2017 Legislative Wrap Up
Though Utah’s 2017 legislative session started with a bang and ended with a record number of bills passed, it was a relatively quiet 45 days. The state’s 62nd Legislature kicked off on Monday, January 23, just a few days following President Donald Trump’s inauguration. And one of lawmakers’ first actions was to send the new president and the republican-controlled congress a message: rescind Bears Ears National Monument. The message was heard loud and clear by the Outdoor Retailer show, which announced it was taking its twice-yearly event—and its $50 million economic impact—out of Utah.
It was a controversial start to the session, which is rarely void of controversial, headline-grabbing issues. And while this year was relatively quiet despite its loud beginning, there were some bills that stirred local and national interest, such as the idea of re-implementing the food tax and revamping the state’s somewhat quirky liquor laws. Below are highlights from the 2017 General Session of the Utah Legislature.
Education gets a boost
Utah’s students were the biggest winners during this year’s session. After hemming and hawing over a proposed 3 percent increase in per-pupil spending, Utah’s legislators made a somewhat surprising announcement when they agreed to boost per-pupil spending by a whopping 4 percent. Lawmakers also approved $64 million in ongoing funding to fully fund student growth.
The increase comes at a time when Utah’s already stretched classrooms are experiencing unprecedented student growth—the state adds approximately 10,000 new students every year. It also comes at a time when Utah has been at the bottom of the education funding pack, ranking dead last in the country for per-pupil spending—an achievement no one is proud of.
Despite the 4 percent funding increase, the Our Schools Now group is still advocating for more student spending. The group, founded by several prominent business and community leaders, is in the process of gathering signatures to add an initiative to the 2018 ballot that would ask Utah voters to approve a 7/8th of 1 percent income tax increase. If passed, the plan would boost education funding by an estimated $750 million per year.
Teacher pay was also on this year’s legislative docket. HB 212 gives a $5,000 bonus to high-performing teachers in low-income areas. Sponsored by Rep. Mike Winder, R-West Valley, the bill was lauded as a way to attract teachers to Utah’s poorest areas. HB 108, which aimed to grant science, math and technology teachers a pay increase, passed through committee but failed to make it out of the house. And a bill that would have shifted more money to rural school districts, as those districts tend to collect fewer property taxes, also failed. Legislators did decide to spend $8 million in ongoing funds to help teachers purchase classroom supplies.
Transparency in higher education costs was another topic up for discussion. As more college students are taking out exorbitant student loans, HB 100, the so-called “know before you go” bill, sailed easily through the legislature. Sponsored by Rep. Kim Coleman, R-West Jordan, the bill aims to ensure higher education students understand all associated costs of college beyond tuition, such as the costs of books, fees, equipment and job placement aid. HB 249, which also passed, makes it so higher education institutions must annually notify students of their debt and direct them to repayment solutions. Both bills endeavor to help students navigate the often confusing costs and debt solutions associated with higher education.
SB 161 took aim at ending school bullying. Sponsored by Sen. Luz Escamilla, D-Salt Lake, the bill amended the definition of bullying to include cyber bullying, and it requires employees, students and parents to sign a statement annually acknowledging anti-bullying policies.
A concurrent resolution passed declaring the mental health of Utah’s higher education students to be a public health crisis. The resolution urges state agencies, nonprofits, health organizations and higher education entities to work together to develop and implement solutions that address mental health issues among students.
Liquor laws remixed
Always a hot topic, Utah’s alcohol laws got another revamp during this year’s session. HB 442 modified Utah’s so-called Zion Curtain, the 7-foot-2-inch barrier between restaurant patrons and bar areas, which became law in 2009. Sponsored by Rep. Brad Wilson, R-Kaysville, HB 442 doesn’t overtly remove the Zion Curtain barrier, but instead allows restaurants to choose whether they want to keep the barrier or select another of two options: to keep minors 10 feet away from the bar area or to keep minors six feet away from a 42-inch-high wall near the bar area.
Wilson’s alcohol reform bill didn’t just address the Zion Curtain, it also toughened up packaging and labeling rules on alcopops (flavored malt beverages with a low alcohol content); raised the markup on liquor, wine and beer by 2 percentage points; and established an underage drinking prevention program to be taught to eighth and 10th grade students.
Utah’s lawmakers also made the state’s DUI policy now the country’s strictest, dropping the legal blood alcohol level from .08 to .05. While some laud the action as key to lowering drunk driving and related injuries and death, others say it will hamper Utah’s travel and tourism industry, as well as keep many Utahns from consuming any alcoholic beverages at local restaurants. Though Utah is the only state in the country to adopt a .05 legal threshold, countries like Austria, France and Germany have already adopted the .05 limit. Sponsored by Rep. Norman Thurston, R-Orem, the bill, assuming Gov. Gary Herbert signs it into law, will be enforced beginning in 2018. Sen. Jim Dabakis, D-Salt Lake, is circulating a petition calling for the governor to veto the bill.
