Wednesday, September 21, 2016

UPDATE: Interim Session - September 2016

We had our monthly interim session meetings today to discuss burgeoning issues.  Here is a recap of my meetings.

Revenue and Taxation Meeting

We had two controversial items on the agenda today that warrant mentioning.  The first involved a presentation by the Governor's Office of Economic Development regarding tax credits issued to businesses who purchase equipment for the purposes of recycling.  The presentation was short and very focused on the administrative side of the credit.  However, our committee was more interested in the history of the credit and whether it warranted support or needed changes.  We specifically prodded GOED for details and they could not provide any on the merits of the program.  Here is a sample of that prickly conversation (my comments at 4:30):


The other issue on the agenda dealt with the recent Facebook tax incentive fiasco in Salt Lake County.   The conversation is spritied but quite euphemistic and esoteric.  Yet, if you know what you are listening for, its all here:



Majority Caucus

We had a couple special visitors to our lunch meeting today.


Donald Trump Jr. dropped by momentarily to say hello and offer a small stump speech.  He said he wants his father to win because we need a "disruptor" in the White House to change the course our country is on.  I agree with him on that point.  However, if Trump Sr. wins, we need to discuss the details of what exactly needs disrupting and how.


 We also were visited by Mark "Oz" Geist who served in Benghazi and was in the firefight to protect our ambassador during the attack of September 2012.

The Fight for Utah's Public Lands

We did receive a report from the chairmen of the committee overseeing Utah's lawsuit to regain control of its public lands.  Interestingly, we learned that while the media has hyped a $14 million cost for the litigation, to date the Legislature has spend just under $950,000 on the effort.

Government Operations Meeting

In today's meeting we touched on a few issues.  One issue involved embezzlement from a state employee who bilked taxpayers out of $800,000 over a decade.  Our committee discussed what state entities were doing to improve oversight and accounting procedures. Unfortunately, the state auditor indicated that there are likely other cases out there that have yet to be discovered.

We also discussed the minutia regarding when ballots are counted and discussed ideas on when the exact cutoff should be for ballots to be turned in.  There is a discrepancy between when rural post offices and urban post offices are able to process postmarked ballots they receive.

This is the update for now, but look forward to more exciting things to come...


Tuesday, September 20, 2016

The Future of Solar Tax Credits In Utah: Part 2



Things are heating up in the debate regarding Utah's rooftop solar tax credit.  In The Future of Solar Tax Credits in Utah: Part 1, I described the budgetary problem facing Utah's education programs due to runaway claims from purchasers of rooftop solar panel systems.  Also, here is a recent radio conversation we had on the subject:




The problem is not that rooftop solar systems are bad, but rather, that the cost to install a system has fallen so much over the past few years that the market is adopting the technology at an accelerated pace.  While this is great news for consumers and industry alike, it is bad news for schools.  This rapid market expansion has exponentially increased the number of income tax credits being claimed...and in Utah, every dime of our income tax funds education.  So, more rooftop solar systems means less money to pay for teachers, tutors, and textbooks, and thus, the urgent need for us to review the tax credit in its current form and make the necessary revisions.

The course of events regarding this issue has taken a different path than I had anticipated. We scheduled three stakeholder meetings during interim to discuss the issue. In our first stakeholder meeting we defined the problem.  Later, we gathered again to discuss potential solutions.  However, that meeting devolved into a complete disaster.  The solar community came prepared to talk only about funding an administrative shortfall to facilitate processing EVEN MORE tax credits for their business.  They came completely unprepared to talk about changing the tax credit itself.  When I asked if anyone had any ideas or solutions, other than a suggestion from one of my brave constituents, the only sound that could be heard in the rest of the room was crickets.

Even more exasperating was the disingenuousness of a major solar company based in Utah (which we will call Bulldog Solar) who asked me to defer on my bill during the 2016 Session so we could discuss the bill together over interim with big and small companies in these meetings.  During the session they felt that a larger group of minds would provide a better result.  In good faith, I agreed and held the bill at their request.

