisis or not I don't know what the definition will be.
But trying to be forward thinking is hard for politicians to do, and we have a hard time getting past the next election. So the visionary aspect of what this was attempting to do. I think we ought to appreciate. But I think people take a little bit of a pause now and say let's see where this leads to and address more of this maybe through summer study. Maybe in 2021 session maybe come back and see if there's something we have some consensus. Hey new governor. and so we'll see what the new governor has to say about this and what they would like to do in leading out.
LIZ ADEOLA, PBS UTAH: There are a lot of strong emotions in this entire process I read some of the tweets that were sent to you. They were very biting, in your news release, you said we're not foes what do you want to say to those people who gathered to sign these petitions?
GOVERNOR HERBERT: You know we have a great process here in the state of Utah which allows the legislature to propose and pass legislation, there's the ability for the governor to veto, it's a check and balance. But there's also the will of the people. We all in a republic think that we should represent the people. It's a republic though because there's some areas that are difficult to understand, and we expect people that we elect to go there and do the deep dive analysis do the research necessary to make the right decision in creating the right policy. It's not a democracy that's a little bit too emotional.
But we do have a check and balance with the people, they can put a referendum in place, they can put initiatives in place, and so the voice of the people have spoken. It has put a cloud over the legislative session, and I think wisdom would say, you know what, something's amiss here let's push the reset button. Let's not have this cloud, we don't want to have a divisive argument in the state of Utah for the next 10 months, that won't be helpful for anybody, and so let's take a look at it. We have probably some time and let's see if we can take a look at, a fresher look and bring the public along and see if we can come up with a better proposal.
REPORTERS: Are you surprised with how much--
LISA RILEY ROCHE, DESERET NEWS: What would you have done differently in terms of getting tax reform through, you initially proposed something very different than what we ended up with. You wanted to see sales tax rates dropped, and that rate broadened over a wide range of services. We ended up with something very very different than that. What would you have liked to have seen?
GOVERNOR HERBERT: Well my proposal was a little different, it was in fact to reflect the shifting of the marketplace from a product as a market to a more service-oriented market which has been, we've been warned about this by our economists, CPAs, those that are experts in this aspect of government, since Olene Walker's time. Saying that eventually it's going to catch up to you if you don't make some modifications. We already have 60 services that are taxed by the way. This is not a new idea. But broadening the base, and lowering the rate, you know absolute fairness would say every service should be taxed--
ANDREW ADAMS, KSL: Were you surprised by, oh I'm sorry.
GOVERNOR HERBERT: Yeah let me finish, thank you.
ANDREW ADAMS, KSL: No problem.
GOVERNOR HERBERT: Every service should be taxed, and then drop the rate, if every service was taxed, you might have a sales tax rate of less than 1%. You might pay more for a haircut but you'll pay a heck of a lot less for your automobile, your furniture, bigger ticket items. So again, but in politics, it's the art of the possible. What will in fact the market bear? What will the people be able to understand and support? You go through these processes all the time, sometimes you get it right, sometimes you don't. You know we're all prone to make mistakes and when we find out and learn from our mistakes, pick ourselves up and start over again. So it became a lot more complex than what I originally envisioned, but there was a good-faith effort by the legislature to do it right and I applaud them for their efforts, now you.
ANDREW ADAMS, KSL: Sorry were you surprised with how much support lined up behind the referendum in a short amount of time?
GOVERNOR HERBERT: A little bit, clearly with the grocery stores getting involved in the business and again accentuating only one aspect of the tax reform, the increase on the tax on food. You know we never took off the rate, or took it all off because there was issues with local governments and things, it was a debate when it was taken off in 2007 or lowered the rate and that's why we didn't take it off entirely. It's, that would kind of put the magnifying glass on this and the belief that somehow we're going to hurt the poor which seemed to be the rallying cry. Even though the belief was that not only would the poor not be hurt but they would get a significant benefit, not only in overcoming the cost of food, sales tax on food but programs can be helping them to in fact be given skills and educations. Through our workforce services, get better training, the old adage of we're trying to help you learn to fish not just give you a fish, so there's aspects of it that were good, not understood and we didn't do a good job of explaining and so again I think pushing the pause button, reset let's go back and bring everybody together and see what we come up with on another effort is probably wise and prudent and what the public wants us to do.
