June 24, 2004

We have several initiatives we're still going to roll out as we had planned, and I’m excited about those initiatives. We're working hard on tax reform, which I’m certain is going to provoke a lot of questions, a lot of thought.

Reporters (in order of appearance):

KEN VERDOIA, KUED
DAN BAMMES, KUER
DAN HARRIE, SALT LAKE TRIBUNE
RICH PIATT, KSL-TV
JERRY SPANGLER, DESERET MORNING NEWS

Transcript:

KEN VERDOIA, KUED: Governor, thanks for joining us today.

GOVERNOR WALKER: It's my pleasure.

KEN VERDOIA, KUED: The race is now set for governor in the general election. Have you given a thought to any role you would choose to play, or like to play in the coming months?

GOVERNOR WALKER: I think the campaign has a life of its own. I think I'll concentrate on being governor. I've got six months left, a lot yet to accomplish. We have several initiatives we're still going to roll out as we had planned, and I’m excited about those initiatives. We're working hard on tax reform, which I’m certain is going to provoke a lot of questions, a lot of thought.

I'll continue to work on the watershed issue, and wilderness issue. We want several counties to start looking at wilderness in their communities. We're encouraging them to bring the people to the table on all sides, and we want to see those counties move ahead so a process is in place, and we'll continue to work on RS-2477 roads, and I’m going to be out planting trees on watersheds. So I've got a busy schedule and I'll concentrate on those areas.

KEN VERDOIA, KUED: These are your issues.

GOVERNOR WALKER: Yes.

KEN VERDOIA, KUED: And you had additional issues that you advanced in your own candidacy. What if you see these not coming to the fore in the political process, will you be an advocate for getting these issues front and center?

GOVERNOR WALKER: Well, I'd like to have them some of them so firmly in place that they would continue in some form. I recognize that a new governor will want to put in place his own issues and initiatives, but I’m certain that if you have the mechanics of certain initiatives in place, that they will continue on.

For example, the initiatives that we're helping foster children transition into adulthood. I’m hoping that that is so firmly entrenched that it'll become part of the system. I’m hoping the focus on making certain every child reads will continue on in the next administration. They can call it by a different name, I’m comfortable with that. But the thought that we've got to look at individual students mastering basic skills, I hope, becomes ingrained in our educational process.

I’m hoping the process for resolving the roads and the wilderness issue will be so firmly in place that that will continue. I don't care if the next governor takes credit for it, or calls it by a different name in any of these areas, but I think they are, in every case they are processes that benefit the citizens of the state, so I’m hoping they'll continue.

DAN BAMMES, KUER: Governor, the Granite school district newsletter came out saying that in order to fund the reading program that you proposed, they were required by the state to raise their own local property taxes. Was it your intention to require local districts to raise property taxes in order to fund this reading program?

GOVERNOR WALKER: Quite frankly, in my budget I put $30 million in of state funds, and as we know that we had a very difficult budget. I concurred with the legislative proposal to put half of that $15-million burden on local districts. And quite frankly, I feel that school districts should take a greater burden in determining programs and funding in school districts. So I am comfortable with that. Some went to the tax increase, but many of them did it with funds that, from other sources that they could use to match. We left that option up to the school districts. But I think that, in the last 40 years, we've seen a significant shift of responsibility for funding education from the local districts to the state, and that was the result of equalization. It's tough to equalize Piute school district with Park City school district without the state assuming the bulk of the responsibility. So it's become a state issue, but on this one I’m comfortable with having it jointly shared with school districts.

DAN BAMMES, KUER: So you feel your reading program is sufficient justification for local districts to raise their taxes?

GOVERNOR WALKER: I think that's true. Now, it's very difficult to ever justify a tax increase when we're having increased revenues. But we were dealing with this issue when the revenues weren't there, and I think the commitment of the local school districts for responsibility for education should be there.

DAN HARRIE, SALT LAKE TRIBUNE: Governor, you've tentatively called a special session for Monday to deal with one specific item- -

GOVERNOR WALKER: Right.

DAN HARRIE, SALT LAKE TRIBUNE: - -the streamlined sales tax. Are you seeing requests to put other items on there, and do you think the legislature will be asked to deal with other items in that special session?

