November 2002

Utah, like every other state, is being affected by a national recession. It has produced a drop in our tax collections at a rate that's faster than anything that has occurred since World War II.

Reporters (in order of appearance):

KEN VERDOIA, KUED
LEE AUSTIN, UTAH PUBLIC RADIO
ROD DECKER, KUTV
DAN BAMMES, KUER
TOM JORDAN, METRO NETWORKS
JANICE PERRY GULLY, KCPW

Transcript:

KEN VERDOIA, KUED: Governor, thanks for joining us today. The headline this week says, "A lot, if not all. Utah ink runs red." Obviously the rather dismal current state revenue picture continues in the current fiscal year. Action is required. Can you give us an outline of the severity of the situation and what you are beginning to propose as means of addressing the shortfall?

GOVERNOR LEAVITT: Utah, like every other state, is being affected by a national recession. It has produced a drop in our tax collections at a rate that's faster than anything that has occurred since World War II. So it's a very serious problem over time but one that we will obviously have to cope with. The shortfall that we're dealing with at this point is between 80 and $140 million. We won't know until Friday, when we'll finish our formalized revenue estimates. $140 million is serious money in anyone's book, but it's made substantially more difficult by the fact that we have already reduced state spending by somewhere in the neighborhood of $500 million.

I've laid out a series of principles that I believe ought to be followed. The first is that we ought not to cut education funding as part of it. Education is economic fuel. It's a key to our long-term sustaining economic, not just recovery, but prosperity.

The second principle is that we need to look at some underlying tax structure issues at this time. One of them, in my judgment, is the way we subsidize our water. We have among the lowest water rates in America, and we have the highest per capita use. In other words, our water structure incents people to use more, more, more, and we ought to be incenting them to use less, less, less. I'd like to have a structure that allows the market to determine the price of water, and not tax subsidies. Currently we're subsidizing through the use of our water loan funds, with interest-free grants and loans, systems that would have other means of doing so, and I believe we ought to look at that as a primary way of being able to balance our budget.

A third principle deals with the need for our infrastructure. We've invested a great deal in roads and in buildings. It may be that we'll have to slow the pace.

I would like to go back to water for just one moment and make clear that I'm talking here about non-agricultural water. I'm only speaking now about industrial and municipal water systems.

And now to go forward to our building program, we may have to slow our building program down some, particularly in the area of highways. We're still committed to all of the projects that are on the table, but we may have to slow them down.

Another principle would be not allowing anything to occur through the course of this that would hurt those in our society that are most severely put at peril by a national recession. I'm particularly concerned about the health care of children and those who are severely impaired by low income.

And lastly, we cannot borrow our way out of this. We have to deal with the financial reality, and I would oppose anything that would impair our AAA bond rating. It's a long-term asset we've worked hard to maintain, and we should continue that process.

KEN VERDOIA, KUED: Governor, just to return to the subject of water, this is a theme you've cited now several times, and the average person might say, "Well, how much money really is at stake?" What kind of money are we talking about when you say that we need to reconsider the amount of money we're putting into it and what people pay? What really are the figures we're talking about?

GOVERNOR LEAVITT: Well, this is serious money. We have nearly $500 million that we've put into water loan funds. The key point here, however, is that that money has come from our taxes, not our water rates. I believe that there is a need for water development over time, and that communities need to have a place where they can go and borrow money at market rates, but the source of those funds should not be tax dollars, where we're subsidizing it. It should be water rates. And so I'm interested in seeing the water loan funds continue, and freeing up that nearly $500 million that we could move into places like education and other significant needs. Now, there's about $20 million a year that goes into that fund, there's about $30 million that comes back in repayments, so between the two of those there's nearly $50 million.

KEN VERDOIA, KUED: We want to return to our microwave system, actually turn to it for the first time, and a question from Lee Austin of Utah Public Radio in Logan. Lee?