Non-competes and regulations reviewed
During last year’s legislative session, a somewhat controversial bill clamping down on non-compete agreements became law. In sum, the legislation restricts both the employer and employee from entering a non-compete agreement for more than one year. While many in the business community supported the bill, others said it would hamper their ability to keep company intellectual property and trade secrets in-house. Because of the opposing viewpoints, rumors circulated that the relatively new law would again be up for debate during this year’s session, but legislators decided against reexamining the issue, a decision many local business leaders, according to the Salt Lake Chamber, agree with.
“I was pleased the legislature deferred any action on non-compete agreements. Increasing regulations has to be approached cautiously and thoughtfully,” says Fraser Bullock, managing director of Sorenson Capital. “Sometimes no action is the best action.”
Regulation was also an issue tackled during this year’s legislature. HB 272, sponsored by Rep. Brad Wilson, R-Kaysville, put into place an extensive overhaul of business regulatory policies. According to the Salt Lake Chamber, “HB 272 helps legislators make better-informed decisions, produce smarter regulation and enhance transparency.”
The Salt Lake Chamber also championed stopping an expansion of FMLA requirements to smaller employers and helped to defeat a proposal to incrementally increase minimum wage to $15 an hour. “In fact, legislative analysts estimated this would cost our economy 93,558 jobs and $11.9 billion in Gross-State-Product,” said the Salt Lake Chamber in a prepared statement.
Air quality freshened up
Utah’s air might get a little easier to breathe thanks to SB 197. Sponsored by Sen. Stuart Adams, R- Layton, the bill gives refineries an incentive to produce Tier 3 fuel, a significantly cleaner fuel. The bill exempts refiners from sales tax starting in 2018. If the refiners produce Tier 3 fuels by 2020, the exemption remains intact.
“When vehicles in Utah burn Tier 3 fuel, it will be like removing four out of five cars from our roads,” says Ashley Miller, program and policy director for Breathe Utah. “A huge win for air quality if the refineries take advantage of this major incentive.”
Todd Bingham, president and CEO of the Utah Manufactures Association also applauds the bill, but he would have liked to see all manufacturers receive a sales tax exemption on manufacturing inputs, which the bill originally included. “Utah is one of the only states in the country to tax inputs into the manufacturing process. By exempting inputs from sales tax, we would grow our economy and produce high-paying manufacturing jobs in the state,” he says, but adds that the legislation is a big win for Utah’s air. “…addressing the need for increased air quality is a great policy and an important step in assisting refineries in producing Tier 3 fuels. We are grateful for the insight and support of the Utah Legislature.”
Miller says an even bigger win for Utah’s air quality during this year’s session was not a bill passed or defeated, but the funding of the Division of Air Quality (DAQ). The DAQ will receive $1.3 million one-time and $150,000 ongoing funding for monitoring equipment and will receive $200,000 for research.
“The DAQ desperately needs this money to improve and expand the air quality monitors throughout the state. Twenty-three percent of existing monitoring equipment is past its useful life, and there is no backup equipment on the shelf. There are many times when the monitors fail and cannot be fixed for days. This results in a lack of data,” she says. “This is a requirement to comply with national standards and essential to developing good emissions reductions strategies.”
Tax reform stalled
Tax reform was a prominent topic during this session, and while many thought 2017 was the year Utah’s sales and income taxes would get an update, the state’s lawmakers ultimately tabled tax reform until next year’s session.
The biggest debate was whether to reinstate a food tax, but the proposal received backlash from several organizations, who argued that a food tax would hurt children and low-income families. The bill was dead by the final week of the session.
Utah’s taxes haven’t seen reform since 2005 and are in great need of modernization, according to Herbert and many lawmakers. In fact, according to the Governor’s Office of Economic Development, Utah’s sales taxes have declined from nearly 70 percent in 1985 to just under 44 percent in 2015. Moreover, Utah’s Office and Management and Budget and the Utah State Tax Commission estimate that the owed but unpaid sales tax on purchases made outside of Utah is approximately $150 to $200 million per year and rising. Much of the loss stems from the growing popularity of online purchases from retailers like Amazon and Overstock (although Amazon now charges Utah customers a sales tax on purchases). Tax exemptions are also part of the problem. In 1996, for example, the state had 48 exemption and today there are 89.
The governor and members of the senate and house have committed to working on tax reform during the interim session and plan to address the issue during next year’s general session.
Odds and Ends – A few more happenings worth noting
– Medical marijuana will undergo research to verify consumption safety.
– Utah now has two new state parks, Little Sahara and Hole in the Rock.
– Safety inspections are a thing of the past, but emissions testing is still in place and vehicle registration fees increased by $1.
– The University of Utah Medical School received a $190 million expansion approval.
– Municipalities can no longer prohibit residential short-term rentals like Airbnb.
– Transportation received a $1 billion bond to build new roads and repair current transportation infrastructure.
– Nearly $300 million in building projects will be bonded.
– A joint resolution to help rural Utah create 25,000 jobs during the next four years was signed.
– A $2,000 income tax credit for homeowners to install solar panels will be incrementally phased out. Each year, the credit will be reduced by $400 until fully eliminated in 2022.