May 23, 2005

"We have new needs that we never envisioned in 1958 that are part of a growing population, that are part of a public education system that is being transformed with each passing year in terms of what our needs are and the standards that we need to live up to." -Governor Huntsman

Reporters (in order of appearance):

KEN VERDOIA, KUED
LISA RILEY ROCHE, DESERET MORNING NEWS
MATT CANHAM, SALT LAKE TRIBUNE
RICHARD PIATT, KSL-TV
TOM JORDAN, METRO NETWORKS
JENNIFER DOBNER, ASSOCIATED PRESS
JULIE ROSE, KCPW

Transcript:

KEN VERDOIA, KUED: Governor, thanks for joining us today. I guess we can start out with some good news. The economic recovery continues for Utah, and that spells good news for the state's revenues. And that's leading some people to say that it is the time to begin actively considering tax cuts for the income tax payers. You've expressed some reservations. Where do you stand on this issue of dealing with the good news of revenues?

GOVERNOR HUNTSMAN: Well, I'm going to approach the whole tax reform effort with a sense of revenue neutrality. Now, to me a lot of it's going to be wrapped up in the negotiation. I've got some ideas on the table that will take a serious look at our taxes based upon where they are today, which is basically as they've been since the 1950s, and what we need to do to truly make them competitive in the 21st Century. It might mean that we take a look at individual taxes, it might mean that we take a look at corporate taxes, it might mean that we bring people into the tax regime who have not been there before, recognizing that we're fundamentally a different economy today than we were when my grandfather grew up. All of this is going to be part of the negotiation over the next six months, and I'm going to do it with an eye toward simplicity, equality, revenue sufficiency, all of these are going to be very important guideposts as we go forward. Transparency is another one I would add to that list. All aspects of what I think need to be part of a tax code going forward.

It isn't going to be easy to achieve, and a lot of folks have said this is the reason that it has not been done in the last 50 years. It is a tough thing to do, but it must be done. But tax cuts for the sake of tax cuts, I don't know that anyone is necessarily, at least from my office, going to be advocating that. We have new needs that we never envisioned in 1958 that are part of a growing population, that are part of a public education system that is being transformed with each passing year in terms of what our needs are and the standards that we need to live up to. We have transportation, we have infrastructure projects that are going to be far different for 4 million people than they were for 1.5 million people. So I think it's going to be a very, very healthy conversation over the next six months to not only identify what our tax code needs to look like to be truly competitive, but perhaps to reassess some of our longer term needs.

LISA RILEY ROCHE, DESERET MORNING NEWS: Governor, you talk about the need to bring in new people into the tax base. I assume you're talking about extending sales taxes to services.

GOVERNOR HUNTSMAN: That certainly is one idea.

LISA RILEY ROCHE, DESERET MORNING NEWS: You're very focused on economic development. In fact one piece of your tax package is to take a, is to phase out corporate income tax. But what about the effect of taxing services on small businesses that provide services? Are you worried about that having a negative economic development effect, especially for smaller sole practitioners, for example, of various trades?

GOVERNOR HUNTSMAN: Well, what I am concerned about most of all is creating and maintaining an overall competitive environment. That is the objective at the end of the day. So that you have the small business people, men and women who go out and take out a loan and run a risk to start something, not give up as they are building their enterprise into something larger. And part of it is taxes, part of it is perhaps regulatory barriers, part of it is lack of advisory services that could help them grow to a larger size. Part of it might be access to capital. And I think all of these are being looked at as part of our economic development plan. But this is why we're going to take at least six months to look at tax reform. We do need to look at the analysis, we need to run the numbers, we need to run the numbers, as they say in the accounting field, to see exactly what these changes in the tax code would do to businesses everywhere. But I think a fundamental premise going into it must be that we are no longer the economy that we were a couple of generations ago, based on mining and manufacturing and agriculture. While they are still important pillars in our economy, we are two-thirds services based today. And I think we need to recognize that fact, and try to capture where, not only we are today, but indeed, what we're going to be in 20 years. And have a tax code that can accommodate those needs. And allow the free market system and entrepreneurship to continue to flourish.