LEE AUSTIN, UTAH PUBLIC RADIO: Thank you. Governor, in your five principles related to the current budget shortfall, I didn't hear anything that said absolutely no new taxes, we can't raise revenue to get ourselves out of this situation. Is that something you'd like to address now? Is that something that should be done in a special session in December, or be held off until January?

GOVERNOR LEAVITT: Well, the principle that I enumerated that I think does provide for the freeing up of a lot of general revenue that's now being diverted into our water subsidies would clearly be an acknowledgement that water systems are going to have to adjust. And I think that's the first place we ought to go, is to find how we're using our general fund money now, and move it back into more traditional purposes. We have nearly, well, we have $85 million currently that, coming out of our general revenue into our highway fund, for example. Into our centennial highway fund. I believe that it's far better for users to pay, as opposed to tax--to have users pay as opposed to taxpayers pay. Now users are taxpayers, but the point is that if you're dealing with water or if you're dealing with fuel you have the option of conserving.

Now, back to water for just a minute. We live, as I indicated, in one of the driest areas of the world, we use more water per capita than almost any other state, and we have the lowest water rates. I cannot understand the policy where we subsidize something we have a severe shortage of, when we have to send the message of conservation, and yet we under-support something we have an abundance of, which is children. It ought to be exactly the opposite. We ought to be supporting our education system with those dollars, we ought not to be subsidizing our water, incenting people to use more. And I think that equates to being able to have dollars that can go into our education system.

TOM JORDAN, METRO NETWORKS: Can you look at the, perhaps involving federal money in the legacy highway project? It's all state money. Is there a way to free money by going after federal money on that level?

GOVERNOR LEAVITT: Well we welcome federal highway money at any time, and we want to make sure we get our share. The Legacy Parkway is an important project. Important to, I think, focus for a moment on why it's referred to as the Legacy Parkway. A legacy is something that one generation does for the next generation. Now, we've been the beneficiary of freeways that have been built by our parents and our grandparents, and we take for granted. Legacy Parkway is literally about the entire west side of the valleys, of the most populated areas along the Wasatch front. If we don't deal with that issue and create a means by which a vision of that entire area can be created and planned, the quality of the life that we've come to understand will be diminished. We refer to it as the Legacy Parkway because it's about one generation preparing for the next, and delivering the same kind of quality and access that we have had.

ROD DECKER, KUTV: Excuse me, I didn't- -

GOVERNOR LEAVITT: I was waxing eloquent.

ROD DECKER, KUTV: I apologize. CHIP, it's time to sign up for CHIP. And it was something that you've supported, but something that now has a cap on it. Could you tell us the facts of where CHIP stands, and could you talk about how you hope it will fare in the coming budget crunch?

GOVERNOR LEAVITT: CHIP, or known as the Children's Health Insurance Plan, is a plan that provides health care to children in families with an income, I believe it's under 200 percent of poverty. The program is a matching program between the state and the federal government. The match, I believe, is somewhere in the neighborhood of 70 cents of federal money to 30 cents of state money, so it's a very favorable match. I was involved in the development of the CHIP program at the national level, and one of the things we asked the Congress to do was to provide a means by which we could provide coverage to as many children as we had money for, as opposed to an entitlement program where it provides coverage to any child that might fall into that category. Now, at the time it seemed that we would have, we had good economic times, there was hope we could provide it to everyone, whenever they had a need. And we went rapidly from zero to nearly 27,000 children that are covered by it. Something that we can be proud of. However, in tough economic times it's become evident that we cannot provide it to everyone, so we have placed a limit on the number. Now, gratefully, many of the children who go on to CHIP find their way into private health insurance, so we take it to 27,000 and then we allow the program, we cap the program and it'll go down for a ways while people go to other health insurance, and then we open it back up and we have an open enrollment, we're in an open enrollment period now. I think we'll have somewhere in the neighborhood of seven to 8,000 children who will be able to be enrolled in CHIP, and we hope that all of those who qualify will take advantage of it.