So, you can imagine my dismay when during our second meeting Bulldog Solar's legislative affairs person, the very person who asked me to convene these meetings, says:

"We don't want to talk about the tax credit.  We want to talk about the administrative funding issue.  We will talk to Representative Peterson separately some other time about the tax credit."   
Unbelievable.  When this legislative affairs person defended their business by pointing out how much sales tax revenue they created for the state, I pointed out the stark irony that they had lobbied hard to get themselves exempted from sales tax last session.  They didn't find the humor in that.  The meeting ended on a sour note with the Governor's Office of Energy Development and myself completely flummoxed by the lack of stakeholder cooperation.

With the lines seemingly drawn in the sand, OED and I went about drafting a bill that would create some limits to how much solar tax credits could affect the state budget.  The bill would also create a new limited tax credit for battery storage.  I was called several times by stakeholders asking for a copy.  When the bill was drafted, I shared a copy with the solar companies so they could review it.  They then went radio silent...but you could still hear their war drums beating in the distance.

Our first hearing on the bill was scheduled for September 16th.  However, a series of unexpected events created uncertainty surrounding our presentation and also indicated we needed to include more substance in our bill.  We delayed the hearing for sometime in the future so we can address the freshly sprouted problems.

A key problem we discovered was that information held by the Office of Energy Development, which processes tax credit applications, and the Tax Commission, which accounts for those applications with tax returns, did not match up.  The OED counted nearly twice as many credits as the Tax Commisson reported.  It turns out that, due to confusion, taxpayers have been claiming their $2,000 credit under another similarly named tax credit which is meant for a different purpose.  The Tax Commission discovered this during its regular audits.  So, we intend to fix this confusion in the bill as well.

Another factor forcing us to postpone the hearing is that the Tax Commission will not have final numbers for 2015 tax credits until October.  We really need those figures to present a complete story to the committee.  

Meanwhile, Bulldog Solar has been lobbying committee members and painting a picture of devastation and ruin if the tax credit is changed in any way.  To a point, I can understand.  If my business received such lucrative preferential treatment from government as they are getting, I would be upset about change too.  However, dispassionate minds will understand that no such apocalypse is at hand and that such indulgences have consequences. In this case, those consequences are affecting our schools.  I look forward to presenting compelling evidence to our committee that solar tax credit reform is both timely and necessary.  

School kids mourning the impact of solar tax credits on Utah's education budget.  



       

Sunday, September 18, 2016

BOOK REVIEW: The Fatal Conceit - The Errors of Socialism



I have been rounding up parts of the collected works of Friedrich A. Hayek and recently finished his book The Fatal Conceit - The Errors of Socialism.  The book is Hayek's final work written in 1988 while he was an octogenarian. It exudes the wisdom of a lifetime of study and experience.  The work is a powerful intellectual indictment of man's misguided efforts to control his economic environment through government planning.  Interestingly, while Hayek was himself an agnostic, he also provides a consistent and robust defense of religious tradition as a precursor of Western Civilization's success.

The book is a rich read.  I had to put the book down every few pages to digest the information he presented.  I took copious notes for future reference.  Here are some highlights by topic for your benefit.

Nature of a Free Market

"Not only does all evolution rest on competition, continuing competition is necessary even to preserve existing achievements."

Private Property

"Where there is no property, there is no justice."

"Nobody is at liberty to attack several property and to say that he values civilization.  The history of the two cannot be disentangled." - Henry Sumner Maine


The Character of Socialist Thought

"Moreover, they (socialists) also understandably will want to align themselves with science and reason, and with the extraordinary progress made by the past several centuries, and since they have been taught that constructivism and scientism are what science and reason are all about, they find it hard to believe, that there can exist any useful knowledge that did not originate in deliberate experimentation, or to accept any tradition apart from their own tradition of reason."

"Intelligent people will tend to over value intelligence."

"Pretending to be lovers of freedom they condemn several property, contract, competition, advertising, profit, and even money itself.  Imagining that their reason can tell them how to arrange human affairs to serve their innate wishes better, they themselves pose a grave threat to civilization."

"While facts alone can never determine what is right, ill considered notions of what is reasonable, right, and good may change the facts and circumstances in which we live."

"On a less sophisticated level than the argument against alienation are demands for "liberation" from the burdens of civilization, including the burdens of disciplined work, responsibility, risk taking, saving, honesty, the honoring of promises, as well as the difficulties of curbing by general rules one's natural reactions of hostility to strangers in solidarity with those who are like oneself - an ever more severe threat to political liberty. Thus, the notion  of  "liberation", although allegedly new, is actually archaic in its demand for release from traditional morals.  Those who champion such liberation would destroy the basis of freedom, and permit men to do what would irreparably break down those conditions which make civilization possible."