RICHARD PIATT, KSL-TV: Governor, you mentioned the tax reform system in regards to the issue of fairness, as well. When you were running for office you mentioned that you were willing to expend political capital in order to do things that were for the good of the state. Were you referring to this tax reform idea at the time, or is that applicable in this case, do you think?

GOVERNOR HUNTSMAN: I was referring to tax reform at the time. Knowing that if we're truly going to have a competitive environment, we must take a look at our tax regime. And I've known that for some time. It's old, it's antiquated, it's an anachronism. And we need to get busy over the next six months in coming up with something that is more in keeping with who we are as an economy as we enter the 21st Century. And yes, it's going to take some political capital, and yes, we're certainly going to be running some risks, and there will be some who will balk at what we propose. But isn't that the nature of any kind of change as it relates to the tax code? I think Governor Walker put forth some good recommendations. It's not like I'm looking it recreate the wheel or impanel a new group of people to look at something altogether different. I think fundamentally we've got a good starting point, and I'm going to build on that good, solid foundation that has already been presented.

MATT CANHAM, SALT LAKE TRIBUNE: Last month we talked about a living wage a little bit. I saw on your schedule that you had a meeting with some advocates of living wage last week. I don't know if that actually happened. I wonder if you could tell me a little bit about how that meeting went, and what your thoughts are on living wage?

GOVERNOR HUNTSMAN: Well, I am interested in the living wage, as I was during our last meeting. I think I left our last meeting with the idea that I was going to get smart, and learn as much as I could about how it is impacting people in our state, and that was the reason for our first meeting. And indeed, it will not be our last meeting. We created a task force that Pamela Atkinson is going to spearhead for us. There were several people who were in on the meeting, and I told them that I'd done a lot of homework in terms of trying to understand the minimum wage versus the living wage, and who's doing what around the country. I mean we've got 123 cities and counties that are currently doing something about it. We have 31 states that have either taken action or might take action, have legislation pending. You've got Nevada, just to our west, that has done something that's tied to some sort of cost of living factor. And as I shared with the group, you know, even though I'm a good Republican, I'm a little bit concerned that during the course of eleven years we've seen no adjustment in the minimum wage in the $5.15 per hour number.

So what does that mean, then, for those who are trying to get by in our state? Does it mean that we have some in the private sector who are actually subsidizing many who are living at minimum wage through supplemental state programs? I don't know. But we need to get the analysis done, and as I shared with this group, I would like to look specifically at how this is impacting our working population. I know we've got a lot of people who are right at the line. And indeed, if you have a family of four or five, on minimum wage, just look at the numbers and look at the percentage of poverty level at which they are currently living. Is that sustainable? I don't think it's sustainable. So let's take a look at how it's impacting our population. Let's, then, take that analysis and try to hone it into some sort of public policy response. I don't know what that public policy response is going to be, but is there something we can do at a state level? I don't know the answer to that either. But I'm open to some recommendations, and that's, in fact, the reason that we brought the group together and why we're going to continue meeting as a group. To see what, from a public policy standpoint, we ought to be looking at to ensure that we don't have too many people who fall through the cracks economically in this state.

LISA RILEY ROCHE, DESERET MORNING NEWS: Governor, does tax reform help with that as well? For example, during the campaign you talked about taking the sales tax off food. There's certainly been efforts over the years to reduce the number of low income people on the income tax rolls in the state, for example. We talk a lot about economic development. But what about the other end of the spectrum, people who could be helped financially out of poverty by tax reform?

GOVERNOR HUNTSMAN: I think it's a very legitimate question, and sales tax on food will be part of our discussion over the next six months. It's why I haven't done anything about it to date. I wanted to make sure that I logically added it to overall tax re- - You can't do it separately. It's got to be part of an overall, more omnibus look at tax reform. But I do think the sales tax on food, just as one aspect of tax reform, could help a lot of those who are on fixed incomes, are working citizens, some who are retired. I've talked about it before, during the campaign, and I don't need to talk about it again, but I believe it hits people where it shouldn't. We're one of only eight states that still levy this tax, and I believe that it will get a fair hearing as we put it in the overall tax policy task force. That's where it belongs, and I think it will be debated fully there.

