February 23, 2006

"All day kindergarten...is very, very good for kids who are struggling...with issues like English as a second language and need the extra time and attention that kind of an environment will provide." -Gov. Huntsman

Reporters: (in order of appearance):

DAN BAMMES, KUER
RICHARD PIATT, KSL-TV
GLEN WARCHOL, SALT LAKE TRIBUNE
ROD DECKER, KUTV 2
LEE AUSTIN, UTAH PUBLIC RADIO
TOM JORDAN, METRO NETWORKS
LISA RILEY ROCHE, DESERET MORNING NEWS
BROCK VERGAKIS, ASSOCIATED PRESS:

Transcript:

DAN BAMMES, KUER: Thanks for joining us today, Governor. We are looking at what might be an unprecedented situation in our legislature right now. It is possible we'll finish this general session without finalizing the State budget because of disagreements between members of the House and Senate, between members of the legislature and your office, over the size and shape of tax reform and other budget issues. Does that concern you? And what if anything are you able to do about it?

GOVERNOR HUNTSMAN: It doesn't concern me that much. We have until July 1st in order to complete a budget. We are dealing with unprecedented numbers. We are dealing with complex issues in terms of tax reform. It is not surprising that perhaps the discussions and debates have been perhaps a little more vocal and have taken a little bit longer this year. If it means we go into a special session, I think that, for me, is acceptable.

What is important is that we get accomplished some of the issues that I think the citizens of the State feel very strongly about, like the sales tax coming off of food. Looking through one of my files earlier today, I found two years ago, almost exactly two years ago, I made a speech before the Provo Chamber of Commerce talking about the sales tax coming off of food. It is something I have talked about for two years.

The Speaker of the House, Greg Curtis, has talked about it and has done a whole lot of very good work on it as well. This is the year to get it done. If we don't get it done this year, then we are not able to deliver for the citizens of this State what I think they deserve, and what a lot of people have been talking about it since 1933.

We can tailor a budget to make that happen. In fact, I've gone so far as to kind of shift some of my priorities so that we can get down to what is really important to the citizens of the State, this year. It starts with the sales tax coming off of food. I put forward a proposal that allows some flexibility in the way in which that comes off - over say three to five years.

It allows us a chance every year during the legislative session to test the prevailing winds economically of our State, and the following year to see if it's safe to take off an increment of that sales tax. It is done in a very cautious, thoughtful and contemplative way, but we'll get it done over three to five years.

I've also said I'm willing to take income tax reform, which had 20 to 30 million attached to it, and move it on to next year's agenda. And what I have asked in return is by doing that, you really simplify the process. You've taken one hurdle out of the road that I know in the Senate would have been difficult and in the House would have been difficult. I am saying, all right, I want 20 million more for education, which means that the WPU goes up to 6%. Unprecedented numbers for education.

Number 2, I want more money to fund the disabilities waiting list. We take that to 3 million dollars, which is I think the proper contribution at this point. And then we agree that we give a bonus to all teachers in the State of $1,000 out of one time money. That is all I'm asking for in exchange for taking my income tax proposal off the table and putting it in the next year.

So we've come up with a pathway forward for the 300 million dollars left on the table. It allows us to take the 138 million dollars for sales tax coming off of food. It allows 20 million dollars for some business exemptions. I know the House has been very high. I've been kind of on the low end. The Senate, on the other hand, has advocated 60 million dollars in business cuts--cuts for gas, oil and mining interests--I don't think this year to be doing that. It allows USTAR out of my 300 million dollars to get done.

We remove the cap off water projects. That is able to get done. We get the all day kindergarten accomplished and it still leaves 90 million dollars for both bodies to discuss for ongoing transportation and needs in the various committees, which is very important. We can get all of this done by simply agreeing to this budget, which starts really with the pathway forward on sales tax coming off of food.

RICH PIATT, KSL-TV: Governor, a member house leadership yesterday expressed a lot of frustration over what's going on between the House and the Senate and your office, as a matter of fact saying he felt like he bent over like a wet noodle to try to get things to work. Everyone knows it is much easier to say no to a proposal at the capitol than it is to reach a compromise and actually come up with something, so there is a lot of frustration in the House right now. I'm wondering if you're feeling that same frustration or if you are still hopeful that in the five days remaining something can really happen?