"So priding itself on having built its world as if it had designed it, and blaming itself on not having designed it better, human kinds is now set out to do just that."

"The aim of socialism is no less than to affect a complete redesigning of our traditional morals, law, and language, and on this basis to stamp out all the old order and the supposedly inexorable, unjustifiable, conditions that prevent the institution of reason, fulfillment, true freedom, and justice."

Man's Folly

"Man became all that he is without understanding it." - Giam Batista Rico (1854)

"There is a difference between following rules of conduct on the one hand, and knowledge about something on the other."

"Nothing is more misleading than the conventional formula of historians who represent the achievement of a powerful state as the culmination of cultural evolution; it has often marked its end.  In this respect, students of early history were overly impressed and greatly misled by monuments and documents left by the holders of political power.  Whereas the true builders of the extended order who as often as not created the wealth that made the monuments possible left less tangible and ostentatious testimonials to their achievement."

Morality and Reason

"But to ask for the conscious reason why man adopted his morals is as mistaken as to ask for what conscious reason man adopted his reason."

"It is not our intellect that created our morals, rather, human interaction governed by morals make possible the growth of reason and those capabilities associated with it.  Man became intelligent because there was tradition, that which lies between instinct and reason, for him to learn."

"While it is true that traditional morals are not rationally justifiable, this is also true of any possible moral code, including any that socialists might even be able to come up with.  Hence, no matter what rules we follow, we will not be able to justify them as demanded; so, no argument about morals -science, or law, or language - can legitimately turn on the issue of justification."

Money

"The love of money, the bible declares, is the root of all evil.  But ambivalence about it is perhaps even more common; money appears as at once the most powerful instrument of freedom, and the most sinister tool of oppression."

"And thus we reach the progressive climax of the replacement of the perceivable and concrete by the abstract concepts shaping rules and guiding activity.  Money and its institutions seem to be beyond the boundary of laudable and understandable physical efforts of creations in a real where the comprehension of the concrete ends and incomprehensible abstractions rule."

On Man's Liberty and the Free Market

"Mankind could neither have reached nor now maintained its present numbers without an inequality that is neither determined by nor reconcilable, with any deliberate moral judgments.  Effort of course will improve individual chances, but it alone cannot secure results."

"Our ability, no less than the freedom, to be guided by one's own knowledge and decisions rather than being carried always by the spirit of the group, are developments of the intellect that our emotions have followed only imperfectly."

"It is no exaggeration to say that this notion marks the emancipation of the individual. To the development of the individual spirit are due the division of skills, knowledge, and labor on which advance civilization rests."

"Enforced obedience to common concrete ends is tantamount to slavery, obedience to common abstract rules (however burdensome they may still fell) provides hope for the most extraordinary freedom and diversity."

"Men are qualified for civil liberties, in exact proportion to their disposition to put moral chains on their appetites; in proportion as their love of justice is above their rapacity."

Immigration

"At least a minimal change of conduct on their part will be a condition for their being permitted to enter the larger established group and gradually to gain an increasing share in its total product."

----

I hope you enjoy these enlightening quotes as much as I do.  Hayek is certainly in a class of his own when it comes to economic thought.  The book contains much more that is worth reading and students of economics, politics, and history will certainly gain insight from its pages.  Happy reading!

Saturday, August 13, 2016

NCSL Chicago: Highlights From A Wonk's Paradise


This past week Legislators from Utah's House and Senate made a trip to Chicago to share ideas and learn from other Legislators across the nation.  I was privileged to attend.  Here are some highlights from the trip.

Utah Stands Out


Senator Curt Bramble from Utah County is the President of the NCSL organization.  He opened our conference.


Utah was also showcased in our Budget and Revenue Breakout meetings as a great example of emergency fiscal preparedness.  Jonathan Ball, our chief Fiscal Analyst, told how Utah's origins created a culture of frugality that still carries with our budget making policies today.

In another session, I even had a chance to speak against some amendments proposed by other members of the conference.  One amendment to a resolution was proposed by a Representative from Massachusetts that would strip language asking the Federal Government to operate a sustainable budget.  The resolution was deferred to a later discussion after the amendment failed. I suggested that asking the Federal Government to operate a sustainable budget was not too onerous a request and that it was acceptable for our conference to push back against Federal mandates.