KEN VERDOIA, KUED: Governor, one of the issues that's often brought up when the discussions of wages are considered here in Utah, is the infusion of undocumented immigrants into the United States. It's had a profound impact on border states, Arizona, New Mexico, Texas, California, obviously, but increasingly there are tens of thousands of undocumented men and women working in Utah, many times in service sector jobs. Some voices argue that they are artificially keeping wages down because of willingness to work at hard labor jobs for less pay. Are they, in fact, coming into the mix in our economy? Are they contributing to this climate where wages are not moving apace to meet the needs of families who live here?

GOVERNOR HUNTSMAN: Well, I can only tell you that, based on what I have seen and heard, our undocumented work force is a critical piece of our economic well-being. You have places like Park City, for example, that rely heavily on this labor force. And I suspect in the agricultural sector, for example, there is, again, another area that relies significantly on this labor pool. So is it a part, an important part of our economic well-being? Yes, it is. Does it artificially hold down wages? I don't know the answer to that, but perhaps that's something that will come out of our discussion on living wage.

MATT CANHAM, SALT LAKE TRIBUNE: The Utah Public Employees Association agreed, or decided to sue the state over House Bill 213, which removed benefit, or sick leave benefit after retirement. I wanted to get your reaction to that move, and tell me what you think that's going to do to the relationship between that public employees association and the state government.

GOVERNOR HUNTSMAN: Well, I am a public employee. And as I told UPEA when they were in my office just a couple of days ago--very good people by the way, and a good group--I told them that I'm a public employee, and I don't like to differentiate between the governor's office and public employees. They haven't launched a suit formally. They have talked about it but it has not been launched, and we are in discussions with UPEA to see if there's anything that can be done short of what has already been envisioned legislatively. We have to remember that this issue has been studied for two years, we're up against new accounting standards that are being foisted, not just upon us, but every state in America, so every state has to deal with this in some form or fashion, and that is the way in which you account for sick leave going forward. And then how you accrue for that. And the implications, of course, are many, and that is will it impact your overall bond rating? We now have a AAA bond rating by Moody's and Standard & Poors, and perhaps there's another. But we're one of only a very few state that is enjoys that kind of rating, which gives us a preferential cost of capital. So there's a reverberation effect here if something isn't done in terms of how you account and accrue for sick leave. And is there a different way to go about doing it? I think it was looked at pretty exhaustively, pretty comprehensively in the last two-year review. But I'm certainly willing to talk to UPEA, as I'm doing now, evidenced by our meeting just a few days ago, to see if there's anything else that we ought to be looking at. And I think they're willing to maintain this discussion before they formally launch any lawsuit. I know that many thought that they had already launched that suit, but they have not formally.

RICHARD PIATT, KSL-TV: Governor, a couple of months ago you came out in favor of a stand-alone stadium for the ReAL Salt Lake soccer team. Salt Lake and Murray have been vying for this, and now, within the last couple of weeks Sandy has indicated its interest in building a stadium, but part of their proposal is using money that was originally earmarked for a parking garage for the convention center down there. I'm wondering if you have any concerns about the way this issue is going and progressing, and if you foresee any opportunity to exert your leadership authority to guide it in any way, or if you're anticipating that.