ROD DECKER, KUTV: Is it going to change, given the hard economic times? Will the cap be set lower, or is it something that you're going to push to get more money into it, despite the economic troubles?

GOVERNOR LEAVITT: Actually, I was making reference to that in specific when I said I'm very concerned that we not impair the capacity, the progress we've made in allowing every child in our state to have access to basic health care. As a matter of fact, we have recently instituted a program called the Primary Care Network, which is a unique program to Utah, where we've been able to take the dollars that we're currently providing for Medicaid, or health care for the poor, we've been able to take money from those programs by reducing the benefits slightly, and provide coverage to nearly 25,000 adults and family members who would have no health care but they're working. In other words, in the past we've only been providing health care assistance to those who weren't working. We're now able to help those who are working, but at jobs that don't either provide it or they can't afford it. They have to be under 200 percent of the poverty line. That, again, is a program that has a cap. But we're providing it to as many people as possible. We have room for about 13,000 more people, so if a member of the audience makes under 200 percent of the poverty line, it may be that they've been unemployed, they don't have health care, they work at a job that doesn't provide it, this is a great way in which it can be provided to them or they can participate in its acquisition.

ROD DECKER, KUTV: Different topic. We recently had a referendum on Envirocare, essentially, on taxing them. Then I think it was Tuesday they got a permit, or some administrative process so that they can accept B and C waste, higher-level nuclear waste. However, my understanding is they need your permission before they can do that. Have you thought about whether you'll ever be giving Envirocare permission, or anybody permission to accept out-of-state B and C radioactive waste in Utah?

GOVERNOR LEAVITT: Let me say that the permitting process is essentially a regulatory process that's defined by the statute, and the outcome is defined by the inputs. If you qualify, you get the permit. That's the reason that the legislature, I think, wisely created a responsibility on the part of the legislature to decide whether they want B and C waste. I would be surprised if the legislature made that available to them. So long as we are dealing with the nuclear waste, the high-level nuclear waste, I don't see that being approved in this state.

ROD DECKER, KUTV: Do have you an absolute veto, or would you merely be able to veto it with an override?

GOVERNOR LEAVITT: No, I have an absolute veto on that.

ROD DECKER, KUTV: Have you decided how you will use your absolute veto?

GOVERNOR LEAVITT: We will not see any nuclear waste in the state so long as we have the problem of the high-level nuclear waste threatening in the Goshute, it's too hard, it's too confusing, and I simply, I won't take the chance on anyone confusing a willingness on our part to take any waste that has "nuclear" in front of it.

ROD DECKER, KUTV: You sound as if you aren't so opposed to B and C, a much lower-level waste, on their own, but this is something, because we're embroiled in a fight, you would see this as a tactical move. But that were the fight, say, to be resolved, then you might take another look at B and C on their own merits. Did I hear you right?

GOVERNOR LEAVITT: That would be speculation at this point. I've laid out a position that I think is fairly clear for what will likely be the next several years.

KEN VERDOIA, KUED: Governor, I'm interested in the status of the Skull Valley proposal for the storage of high-level uranium fuel rods that have been depleted to a certain extent. Specifically in light of homeland security concerns, and the F.B.I.'s acknowledgement that the nuclear industry could, in fact, be targeted for terrorist activity. This would involve, of course, even the transportation of certain radioactive materials. How does this weigh into the state's great concerns about responding to the proposal for private fuel storage to bring those materials to Utah?