REPORTYERS: You signed the bill--
BOB BERNICK, UTAHPOLICY.COM: Of course but, if you had your druthers would you have included the sales tax on food or would you have said no, I don't want to do that.
GOVERNOR HERBERT: My emphasis was on in fact broadening the base, and lowering the rate and I think we could have done that really with services, but again not everybody sees the world like Gary Herbert does and that's the beauty of our system, everybody kind of weighs in and we find consensus so build coalitions and finally get hopefully enough votes to pass the policy.
BOB BERNICK, UTAHPOLICY.COM: In this new program, whatever happens you may not even be in office, but would you recommend because of what's happened here that they try to put the sales tax back on food again?
GOVERNOR HERBERT: You know I've never thought that was good policy, I think there's an easier way to do things, for example for those who are below a certain income level you ought to give them a card, rather than a pre-bate or a rebate which seems to be confusing to people and not convenient, if everybody that qualified got a card, when you watch your groceries you have this card that would allow you to in fact have immediate deduction of the sales tax on food. So there may be some new ideas, new technology that will allow it to be a little more convenient, less confusing. So I think it certainly ought to be on the table, whether that's the right answer or not, remains to be seen but there's just a lot of aspects of this thing that probably need more discussion and we'll see if we can build consensus.
NICOLE NIXON. KUER: What do you want to see happen on education funding, here's been talk about removing the constitutional earmark on the income tax, should that be paused as well?
GOVERNOR HERBERT: Well again I never advocated for that either, and education has been my number one budget priority since I've been in office, and we've done very good by education. If this budget recommendation is approved by the legislature it will be $2.3 billion nearly doubling the amount of money put into public education since I came into office, so we've done a pretty good effort to get more money to education, that's with in fact the earmark, the constitutional earmark on income tax we're the only state that has that. We're the only state that has an earmark on income tax and we're constantly being told we're the lowest for people spending in the nation. So that certainly hasn't guaranteed the funding as people would have liked to have more.
But when I was at Wall Street, the last few months ago, they brought up the fact, do you know you're the only state in America that has this earmark, and they would like more flexibility. They would like the legislature to have to make the tough decisions every time they come in to session, not have money that's been earmarked whether it be education or transportation or other areas to be set aside so that they don't have to make the tough decisions, that's probably better policy.
That being said we're unique in Utah, and mostly that uniqueness has lead us to good outcomes, better outcomes we are the by far the most diverse, healthy economy in America today. We have the largest middle class of any state in America today, we have now the lowest tax burden that we've had in Utah in 27 years. We have upward mobility, the American Dream, the best of any state in America, I mean the list goes on and on and on so these people in the legislature and governors present and past have led to this great lofty position we have here in America today, they want to continue that they don't want to destroy that so I think the intentions are good, we'll see what comes up in the future.
BOB BERNICK, UTAHPOLICY.COM: Does this mean that basically your budget you just recommended is thrown out? Because that was with all the new numbers in it.
GOVERNOR HERBERT: No I don't think so at all. I think in fact the budget will be very similar to what I proposed, I think we've made a very rational, reasonable budget and I think the legislature will embrace most of it, all that really happens now is that $160 million tax cut will not happen.
Which means that we literally will have more money to spend and so it doesn't mean we need to spend it all, we need to save for the rainy day which we're very good at doing, we're a very structurally sound budget from the standpoint we don't use one time money for ongoing needs which many states do.
We have rational debt we're one of only 12 states that have a AAA bond rating from all the rating agencies on Wall Street, even the United States doesn't have that anymore. So we're a pretty fiscally prudent, very dynamically growing economy with a great quality of life. That will continue.