GOVERNOR WALKER: Of course. Every time you special session you have lots of requests. But we have agreed to keep it to one item, and that's what, at this point, I will follow through on that direction.

DAN HARRIE, SALT LAKE TRIBUNE: What about the Carson Smith scholarship program? You had, several months ago when you vetoed that, you made it sound like it was quite urgent to fix that so that you could get funds to disabled kids to go to private schools.

GOVERNOR WALKER: There are several items that we will have to have a special session for in September, and August- - August or September. And so at that time we will have additional bills, or some that have come to light, but certainly the Carson Smith is one issue, the abortion issue is another one that senator Bramble is working on.

They're working on, ironically, the unfair practices act that was the issue in an override session. There have been many that have come back and said we really need to fix that bill. So there are two or three that now are geared to a special session in August-September, if we can get agreement on those bills.

I think it's very difficult to call a special session without agreement on the bill. So we're looking toward consensus on those bills, at least the majority vote that we can get through, those are the items that have been discussed. Whether they'll end up on the call I don't know at this point. Will there be additional items? Again, I don't know that any have risen to the forefront. There are some issues on buildings that many want discussed. We'll have to see how they play out.

DAN HARRIE, SALT LAKE TRIBUNE: On the streamlined sales tax, my understanding is there's two issues. One, there were some hidden tax increases in that legislation, and number two, there isn't software available, and businesses are going to have a difficult time converting to a new system of sales tax collection. Do you want to just postpone that for a year? Do you anticipate other changes to it? Some elimination of these so-called hidden taxes or- -

GOVERNOR WALKER: Actually, as I understand it, there were some tax increases in certain areas by definition, and tax decreases. So the bill basically was revenue neutral. There are issues that some small businesses feel they cannot be ready. There were some who felt there was going to be new software. I understand from some senators there exists software that's available, but it isn't applicable specifically to Utah, that can be used. Nevertheless, most of the new businesses, large businesses, and medium-sized business are ready to go, but there are many small businesses who feel they need extra time. And so for that reason we're looking at delaying part of the bill. But as my understanding--and even as we speak it's being drafted, so that I’m going to have to wait and see the draft before we make the call--that parts of the bill will be delayed, but the overall bill will go into effect.

RICH PIATT, KSL-TV: Governor, now that you are, now that the governor's race is set for the fall- -

GOVERNOR WALKER: Yes.

RICH PIATT, KSL-TV: Perhaps you have a little better idea of, you know, your ability to speak freely on some issues. I’m wondering, given the state of the state's budget and the trend that's happening in other states, as well, what do you anticipate the likelihood is that the next governor may have to consider or propose a tax increase?

GOVERNOR WALKER: Actually, our state is looking great in terms of revenues. Now, maybe great is an exaggeration, but certainly the revenue picture is much improved from a year ago, or when I did the budget last October-November.

We are having job increases at 2 percent, which is a remarkable rate of job increase. We just finished two years of job decrease, and so to have a 2 percent job increase for this year is quite remarkable. In terms of the budget, the last TC-23 report said that we had $98 million surplus, and $11 million in the transportation fund. Of course, half of that money will go in to replenish the rainy day reserves, and of course I’m delighted with that increase in reserves.

Now, those increases don't solve all of the fiscal issues in the state of Utah, but it would certainly indicate that our economy is recovering, the rate of jobs increase is quite remarkable, and the fact that our revenues are well above projection is a positive. Our unemployment rate has dropped to 4.5. That's the lowest it's been in the preceding two or three years, it shows that we're on the right path. And the new jobs are across the spectrum. We even have new manufacturing jobs, which is a great report to get.

RICH PIATT, KSL-TV: You are a big advocate for education.

GOVERNOR WALKER: Yes.

RICH PIATT, KSL-TV: Education needs more money. Sitting where you are right now, what needs to happen to make education well funded in Utah? Do we need to raise taxes? Do we need to streamline something? This has been going on for years, people are frustrated. I’m wondering if you have any thoughts about what you would like to see happen in the future.

GOVERNOR WALKER: Well, I’m a strong advocate for education. I’m also a very fiscal conservative. I think that we cannot drop below where we are in terms of funding, and indeed, I would like to see some increases.