The Internet 3.0


We heard a session about a new technology based on the framework used to support Bitcoin call BlockChain.  The discussion confused a lot of folks in the room.  What I got out of the conversation was that a new network and method of transaction is being concocted to help reduce fraud and increase the speed of business transactions.  Look for more on this topic in the coming year.

The Creepy Dark Web

As a member of the Law Enforcement Committee, we heard about the "Dark Web".  It is a sordid place of anonymity where the underworld does its business.


Here we were shown a website on the dark web claiming to broadcast live torture.   It turned out to be a spoof site.


Here we were shown a web page similar to Amazon.com where you can purchase drugs, hitmen, guns, and any other nefarious item you can imagine.


Data breaches are happening at amazing volume. 


To combat fraud and fight the dark web, the technology advocates asked that policy makers focus on the behavior and not try to regulate the computer hardware.  For a moment, I thought we were talking about guns.

ZZzzz...


Not all breakout sessions are created equal.  In this case, I attended a session called "Tax Fraud Prevention".  Sounded exciting.  I imagined it would be a cops and robbers discussion on what kind of policy to implement to deter fraud in our state tax system.  Instead we were treated to a dry lecture on the IRS-State Industry Submit Process.  From a look at the number of warm bodies in the room, it appears that everyone got the memo about this session before I did.

The Future of Tax Policy

   
 We had a session where legislators were asked to offer one word that represented their state's tax system.  You can see the candid responses above.  

Fortunately, from the discussion we had, it appears that Utah has been very good about anticipating shifts in the economy and adapting its tax code as markets and consumer dynamics change.  Utah has a relatively balanced tax system compared to other states. Utah utilizes property, sales, and income taxes to generate its revenue.  Other states have very lop-sided policies.    

The key takeaway from the meeting was that when larger numbers of people pay taxes, the taxes can be lower for everyone.  When few people pay taxes, taxes are a lot higher for those few people paying them.  Utah does a pretty good job of "broadening the base and lowering the rate" but more work on this important topic can be done.   



It was great to be in Chicago with my wife and colleagues to absorb some great information.  Look for more bills and initiatives on the Hill from lessons gleaned from this conference.



Monday, July 25, 2016

ACYPL: Dining with Delegates from China


Last year I was privileged to be able to travel with a group of young political leaders via a State Department funded program called ACYPL (American Council of Young Political Leaders).  You can read about that fascinating trip here and here.

One of the great parts of the ACYPL program is that it creates a network of alumni that support the program moving forward.  I had an opportunity recently to provide that support by hosting a dinner for a delegation of Chineses officials coming to America.  I chose the Joseph Smith Memorial Building as our venue and invited Ryan Wilcox, a former Legislator who now works for Senator Mike Lee and Eric Hutchings who currently serves with me in the House of Representatives and who also happens to speak fluent Mandarin. Both also happen to be ACYPL alumni.


Here is a brief biography of our guests:



Our conversations mainly focused on political economy.  I sat next to Mr. Wan Sucheng who is in charge of the All-China Youth Federation.  It is an organization that oversees the civic education and molding of over 300 Million Chinese youth.  I joked with him that being in charge of that many people was pretty close to being President of the U.S.  But, since they are all kids, I am sure its much harder.  Interestingly, he is fourth in line to become President of China.

We did share some of Utah's history and explained the importance of the month of July in our state.  They listened intently as we rehearsed the pioneer story and how that heritage has affected our politics.  My wife Kim also attended the dinner with us and one of our guests asked us directly about our LDS faith and how we raised our children in the faith.  I am sure from their perspective where a one-child policy has been the norm for decades, it was alarming to hear that we had four daughters.

Our evening ended with an exchange of gifts.  I presented each member of the delegation with a proof-quality commemorative quarter celebrating the completion of the trans-continental railroad.  We also shared the story of how Chinese immigrants played a significant role in the building of that rail line and that many Chinese rest in our Ogden cemetery from that era.  


It was great to make new friends from a foreign land.  As we parted I told them that: "Peace comes from understanding, understanding comes from friendship, and friendship comes from eating dinner together."  We all got a good chuckle from my pseudo-Confucius-like aphorism.  I am glad we were able to give our guests a taste of Utah hospitality and good will.    