GOVERNOR HUNTSMAN: I'm an eternal optimist. I think we'll be able to work something out. And if we don't, that's why the Governor has been given the power to call special sessions, and we have until July 1st to get it right; although, there is no reason why in days remaining we can't get it right. But I think there is a level of frustration in the sense that we started with the sales tax coming off of food, in total the first year at about 200 million dollars, we compromised whereby we keep all local governments harmless. That took it down to 166. It is now down to 138, and so there's been compromise after compromise for those of us who consider this to be a priority and not a lot of give out of the Senate.

I'm hopeful that maybe over the next couple of days we can think a little more creatively about how we can move this forward successfully. It doesn't need to be a one year phase out. It can be a multiple year phase out. We can look at metrics by which we measure the performance of state government to see if it's safe to once again take an increment off sales tax on food. If we don't do it this year, we're never going to get it done.

RICH PIATT, KSL-TV: So is it a matter right now of finding a way to leverage the Senate? Because if you get down to the wire and nothing happens during the regular session, what really is going to change in the special session if they're so entrenched in what they think?

GOVERNOR HUNTSMAN: Well, you've got a lot of individual projects, I know that are important to senators. You've got buildings of various kinds. You've got individual priorities. Those are all going to be put on hold until we can get serious about the sales tax coming off of food. Once that is agreed to and the pathway made clear for everybody, everything else will fall into place very, very nicely. It is going to be a great budget when all is said and done. We'll have unprecedented support for education and for transportation. All the needs will be funded. Social services will be taken care of. We just need to figure out a solution for sales tax coming off of food. And there's no reason we can't get that done in the next couple of days.

GLEN WARCHOL, SALT LAKE TRIBUNE: Governor, the Senate's response to this is that the House and yourself are looking at short term gratification and putting aside the long term needs of repairing the tax system. And frankly, it's a little surprising to hear you abandoning tax reform or at least putting it off for a year and risking abandoning it, when you've been telling us for a year now that this has to be fixed to help future generations of Utahns and Utah children. Why did you decide to back off of it just for sales tax on food?

GOVERNOR HUNTSMAN: Because you have to assess what the market will bear, what you can get done in a 45 day session, and I'm convinced we're going to get tax reform done in our first term. This is absolutely critically important to get done at some point.

Now, I had 23 million dollars on the table for income tax reform. The Senate jettisoned that, they said that was unacceptable. They said we'll give you 82 for income tax reform. I said that is too much. I'm not willing to take that much out of pubic education. I heard from the House side that any kind of income tax reform this year would be very, very difficult with elections ahead and everything else, and so I sat in my office late one night recently and I thought, how can we move this forward while keeping in place another one of my very important priorities-- it has been since day one of my campaign, taking the sales tax off of food. I'm convinced --people call me a newcomer and naive, but that is how you get things done, when you're not a fixture, you're not a part of the system -- there's only just so much you can get done during a legislative session.

You have to sit back and say, what will the market bear? What can we deliver for the good citizens of this State that will be meaningful longer term, and then how do we get there? We may have had too much on the agenda. I'm trying to simplify things by simply saying, we're keeping one of my priorities in place. USTAR is also a priority, and all day kindergarten is a priority obviously, but in the tax area the food tax is a priority, and I'm taking one of my headline priorities, income tax reform, and saying we'll defer it until next year. We still have some educating to do. We still have to convince a lot of the nay-sayers that the income tax does in fact need to be reformed for the sake of properly funding education over the next 20 years.

ROD DECKER, KUTV: If I understand what you're saying, it's that the income tax is dedicated to education, while you want income tax reform, you aren't willing to do it at a big reduction. You're willing to do it at a little reduction but not a big reduction in the revenues available for education.

GOVERNOR HUNTSMAN: That is correct.

ROD DECKER, KUTV: The Senate, I think, thinks like this: If we don't have a big reduction, we're going to have losers. And the losers, some of them are going to be Republicans. They're not going to be people who pay sales tax on food who are hurt by that; they're going to be people with fairly big incomes who have to pay considerably more income tax, several hundred dollars a year. We won't do that. We want a program without any big losers and with not many losers at all, so that you're different in principle on this. You said, we'll put it off until next year. The problem is still going to be there next year. If you have to talk senators into a Republican income tax cut then you're not going to have an education income tax reform.

GOVERNOR HUNTSMAN: I don't think it'll get to the point this year that we take that much out of public education. I was very comfortable with the 23 million we had on the table for income reform because, Rod, when you layer the food tax coming off along with income tax reform, 96% of the people in the State came out all right. There were a few losers. And the Senate basically came back and said, we don't want any losers. And we said, what's the cost of ascenario in which there are no losers? Well, it's 82 million. That's too high a price for me to pay.