GOVERNOR LEAVITT: This is an issue that we have raised repeatedly, and one on which I have been critical of the Nuclear Regulatory Commission, because they have refused to allow this to be an issue in the permitting of this site. And in my mind it is among the most poignant of our concerns. We have 44 percent of the nation's chemical munitions there, we're in the flight path of airplanes, both taking off from the international airport and those going into the test and training range, and for us to put high-level nuclear waste in the open, in a private area that's not, that is not controlled nor protected by the federal government and the military, is just ridiculous. It just simply doesn't pass the reason test. But they are moving toward permitting. Whether or not they'll succeed is yet to be seen. We continue to resist it in every way we can. There are two major obstacles that remain in their way. Even if they were given a permit, the first is access to the area, they have to get it there either by road or by rail, and they have to have a permit either from the state or the BLM, and I don't believe either is forthcoming, and they also have to have a final lease on their property. They have only a provisional lease, and that would have to be given by the Department of Interior, and I've been assured by federal officials that that's a serious obstacle.

DAN BAMMES, KUER: Governor, are you concerned about the relationship between state government and Envirocare? There has been, in the past, to some degree, a certain level of corruption involved in that, with regulators who were extorting money from Envirocare, and even today some Envirocare executives are people who have worked at high levels in state government. The money, during the past election, from Envirocare was flowing in enormous amounts. Are you concerned about the influence that Envirocare has on Utah politics and on state government in particular?

GOVERNOR LEAVITT: Dan, I think we have to be concerned and properly vigilant about the regulatory, about the relationship between anyone who's regulated, be it a trucking firm or a utility or a waste management firm, or an insurance company, or anyone, a medical facility, anyone that has regulatory oversight, there needs to be a sense of openness about what they're doing, and I believe the law that we have that requires disclosure on the part of anyone making political contributions is a very appropriate way for that to be handled.

TOM JORDAN, METRO NETWORKS: Governor, Kelly Matthews of Wells Fargo said with the price of crude oil dropping and the retail price of gas dropping, the easiest way to raise revenue would be a 5-cent gas tax, because it would be the least painful way to deal with the budget crisis, and it would mean not cutting really serious meat and potatoes programs. Could you support a 5-cent gas tax in the right environment?

GOVERNOR LEAVITT: It's not part of a proposal I'm making at this time. I expect that over the course of the next couple of sessions, whenever they are, that will be part of the discussion. The gas tax is an incremental tax that's added on a cents per gallon, as opposed to indexing it to the price. And periodically the legislature has to wrestle with that, and I feel confident that, given our budget circumstance, that will be part of the discussion. Whether it'll be part of the result I don't know.

ROD DECKER, KUTV: Salt Lake City and the LDS Church are involved in a dispute over the Main Street Plaza, and what will be the rules there. As governor, do you have any positive role at all to play in that dispute? Some legislators have talked about passing a law that might change things. Do you believe the legislature should, is there any action that you would support legislatively?

GOVERNOR LEAVITT: As far as I can tell, and I've watched this closely, this is very clearly a contractual dispute between a local government and one of its primary constituents, and it will stay that way. I don't think I have much to add to that debate.

ROD DECKER, KUTV: Would you- - Do you have anything to say to the legislature as to whether they ought to weigh in on it?

GOVERNOR LEAVITT: As I say, I don't think I have a whole lot to add to that discussion.

KEN VERDOIA, KUED: The discussion over the Main Street Plaza it's known, or the Church Plaza, as it's known, has for some observers laid bare the cultural chasm that can exist in Utah at times between a large homogeneous group and those people in the community that don't belong specifically to that group. And at times that has been portrayed as a fundamental chasm that undermines Utah's ability to move forward. Do you believe that, in fact, this chasm challenges Utah's ability to face its future and move forward with a sense of purpose?

GOVERNOR LEAVITT: I think any time there's, there divides in any way in any society, it's not a positive thing. But I know of no society where they don't exist, and where they don't have to be a constant, a part of constant public dialogue. If you go into any major city you'll find them in one form or another, whether they're religious or racial or economic or cultural or political. And every community has them. This is one that obviously we've had to work with over the course of our entire history, and I expect that it's something we'll have to continue to work for.

TOM JORDAN, METRO NETWORKS: Is the San Rafael Swell National Monument dead?

