October 28, 2016
The recent ill-fated $56-million school bond together with Propositions 9 and 10 strongly point to one conclusion, namely that growth no longer pays for itself. Rather than the "economic prosperity" promised by growth advocates, we in Summit County are being subjected to a series of proposed tax increases to fund expansion of public education, transportation, and other infrastructure requirements such as water and sewer.
Given Summit County growth projections of 84 percent in the next 25 years, more tax increases are coming in my humble opinion. Given this, it is imperative that Summit County citizens carefully analyze the reasons for and design of public funding proposals. For the reasons listed below, I find that Propositions 9 and 10 fail most tests of logical consistency and sound design.
Literature distributed by proponents of Propositions 9 and 10 state that … "we've all seen the tremendous growth in Summit County…(and) along with growth comes traffic" (and congestion). While this is not in dispute, we should ask who has driven growth (and to whom the benefits mainly accrue) in Summit County and Park City. Real estate developers and agents (often corporate), hotel, lodging, and hospitality interests (primarily corporate), and our two ski areas (also corporate) immediately come to mind as primary drivers (and beneficiaries) of growth. While it may somewhat unfair to single out corporate interests, it is important to understand that the primary fiduciary duty of the corporate manager is to the owners and/or shareholders of the corporation, not the community in which they do business. If corporations (and others) can impose costs of doing business on the community and thereby increase profits, there are great incentives to do so. Nevertheless, economic efficiency requires that those who impose the problem to be responsible to bear the costs of mitigation. Propositions 9 and 10 take a giant step towards having the larger community finance a solution to the congestion problem largely driven corporate goals to grow profits as fast as possible. This is not the type of economic efficiency embraced by most free market economists.
Lets look at the design of Propositions 9 and 10. Each proposition represents a one quarter of one percent increase in the sales tax. Exempted are unprepared foods and gasoline. Economists have long understood that sales taxes are regressive. This means that the tax burden falls most heavily on lower income individuals. Proponents argue that nearly 50 percent of sales tax collected in Summit County comes from visitors. This does not negate the regressivity of the sales tax on Summit County residents. If the goal is to have visitors pay most of the taxes necessary to alleviate congestion, there are better options. For example, an increase in the sales tax on passes at the ski area and/or lodging seems to better target the transient visitor. In an economic climate in which the benefits of economic growth overwhelmingly accrue to the top 1 percent of income earners, I find it sad when we resort to regressive taxes to raise additional revenue. I also find it ironic that gasoline is exempted from the proposed increase in sales tax. If the goal is to get people out of their cars and onto public transportation, then Summit County should look for ways to make driving a car more expensive relative to public transportation. Exempting gas from a tax increase is not the way to so this.
That growth is a fact of life in Summit County is not in dispute. The rate at which we grow is, I would argue, a matter of choice. City and County fiscal policy can have an impact of the direction and type of economic growth. Zoning and Planning Commissions owe their existence to the desire of the larger community to protect themselves from the negative consequences of self-interested actions. I find Propositions 9 and 10 sadly lacking in both foresight and careful consideration.
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