ROD DECKER, KUTV: You persuaded the House and persuaded the people, your polls show evidently, but you still seem to me that you may have a losing hand. The Senate, if they say no in the end, they win. You can say, well, I can hold up their pet projects. That might work a little, but they know in the end there's going to have to be a budget, and they'll sneak their pet projects in. In the end, I mean, you can make them stay until July, but so long as they say no, they win and you lose.

GOVERNOR HUNTSMAN: Well, everyone's going to win in the end because we're going to have a budget that is very, very good for the State. I'm a believer, having negotiated a good part of my life in different contexts that we'll come up with something, and the Senate will put forward, I hope, a thoughtful, reasonable, creative package whereby we can phase the sales tax on food out.

I don't think this is beyond reason that we could get there in the next few days, and I'm going to keep hope alive and hope that we actually get there by the deadline. If not, we'll do a minimalist budget for the time being. We'll make sure that education is funded. We'll make sure that the prison expansion in Gunnison is funded, that Capitol reconstruction is funded, that salaries are funded, and then we'll keep the 300 million dollars basically off the table and call everybody back in April and figure out how that breaks down.

I've already given you what I think the proper breakdown is for that 300 million is. I think it makes eminent sense and I suspect that most of the citizens of the State would support that, but it may be that we have to focus on this 300 million in a month from now as opposed to this week.

DAN BAMMES, KUER: Governor, we have a budget related question from Lee Austin of Utah Public Radio at our remote site in Logan.

GOVERNOR HUNTSMAN: Thank you.

LEE AUSTIN, UTAH PUBLIC RADIO: Actually if you've covered these sessions, it does seem like a long time to Wednesday midnight when you've got to reach an agreement. Are meetings scheduled? Are you absolutely down to your final offer or do you anticipate additional give and take with the senate?

GOVERNOR HUNTSMAN: Well, I've given about three times, and I think what is on the table, Lee, is a very reasonable approach to getting us forward, and a very reasonable way of allocating the 300 million dollars. We will be meeting on a regular basis in the days ahead, and my door is always open. We've been meeting regularly for the last few days. I'd like to consider my board room a type of Switzerland of sorts. It's neutral territory where anybody can come in and they talk about whatever is on their mind. I think we'll get there. I'm going to talk today more and more with members of the legislature about this budget for the 300 million dollars, how it breaks down and why, and we'll see if we can rally more support through it.

TOM JORDAN, METRO NETWORKS: What sort of coalition are you bringing to bear on this? You're not going this thing alone. Who else is going to be working on your side to try to change the Senate opinion?

GOVERNOR HUNTSMAN: Well we've got the House, a good part of the House, I don't want to say we've got the entire house, but we do have important elements of the House. And I think there are elements of the so-called moderate caucus. There are Democratic legislators who I've talked to, including Mike Demitrich yesterday, who are very much in favor of what it is we are trying to do. So I suspect we're going to have a lot of support by the end of today behind this budget.

RICH PIATT, KSL-TV: In your years as a diplomat and your experience in government and in business as well, have you ever encountered negotiations that have gone like this?

GOVERNOR HUNTSMAN: Oh, yes. (laughter) Oh, yes. I won't describe specifically which ones they were, but some of them had to do with certain foreign parties.

RICH PIATT, KSL-TV: It's so entrenched, I mean like I said earlier, it is easy to say no, but what do they have to offer, I guess is what I'm wondering. Is that what you're wondering as well?

GOVERNOR HUNTSMAN: You hope as a negotiator that the answer is, "No comma, but here is something to consider," which of course is what most people call a counter offer or a counter proposal from which you can then kind of remake the assumptions and move forward toward a pathway toward resolution.

RICH PIATT, KSL-TV: But it doesn't sound like you're getting that from the Senate right now. You're not getting the comma.

GOVERNOR HUNTSMAN: Not quickly enough. I think we did hear some things with respect to a phase out over time a couple of days ago, and I commend a couple of senators for raising that as a possibility, so I do know that there is at least some support from the Senate for a phase out scenario which would be done very carefully, very thoughtfully, very meticulously over some span of time. There might even be performance efforts involved to make sure that the State was generating enough revenue before we gave permission for the next year's phase out.