Thursday, July 14, 2016

Thank You Noall Knighton!




It was announced this week that Noall Knighton is resigning from his post as the Chairman of the Weber County GOP due to a job opportunity out of state.

I just wanted to take moment to thank Noall for all of his hard work on behalf of the Republican Party and elected officials in Weber County.  Being a county party chair is often a tough and thankless job as it requires balancing the needs and philosophies of so many voices within the party.

I wish Noall the best as he moves on to a new adventure.  Thanks again for your hard work and dedication Noall!


UPDATE: Special Session 2016 No. 3




We just completed our interim committee meetings and special session at the Capitol today.  Here are some highlights from the day's events:

Revenue and Taxation Interim Committee

We heard testimony today regarding internal governance of the Tax Commission and also a problem surrounding property tax exemptions related to agricultural land.  You can listen to our meeting HERE.

Government Operations Interim Committee

Our committee passed out two bills and some additional discussion.  One deals with minor changes to SB54 language and how petitions to get candidates on the ballot are handled moving forward.  The other bill dealt with parameters related to redistricting. The bill modifies the guiding principles so to place more emphasis on community cohesion rather than on exact equality in the population size of districts.  We had State Auditor John "Frugal" Dougall come and make some recommendations to the legislature regarding areas of improvement that were needed in various ways the State conducts its business. You can listen to our discussion HERE.

Special Session Bills

Tax Credit Review Amendments - This was a redraft of HB310 which passed the house with flying colors during the General Session.  Unfortunately, an egregious typo left the bill without an "Enacting Clause" and after the Governor signed it, staff realized it couldn't become law.  So, the bill was brought back to the Special Session to be voted on with its Enacting Clause intact.  The bill sailed through the House and Senate without a problem.

State Fair Park Amendments - There is a panicked effort to maintain the State Fair Park's viability in the community.  This bill made temporary emergency changes to procurement practices to facility a fast renovation of the site to be ready by next summer.  This bill passed.

Unmanned Aircraft Amendments - This bill increases penalties for individuals caught using drones in emergency areas like wildfires.  It also allows violators to be liable for damages caused by their drone intrusion.  This bill passed.

Criminal Justince Reinvestment Amendments - This bill tweaked the much needed yet sometimes much derided JRI legislation we passed two years ago.  It permitted law enforcement to include more common sense provisions in sentencing and probationary situations.  This bill passed.

Grandparent Rights Amendments - The original bill passed during the General Session (I voted against) and was ultimately vetoed by the Governor.  The bill sponsor made some adjustments to the bill and limited grand parent visitation rights to situations where adoptive parents were related to the grand parents.  This bill still seemed onerous to me since the only reason adoptive parents would not permit related grand parents to visit a child was if there was a serious strain within the family.  It seemed to me that permitting the courts to force visitation rights in such a situation would make for very painful experiences for those involved. I voted against. The bill failed 27-40.

Controlled Substance Database Modifications - This bill made a common sense change regarding access of law enforcement to databases related to controlled substances.  The bill passed unanimously.

Economic Development Revisions - This bill created sales tax exemptions for companies moving into Utah who would occupy large 150,000+ SQFT facilities and be using them for constructing data centers.  The logic behind this bill is that data centers are very expensive and add significantly to the property tax base while requiring little in the way of community resources.  Thus, such centers would help fund local education wherever they are built.  The bill also reflects a philosophical drift away from taxing inputs in the manufacturing process and only taxing final products.  This bill passed.

Judicial Nominating Commissions - This bill matched the number of judges nominated with the number of vacancies in the court.  This bill passed.

Continuing Care Retirement Community Amendments - This bill deals with a very strange business model of retirement homes being funded by future occupants of the facility.  Private equity donations would be collect to fund the construction of a facility that the "investors" had contributed to build.  The issues surrounding the bill dealt with how the "investor/occupants" funds would be treated in the event they left the facility and what kinds of guarantees and securities can be offered.  The bill creates some basic ground rules for the business model. The bill passed.

My Bill Files

I have many bill files open already and I am drafting bills on a variety of topics including property taxes, foster care, tax credits, teacher compensation, public notices, and more.  Look for more details as discussions with stakeholders continue.