BEN WINSLOW, FOX-13: Governor, why did you decide to stop the Department of Health's campaign on HIV awareness particularly with the Utah themed condoms, and were you inserting your own personal moral beliefs in a public health campaign?
GOVERNOR HERBERT: You know I think we all recognize men, the importance of HIV awareness and AIDS prevention. I don't think anybody doesn't agree with that, that I know of, but there's a right way to go about the awareness campaign for government and there's probably not, maybe a wrong way to do it. As I found out about this, one it hadn't gone through the proper protocol and procedures to get a thumbs up on going ahead with it, and two as I read the sexual innuendos and double entendre and kind of the crass messages on the packages I thought I don't know if this is what we want to do as government? If you're going to have a novelty shop and somebody in the private sector thinks that's a great way to approach this thing, fine let them.
But government ought not to do something that many of the people think are offensive, and so I thought there's just a better way to spend the money. I thought it was interesting that one of the critics of my proposal said well hey this is not a taxpayer's dollars. This is coming from a Federal grant. Clearly the ignorance is profound in thinking that somehow because it went through the Federal government that it's not taxpayer's dollars that are generated even here in Utah.
So again I just think that we ought to be more professional in it we certainly understand the seriousness of the issue and we want to make sure that our awareness proposal reflects that seriousness. The word slut in the age of “Me Too” all of us ought to be offended by that!
KYLE HARVEY, KUTV2: Where was the breakdown of procedure?
GOVERNOR HERBERT: Don't know exactly, we're having a review of that process now to see what happened, but it did not get to the final echelon for determination, I was certainly not consulted. We're doing a review of that and we'll see what I find out after that review is completed.
KYLE HARVEY, KUTV2: The health department has not been super clear yet, has someone lost their job, is someone going to lose their job are people on leave because of this?
GOVERNOR HERBERT: I can clarify that for you right now. Nobody's lost their job, I know that people had good intentions on this. This is not somebody trying to be nefarious and do something stupid. Probably not as wise, we all make mistakes. That happens to all of us and this may be one that happened to the department of health. So, nobody's lost their job and I don't anticipate anybody will lose their job.
BOB BERNICK, UTAHPOLICY.COM: Do you think there need to be changes in the referendum law or is that, it's different than the initiative law as you probably know in several ways. So should it stand as it is? Or should it be changed to become more, exactly like the initiative law as far as senate districts instead of counties and the percent and all of that kind of stuff?
GOVERNOR HERBERT: You know I haven't even thought about that, they seem to work. We've had initiatives and we've had referendums, whether there needs to be any modification of that I guess would be in light of what's taking place. Maybe somebody will give that some thought, I haven't I think this work really gives a check and balance on the legislature.
LISA RILEY ROCHE, DESERET NEWS: One of the problems though with the recent change to the referendum law is tax reform would have actually taken effect for about a month before you as governor through executive order would have been able to put it on hold for a referendum election and that was the time period where checks were going to be sent out, where all kinds of things would have had to be put in place under that law. So doesn't that need to be fixed? That weird gap?
GOVERNOR HERBERT: Well this is kind of unique because it's about tax reform, and it does impact your budget, it could be a referendum on other policies that have been passed. Vouchers comes to mind, you know and other issues. So this is probably a one-off unique situation. But maybe that's something that ought to be addressed. I've not heard it discussed by anybody in the legislature, I've not brought it up maybe it's worth at least a review.
KYLE HARVEY, KUTV2: Taking a step back to the HIV campaign for just a second, I spoke with some public health folks in Wyoming this week who had a very similar campaign. They did loop in some of their elected leaders on it who sort of had a right of first refusal on some of the designs and since then they've said there's has been a huge success. Would that have changed things in this situation here?