I don't know that you can ask for more than that, but what is important to me is that at the end of four to five years, you're guaranteed sales tax coming off of food in toto, which listen to the average family of four means $40 per month. Now, tell me that isn't important to a lot of people. That $40 per month gets plowed into into other sectors of the economy. Some say it is harmful or deleterious toward the base, I say no. This is money that is freed up and used in other places in the economy.

ROD DECKER, KUTV: The legislators have passed an energy policy which includes promotion of nuclear energy. Some Southern Utah legislators say they want a nuclear power plant in Southern Utah. Will you support the promotion of nuclear energy? Will you support a power plant in Southern Utah? Does saying that we want to promote nuclear energy contradict what we have been saying for years about waste disposal on the Goshute reservation?

GOVERNOR HUNTSMAN: That is not on my energy agenda right now.

ROD DECKER, KUTV: Are you going to approve this energy policy?

GOVERNOR HUNTSMAN: Well I'll take a look at it. I'm excited about renewables. I'm excited about using what our state offers, naturally, in terms of our natural resource base. There's a lot we can do with tar sands, and shale and natural gas. A lot we can do with renewables. We've got a lot of wind, we've got a lot of solar and hydro capabilities.

I'm going to wait until such time as the U.S. Congress has figured out how to deal with on site storage of spent fuel. As soon as they can figure that one out, maybe then it will be time to talk about how we'll forward in terms of nuclear power strategy, but that is incomplete right now, and so, as a result you've got to take that waste and put it someplace, and right now people are still looking at Utah and places like Nevada, which is totally unacceptable. So let's solve that dimension first, before we figure out where nuclear power goes as a policy.

DAN BAMMES, KUER: Governor, your bill for the western presidential primary, last I checked, was at the bottled up in the rules committee because of the cost, $850,000. Are you despairing of geting that passed in this session of the legislature?

GOVERNOR HUNTSMAN: I think we're going to get it done. It has bipartisan support. It is good for both parties in this state. I'm doing it jointly with Governor Richardson. We've got three states already lined up. I think we can get probably another two or three, and I've already had conversations with at least three, maybe four possible presidential candidates, and they have cited the importance of a western states primary and how that would attract them to the region, and I think we're on to something here that could be very, very good in terms of helping candidates understand what are uniquely western issues.

A lot of people on the west coast and the plains states don't quite comprehend land issues, nuclear waste issues, how we fund education, for example. There're just lots of uniquely western issues that candidates running for president need to better comprehend and grasp.

LISA RILE ROCHE, DESERET MORNING NEWS: Taxes aren't the only controversial issue up on this hill this year...

GOVERNOR HUNTSMAN: ...so I hear...

LISA RILE ROCHE, DESERET MORNING NEWS: ...and you have raised concerns about a couple of the bills that are moving through right now. One is dealing with the gay clubs issue, attempting to ban gay/straight alliances on high school campuses, and the other one is the origin of life or not the origin of life, depending on how you look at the latest language. You expressed concerns about those. They seem to have gotten a lot farther than you hoped they would. Are you going to veto those when they hit your desk?

GOVERNOR HUNTSMAN: In fairness, I'll take a look at them when they make it as far as my desk. I don't know that they'll make it that far, but If they do, I'll surely take a look at them and measure them against what I said on the record before. I have a pretty clear perspective on both those issues, and I'll apply the same standard when it comes to whether I veto or sign.

LISA RILE ROCHE, DESERET MORNING NEWS: Are you surprised they got as far as they did given the message you sent fairly early on in the session that this wasn't the time to be dealing with these so-called message bills?

GOVERNOR HUNTSMAN: They're still not on my desk. Moreover, what you're looking at are largely watered down and diluted and fairly benign statements in some cases. So although they've moved along, in some cases they've moved along because the language has been altered rather significantly.

ROD DECKER, KUTV: You mentioned special tax breaks for oil, gas and mining and you mentioned the disability list. I take it you favor the 9 million this year, 9 million next year, 9 million for four years for them or do you favor nothing at all with respect to taking the sales tax off inputs for oil, gas and mining?

GOVERNOR HUNTSMAN: I'm at zero...

ROD DECKER, KUTV: ...this year? ...

GOVERNOR HUNTSMAN: ...I don't think in the case of oil, gas or mining they need any help at all. I looked at their quarterly returns recently and I think they're doing just fine. As it relates to other input possibilities, maybe for telecommunications. There may be one or two others that would represent good sound investment policy. I'll take a look at them, but I'm not looking at any bail outs for gas, oil and mining companies right now.