GOVERNOR LEAVITT: Yes. Regrettably. It was an idea that, had it been allowed to blossom at all, would have provided an enormous amount of value, I think, and particularly to local residents. But I made it clear, and I think the president was clear, that unless it enjoyed local support that it would not go forward, and that's where we are.

KEN VERDOIA, KUED: Let's return one final time to our location in Logan for another question from Lee Austin. Lee.

LEE AUSTIN, UTAH PUBLIC RADIO: Thank you. Back to the budget briefly. When you say in one of your principles that we ought not further cut education, some of my colleagues here on campus may wonder, are you including in that higher education?

GOVERNOR LEAVITT: Yes.

JANICE PERRY GULLY, KCPW: Governor, last summer the Utah Supreme Court struck down a major provision in the state's initiative election law, and they removed the provision requiring a certain number of signatures be gathered in 20 out of 29 counties. And in that decision the justices basically said the legislature cannot pass laws that make, simply for the purpose of making it harder to put an initiative on the ballot. That issue is coming up before the legislature. What is your opinion of the initiative process, and how far do you think the legislature should go?

GOVERNOR LEAVITT: All good questions. First, we need an initiative process. It's an important part of democracy. Second, it needs to be sufficiently difficult that we don't use it or abuse it too often. Third, it needs to have some form of representation, the court made it clear. I thought the court went way too far, personally, in the way it dealt with it. It could have done it more exactingly, and I think the legislature will need to deal with it. Whether it's- - And as you indicated, there are a couple of barriers that they have to meet. One, it can't be, it has to be proportionate, and second of all, it has to create, it can't be too high. And they'll just have to find out where that golden mean is, and hopefully it'll then pass the test.

JANICE PERRY GULLY, KCPW: What would you like to see as restrictions on that in your ideal world?

GOVERNOR LEAVITT: Well, I haven't really formed an opinion as to a specific proposal. I know it's just being talked about. What I hear most often spoken of is having to have some level range, a percentage of every Senate district in the state, or some supermajority of Senate districts. And that makes sense to me on the basis of general logic. It would obviously need to, the details will be where it meets the standard or it doesn't. And I haven't seen any of those yet.

ROD DECKER, KUTV: Dugway Proving Ground evidently is doing anthrax research. Is the state keeping track of that as part of the new homeland security push? Is the state keeping track of that? What do you know about it, and how worried are you?

GOVERNOR LEAVITT: I'm not able to- - I don't know a lot of the specifics. We do have a very good working relationship between the Department of Environmental Quality and the Dugway Proving Grounds, and it's my belief that were there things going on there that were unusually dangerous we would know about it. I'm not able to speak about it today. Because I don't know.

ROD DECKER, KUTV: Okay, you don't- - Okay.

KEN VERDOIA, KUED: Governor, we have about a minute and a half left in this program. You supported the Bush administration's homeland security initiative, it's now passed Congress, and by most estimates it's the largest retooling of the shape and size and nature of the federal government since 1947. It's a significant act. For the rank and file Utahan, for you as governor, what does this retooling hold in store for us?

GOVERNOR LEAVITT: Well, the most important thing I think is for us to realize that just the development of a new development of government does not necessarily mean our homeland is secure. Homeland security will require that state and local governments, and private industry, and citizens organize themselves in a new way. Homeland Security Department is an important tool, but it's only that, a tool.

KEN VERDOIA, KUED: But for the average person out there, will we see--and this is an overly-broad question--will we see a new America emerge with redefinitions of what we consider our fundamental rights as citizens?

GOVERNOR LEAVITT: I think we will see changes in the way our society is organized and the degree to which we have to deal with security issues. But it won't be just because we have a Department of Homeland Security. It will be because we live in a world with evil people who view as the definition of their mission to hurt citizens. Private citizens. And it's a regrettable condition, but it exists, and we'll all have to deal with it by organizing ourselves anew.

KEN VERDOIA, KUED: Governor, thank you for your time today. A reminder that a transcript of this is available on line at www.uen.org. Good night.

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