I have erased the term "adequate educational funding" from my vocabulary, because with the number of students coming into our school system, we'll have 7,160 new students this fall, and you've all heard the numbers, 145,000 in the next ten years compared to 17,000 in the last ten years. We will have significant pressure, financially, just to keep the position we are. It would be my delight to have us move to 49th. I would consider that a major achievement. Will we ever be 25th? 21st? No. As long as our birth rates and birth patterns exist, we won't move up to average. So "adequate funding" is a term we may never be able to use.

But what I would like to see is significant funding for the basic skills, so that every child not only learns to read by the end of the third grade, but has the math skills they need to get good jobs, and I don't know the criterion of that, but certainly by eighth grade they need to have some algebra, et cetera, and writing skills. Because I think they're basic to getting along in today's society.

Do we need additional funds? Absolutely. Am I willing to raise taxes significantly to get it? No. I think we've got to prioritize, we've got to use money wisely, we've got to figure out new rationale in our taxing system, and again, that's something we're working very hard on.

We will have a tax reform package ready for August 1st. Will it be accepted? Probably not. Because it will make significant changes in our taxing system. And the ones that think it's great we'll never hear from, and all those that are hurt personally by it will be out picketing. But I’m hoping the public will look at it, analyze it, and recognize that we need to look at our tax system to bring it up to the needs of the 21st century.

KEN VERDOIA, KUED: Governor, I’m trying to put several of these pieces together.

GOVERNOR WALKER: Yes.

KEN VERDOIA, KUED: You've advocated tax reform, you're studying, you're looking, and you've been concerned about the polls. Now, you've talked about the need to get some money for education, yet not a significant across-the-board tax increase. Could not your tax reform package be something better than revenue neutral? Do you think your tax reform could, in fact, produce new monies?

GOVERNOR WALKER: It depends on the legislature. We're setting the basic principles of tax, and part of those tax policy is those that spend it should raise it. So we're looking at such things as vertical tax sharing, the needs- - we're looking at both state needs and local needs. We're looking at some new concepts, we're looking at keeping Utah business-friendly. We're looking at many changes in our tax structures, in our income tax structure, as well as our sales tax structure. Many of those have the potential for getting more money to education, one particular recommendation, but we're looking at a tax structure that makes sense.

Our plan is not to increase taxes, but to provide the very basic structure that makes sense. Now, it'll be up to future legislators, what they do with increasing taxes or decreasing taxes. But we're mainly looking at the structure of the tax system, which is a major undertaking. And any time you do that, it has real political consequences, and so that's one reason I’m not certain that it will pass. But certainly I’m hoping that it will be a focus of discussion.

DAN HARRIE, SALT LAKE TRIBUNE: More progressive income tax? Is that one of the features of your proposal?

GOVERNOR WALKER: Well, one of the things we are changing, looking at, is changing the income tax significantly, and I'll wait until the 1st of August to let you know what we're proposing.

KEN VERDOIA, KUED: Do you think this is a uniquely good time to get this done, so that it doesn't burden the next administration? I mean here you are, you have this opportunity without political fear or favor placed upon you. Do you think the time is right now to get this done, rather than put it off until after an election?

GOVERNOR WALKER: It's turned out that that's probably true, because there are many things in the tax reform package that it would be very difficult to impose if I were a candidate. I've already seen the effect of the tax reform, because, for example, the realtors were very concerned about my tax reform package, and they did have an effect on the convention election. "tax reform" is a word that's easy to say by political candidates, but very hard to implement. And the fact that I’m not a candidate will make it easier for me to put it forth.

I've had the best people in the state in tax analysis and policy working with me on the tax reform package. There are significant changes that we're going to recommend. We're still analyzing it in terms of the overall effect, but it's always difficult for a politician to look at tax reform, because those that benefit, you don't hear from, and anyone that's hurt significantly, and you can't do tax reform without taking from some and giving to others to make it fair and just. So it is very difficult to implement. But we felt that it needed to be looked at.

When I announced that I was going to do it, I did it after I’d worked with the budget. It's something that we need to do in Utah. And even then, despite the fact that I thought maybe I would be a candidate, I felt it needed to be done, and I was willing to take the risk and put a deadline on it so that it would get done. Tax reform is something that, if you announce and not have a deadline you could put it off forever, because of the political ramifications. It will be ready August 1st.