ROD DECKER, KUTV: Some senators feel very strongly about them. Will you swap them for as part of a compromise deal?

GOVERNOR HUNTSMAN: Well they feel so strongly they got 60 million right through their body lickety split. I'm willing to look at some investment that would be in the name of sound economic development, and that is encouraging investment, encouraging the purchasing of capital equipment and componentry that goes into expanding the economic base, that's more than a bail out. I'll look very, very carefully at what is on the table, and I know there are four or five different proposals. As it relates to gas, oil and mining, I'm simply not there.

TOM JORDAN, METRO NETWORKS: There are a several bills that are chipping away at the authority of the Governor's office. What is your feeling about that? Is this another issue where you're going to study them and possibly use a veto?

GOVERNOR HUNTSMAN: I think this is fairly endemic to the office, I find that in almost every other state, the same kinds of things happen between the branches of government. I'm not sure that it is unique or exclusive to our situation here by any means. I will do everything I need to do to protect and preserve the authority of the executive branch. I don't want to see it diluted. I want to see the flexibility maintained that a Governor needs as they move into the future, and if I have to veto some of those measures I will, as I've stated before.

BROCK VERGAKIS, ASSOCIATED PRESS: Governor, the smoking ban in private clubs faces a lot of resistance because people are afraid it is a violation of personal property rights because of the private club desigation. If we had just regular bars like they have in other states, would this even be an issue and what opposition will we face in making that switchover?

GOVERNOR HUNTSMAN: We'll have to see. I'm on the side of the ban. If London can do it, if New York can do it, if California can do it, I think Utah can certainly do it. I look at it through the eyes of those who are working in these clubs. There are a lot of good men and woman who make their livelihoods working in these clubs, and to expose them to an unhealthy work environment is probably not a good thing, and that really is the heart and sole of my opposition.

DAN BAMMES, KUER: Governor, we have one final question now from Lee Austin at our site in Logan.

LEE AUSTIN, UTAH PUBLIC RADIO: It's sort of been suggested in recent questions, the the question of constitutionality. How much will that weigh when the bill gets to your desk as to whether or not you will veto something that many people think would prompt lawsuits and ulitmately the state would lose?

GOVERNOR HUNTSMAN: Constitutionality will factor very heavily into the decisions I make. I want to make sure that what we support and what we affix our name to is constitutional. There are a couple bills coming our way that do carry that question mark about constitutionality. I've got good people who are on our staff who are very good at vetting these things, vis a vis the constitutionality question. A lot of my decision making will be based on that very outcome.

DAN BAMMES, KUER: Governor, you have proposed all day kindergarten for Title One schools and that passed but not without some significant opposition from very conservative members of the Utah house. Are you surprised that somebody can find something they can object to in all day kindergarten?

GOVERNOR HUNTSMAN: I'm not surprised at all. When people start talking about our schools as government schools, trying to infer that there is somehow something sinister going on because we have public education, that just does not resonate well with me or probably most people in the state. I'm doing it because out of our achievement gap discussion, there came a concern that we weren't capturing kids early enough in their cognitive development, particularly those in the Title One schools who need it most. This came out as one recommendation.

I looked at what other states have done with respect to all day kindergarten. I even looked at what some of our Title One schools have done already in the state, and there's much to show in terms of progress and success, and I think that we're on to something here and it is very, very good for kids who are struggling and kids who are in need of the extra push at that age in life, particularly those who are struggling with issues like English as a second language and need the extra time and attention that kind of an environment will provide.

RICH PIATT, KSL-TV: Governor, I think there is only one minute left. I'm wondering about your final thoughts about this session. Is it turning out as you thought it might? Is it going in a completely different direction than you thought?

GOVERNOR HUNTSMAN: No, this is largely how I thought it would turn out because we're dealing with unprecedented numbers in terms of overall surplus, and we're dealing with issues that have an unprecedented level of complexity, and because of that, it's no surprise we're where we are today and might even threaten to go into a special session. That isn't all together a bad outcome, so long as what we get in the end is a good public policy for the citizens of this state.

DAN BAMMES, KUER Thank you very much, Governor Huntsman. I would like to remind our viewers that a transcript and video recording of the Governor's monthly news conference is available on the Utah Education Network website at www.uen.org, and once again, thank you.

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