GOVERNOR HUNTSMAN: Well I'm not sure it needs any involvement at my level at this point. I stick with my original premise, which is I think the time is right for soccer in Utah. I've been impressed with ReAL, I think they're on a winning streak. I've been out to attend one of their games at which there were 25,500 spectators. Los Angeles turned out 18,500, just to give you some sense of comparison. We turned out close to 15,000 on a work day evening. So clearly the market is there, and I think there's enough in the way of economic possibilities to support a stadium. Now, where it goes, I don't think it's up to the governor, who is interested in the whole state, and not just parts of the state, to micromanage. I think we leave it up to local officials to determine what they're willing to do to attract the stadium and what the sustainability is. Now it might be, it might be interesting to do some sort of demographic study at some point to see where we're drawing the ticket holders from. And if you have it south, is it going to present a problem for those who would otherwise attend something in the downtown area, or the other way around? Some could argue that the vitality of Salt Lake is at stake, while others would say, well, our new center of our population center is about 100 South when you look at the way in which we've grown over the years. So my interest is in getting a stadium done. I think we have a market that would support that, I think we have an excellent team that is going to create, really, a new very enjoyable activity for a whole lot of people in Utah who play and enjoy soccer. I'm going to leave it up to local officials basically to decide where it ought to be, and not inject myself where I don't belong.

RICHARD PIATT, KSL-TV: Is this an economic development tool, though, do you think? Do you think the public should infuse money into it somehow?

GOVERNOR HUNTSMAN: Well, a public-private kind of partnership would not be unheard of. I don't know that you can name a lot of stadia around the country that have done it any other way. I believe the Delta Center was basically done in some, with some type of public-private partnership. I think a lot of what we did with the Olympics was public-private partnership. And I suspect going forward those are the kinds of formula we're going to have to rely upon in getting this done. So I don't object, as I have said before, to that kind of collaboration in getting a stadium done for soccer.

TOM JORDAN, METRO NETWORKS: Governor, you've got a sort of ongoing committee looking into long-term water funding. Just recently Las Vegas popped up with a $2 billion plan to tap an aquifer which runs under a good bit of the west side of Utah. St. George at the moment is talking about a billion and a half to build a pipeline for water needs that they need. Where do you see this issue of funding versus growth heading? Obviously these are extremely large numbers, and they're going to affect all of us if we start tapping into sort of major resources involving aquifers. Where do you see this headed?

GOVERNOR HUNTSMAN: Well, we need water to survive. This is my fundamental premise in starting this conversation. Yes, the drought is probably behind us, but no, our water worries over the next 20 years aren't. We have a growing population, a thirsty population, we live in an arid part of the country, we're going to see these cycles between drought and floods as we're seeing right now. I mean it's almost silly to be talking about water needs when we've got communities today that are deluged with water, going down their main streets. But, indeed, it is a cyclical thing, and we're going to have to look out for our needs over 20 years.

The Lake Powell pipeline project, which last time I looked was around 350 to $400 million project. Not 1.5 billion. I think 1.5 billion represents the totality of water projects in the state over the next twenty years or so. Now Cedar City is looking at participating in the Lake Powell pipeline project. This needs to happen. When you look at one of the fastest growing parts of the United States, not just Utah, but the United States, it is Washington County. It's the southern part of our state. And I don't think that's going to abate any time soon. They're looking at a new airport, I was just down in Hurricane a weekend ago, and they have 4,000 homes on the drawing board. If you can imagine, Hurricane, I mean on the surrounding hills. And the amount of business that is moving there, the need clearly is there and will be over the next 20 years to ensure that we've got a steady flow of water.

So Lake Powell pipeline project will be a must. The question becomes, when do we get it done? Is it on the 20-year project schedule, or does it become on the 10-year project schedule, which I'm arguing might be something we need to look out for, as opposed to 20 years. And the same with Bear River drainage. I think that's likely going to have to be expedited somewhat. Do we finance it through bonds? Do we finance it through user fees? I guess there are several creative ways of looking at financing it. We'll get the financing done. I just want to make sure that our local communities are doing everything they need to do in planning for these projects. So if we chose to put them on a 10-year time horizon as opposed to a 20, that we could, in fact, get them done.

JENNIFER DOBNER, ASSOCIATED PRESS: Since we're talking about water, can you tell us what you know today about the flooding situation around the state and where the high-risk areas are right now?