GOVERNOR HERBERT: Probably, again if we had veto power, there might be some that would be acceptable as far as the cover packages and what they were doing and some not. I've seen some from Wyoming and Alaska I don't think they were near as offensive as what we had on some of ours here in Utah. So yeah again I get it you know I understand that the intentions are to help you know with a little bit of humor to bring about a better awareness. I just think we went over the line in Utah and so back to the drawing board.
BOB BERNICK, UTAHPOLICY.COM: You said that some of the governors candidates now should step up and let people know how tax reform should take place, of course Lieutenant Governor Cox is running and while you may not have endorsed him formally you have given money to his campaign. Did you and he talk about this before you sent out this press release and made the decision that we're just going to repeal this?
GOVERNOR HERBERT: You know we've had discussions along the way, he had some concerns on the tax reform, he would say to you I think that there's a lot of good things in it but some things he couldn't support. Therefore he was opposed, and he's independent. He's not a clone of me, and he has to make his own way and convince people why they should vote for him just like everybody else has the same opportunity. I think he's well qualified and I think he's been a great lieutenant governor, I think he'd be a good governor. So, but that's why we have elections. So we'll see what happens there.
LISA RILEY ROCHE, DESERET NEWS: Were there any alternatives to a straight up repeal of tax reform that were talked about when you met with the legislative leadership? Was this the only way forward or could there have been some kind of a maybe a tax cut with no changes to deal with the budget and balance for example?
GOVERNOR HERBERT: There was, could we modify, tweak it there, and come back with a new and improved approach? That was certainly talked about. I think the concern was that there was so much confusion about the issue, the old adage if you're explaining you're losing. So I think the wisdom was, you know what we need to do is just go back to square one. We can do this, it's not going to go away, but let's see if we can't bring more people into the discussion and find a better proposal for tax reform and that seemed to be the consensus.
I think it made the legislature feel like they didn't have the pressure. We had a lot of things we needed to talk about in this session and that's one of the reasons I wanted to have a special session, let's get this off the table so we can concentrate on other things during the legislative session. I don't think they wanted to have this to be the focus and the sole thing that they were going to talk about and so probably a little easier, maybe a little wiser to say let's just set it aside, let's go back to square one, repeal it and start over.
LISA RILEY ROCHE, DESERET NEWS: Isn't it hard though to take back a tax cut in an election year? I know having that tax cut in place was also one of the reasons that legislative leadership wanted to see a special session, in the prior year. So Utahns could start seeing a little break in their paychecks.
GOVERNOR HERBERT: We've given tax cuts in the past, as I mentioned you know because of good management, economic growth, efficiency in government which we don't talk about much. We have fewer state employees today, then we do back in 2001 and that's in the face of 900,000 more people calling Utah home. Government is labor intensive, we've reduced labor significantly in the state of Utah. So there is a need and a demand and I think a desire to give a tax cut, but it's going to be part of a whole tax reform movement and so I think there's certainly energy to do that. It just didn't work with this tax reform package.
BOB BERNICK, UTAHPOLICY.COM: You just said that it'll be part of it, but will it really? It is an election year, you're not up but all the house is up and half the senate is up. They've got $160 million that they were not going to put in the budget, you think they might just turn around and cut the income tax and not do anything else? Repeal this and then turn around and cut the income tax?
GOVERNOR HERBERT: Who knows Bob, you've been around long enough to know that it is--
BOB BERNICK, UTAHPOLICY.COM: Would you recommend that?
GOVERNOR HERBERT: A little hard to be predictable on that. I've not heard anybody propose that, let's scrap the tax reform and come back and give $160 million tax cut. I think it really is part of an entire package, that's more complex than just that. But we'll see what happens, I know there's a desire to in fact give more money back to the public, because we have some surplus money.
REPORTER: Thank you so much for your time, and for being here governor.
GOVERNOR HERBERT: Thank you, good luck to all of you.
NARRATOR: This has been the Governor's Monthly News Conference. An archive of transcripts, video, and audio is available online. Please visit KUED.org, thanks for joining us.