RICH PIATT, KSL-TV: One of the candidates has already taken on tax reform as a campaign issue in a way. Jon Huntsman, Junior is proposing at some point eliminating the sales tax on food. He's also taken on ethics reform, which has traditionally been a democratic issue. From where you sit right now, in the governor's office and knowing what you know, how difficult of a fight is he going to have to move forward with those two proposals?

GOVERNOR WALKER: Well I think that when you look at taking away the sales tax on food, you have to have a replacement. Now, it's easy to say that we'll just do that with efficiencies, but I think that Utah's recognized as having one of the most efficient governments, in the state of Utah we're very fiscally conservative. In fact, Moody's, in our discussions on bond ratings, said that if they had a 4-star category, Utah would stand alone in that, because we manage money so well, and effectively. And basically, I think after three years of cutting departments, many as much as 10 to 13 percent, anyone will have difficulty finding $240 million to replace the sales tax.

Now, I think, since having Gary Herbert as a running mate, he's revised that and said he wouldn't affect the local tax portion of the food sales tax. But in reality, because of the stability of the property tax, the counties have generally been better off than the state during this last revenue shortfall. So I think if he becomes governor he's going to have to look at that in a little different light.

JERRY SPANGLER, DESERET MORNING NEWS: Governor, RS-2477 has been a big issue for you. Recently San Juan county sued the federal government to acquire a road inside a national park, in direct conflict with the memorandum of understanding that was reached on that issue. Are the counties really on board with you on this? Are they going their own way to fight their own battles?

GOVERNOR WALKER: After years of having somewhat of a divisive approach from the counties' position, attorney generals and the governor, governor's office, we finally have a pretty working understanding of where we're going on roads, and we're working well together. And I give credit to Gale McKeachnie, lieutenant governor, for working on that issue. But I think for the first time we are working together.

I think the one thing that we have to realize that there will still be individual lawsuits by individual counties, we haven't taken away their autonomy. And even in the approach with the committee, there may be some additional litigation on roads that have been closed by either the BLMor the Forest Service. So we have a memorandum of understanding that we're working with on the majority of the RS-2477 roads, but there may be some different approaches, even looking at Title 5, which has not been looked at before, where the federal government gives us unlimited use of the roads. But even in those agreements we would put some consideration for additional court action under RS-2477. So we're looking at all options. But I think we're working together on that issue better than we've ever worked in the past, and I’m hoping that we can keep that coalition together to bring resolution of that issue for rural Utah.

DAN HARRIE, SALT LAKE TRIBUNE: Governor, in the primary election that was just held on Tuesday, the turnout turned out to be around 15 percent.

GOVERNOR WALKER: Right.

DAN HARRIE, SALT LAKE TRIBUNE: That's down from about 19 percent in the 2000 election, when there was a last statewide election in the primary. Is that an argument against the closed republican primary? It seems to be an argument that it depresses turnout.

GOVERNOR WALKER: The parties now control how they select candidates for the general election. And so that isn't an issue for the state. I think that if I were debating it I would use it as an argument for that conclusion.

KEN VERDOIA, KUED: Governor, we're moving into the last minute and 30 seconds remaining in our time together today, and I wanted to address an issue with you, because we are at the front end of the western wildfire season. We've seen fires develop in a number of western states already. And I know you and your office are very concerned that the month of July could be a cruel one if we don't exercise some restraint. What is your office doing, what are you urging now that the fire season is here?

GOVERNOR WALKER: This is the sixth year of a drought. Our forests are very dry, our grasslands are tinder, and we are working very hard to inform people that they have a responsibility, especially as we reach the July 4th period, to watch how they use fireworks, watch how they use camp fires, to avoid fires where fireworks or camp fires are prohibited. We have joined together as a partnership with the federal, local, and state level to have a multi-agency working group on putting out fires. But we're also stressing the education of individuals, because most fires are human caused. Now, there are a lot of lightning strikes, but we have to work together as citizens and state agencies to prevent forest fires.

KEN VERDOIA, KUED: Governor Olene walker, thank you. A reminder that a transcript and video streaming of this governor's news conference is available on line courtesy of the utah education network. That's available at www.uen.org. Until next month in this same location, thanks for joining us. Good night.

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