GOVERNOR HUNTSMAN: The high-risk areas, as of this moment, really are the Sevier River. We have at last count this morning about 23 homes that are in jeopardy along that river. It will probably reach its flood peak in the next day or two, which is to say that we have about, 1.9 inches of runoff per day now is kind of our run rate. And I think we'll add another, several more inches to our peak level in the next day or two to the Sevier. Already at flood level. So you can imagine what might happen there. We're watching the Weber, we're watching the Santa Clara, those are really the areas of some vulnerability.

The good news, and as it has been explained to me by the hydrologists, as compared to 1983, is we've put a lot of money and time into clearing and dredging and fortifying these rivers in the months and the weeks leading up to the events of this week. Which is to say the Army Corps of Engineers taking the debris out of the rivers. You remember back in 1983 a lot of the problems were caused because we had clogged rivers and the water had nowhere to go. Today the water has someplace to go. Even though the runoff is going to be as voluminous and as aggressive as we've seen in peak years of '83 and before that, it now has someplace to go, and we hope that because of the cleared water ways, because of the fortified banks, like those I saw along the Santa Clara river in St. George just a couple of weeks ago, will go a long way in ensuring we have less in the way of property damage.

JULIE ROSE, KCPW : Farmers are sure to suffer in the flooding, it would appear. Is there some hope for agricultural aid, as well, financially?

GOVERNOR HUNTSMAN: I do believe that that will be part of it. I'll be meeting with our secretary of agriculture in the next couple of weeks to brief him on this. We've done well, I might add, through the NRCS and through the agriculture relief services in getting money for those who have lost vital agricultural space to flood, to flood waters. We're going to probably see a little bit more of that, unfortunately. And we'll continue to work aggressively with our own department of agriculture here through the U.S. Department of Agriculture in doing everything we can to make sure that we get just compensation.

MATT CANHAM, SALT LAKE TRIBUNE: The Utah Transit Authority is a quasi-governmental agency. Some lawmakers are upset by them acting a little bit more in the private realm than the public realm with executive salaries. And some of the state leaders, including the senate president, would like to put some more controls on their board of trustees. What do you think about that idea?

GOVERNOR HUNTSMAN: Well, it is a separate entity, and it is governed by a board of trustees, and like any entity of its kind the board of trustees really needs to manage these governance issues, which includes compensation. And if the marketplace is telling them that it is out of whack with regional positions, then it's incumbent upon them to do something about it. If, on the other hand, the board of trustees feels comfortable with the salary where it has been set, based upon comparable jobs in the region, then that's something they have to stand up and defend. That's not something that I'm going to do for them. There's a board of trustees that is responsible for that. They have to look at comparable jobs, they have to look at what is needed to retain talent in what is truly an important area for us going forward, and they have to set that mark.

KEN VERDOIA, KUED: Governor, we have about a minute left. Thinking back to your campaign for governor, you made an important point during your campaign that the time may be at hand for us to reconsider our plans for the future of the Utah State Prison. Perhaps a relocation away from its current setting at the south end of the Salt Lake valley. Produced some controversy at the time. I'm wondering in your first five months in office, have you advanced that notion, that planning, that consideration? Is that a plan that you would like to see come to life?

GOVERNOR HUNTSMAN: We're going to let the numbers tell that story. We have launched an RFP, and I suspect within six months we'll have some data, some numbers that will allow us to make that decision. Which, for me, is going to be based on cost recoverability. If we take the 750 acres, some of which is protected land, by the way, and if we sell it, are we able to pay for the move, and the infrastructure that would be relocated someplace else? So there wouldn't be any kind of cost to the taxpayer. That for me is a very important part of it. And if we find that the answer is no I'm going to be less enthused about this as a possibility. We also have to look at capital investment costs to keep an old 1950s facility up and running, and that's not going to be cheap, and we have to measure everything against what it's going to cost just to maintain the status quo.

KEN VERDOIA, KUED: And on that we will remind you that a transcript of this and every Governors Monthly News Conference is available online courtesy of the Utah Education Network. You can find it at www.uen.org. Until next month, thanks for joining us, and good night.

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