Monday, December 26, 2011

The Plat of Zion: New Urbanism On The Sprawling Wasatch Front

I attended a meeting recently with the Wasatch Front Regional Council to discuss transportation, mass transit, and future development along the Wasatch Front.  The topic of high density development came up.  We acknowledged that most of Davis and Salt Lake Counties had reached a point where future housing development would be constricted by available land.  However, I was curious about Weber County and how many years of developable land remained.  I wanted to know how many more years we had before economic conditions would bring an end to suburban sprawl and force higher density development and in-fill within existing communities in Weber County.

Interestingly, when I posed this question several individuals in the room expressed their opinion that we had already reached that point.  I wasn't presented with any data, but the point was to suggest that we need to start looking at ways to develop more sustainable and integrated  We need to look at rethinking our community design with the automobile as the keystone of a fulfilling and comfortable lifestyle.

I read a brilliant essay this week that takes a look back at Utah's urban planning history and explains how we got to where we are today and makes suggestions on where we go from here.  The lessons from this essay are highly enlightening and I believe embody the qualities we need to adhere to as we plan for the future of our urban centers.

Here is a copy of the essay as it was sent to me:

Building Zion
One of the lessons gleaned from this essay regards the importance of personal association. It was important in the early days for people to cluster together for several reasons including cultural experiences and education opportunity. The automobile and the internet have made such close proximity unnecessary today.

However, from an LDS theological perspective, such proximity is still necessary so that the Priesthood can be exercised and administered. It is not possible to administer the sacraments via Skype or set apart someone to a church office via Twitter.  Theologically speaking, there must be a physical interaction of humanity in order to bless humanity.  Hence, the high density Plat of Zion design.

Regardless of religious affiliation, there are many other temporal benefits to such a design that bless the masses:  Community cohesion and a wise use of limited resources being dominant ones.

It is my hope that the public becomes more knowledgeable about this subject and that communities across the Wasatch Front can begin to articulate how these ideas can benefit their towns.  As we make plans for the future, may we be careful stewards and make judicious choices.

Wednesday, December 21, 2011

Top Heavy: Utah's Dependence on Federal Funds

During our December Caucus meeting, I was sitting next to Ken Ivory who was reviewing a report he received from the State regarding last year's bill that required state agencies to make contingency plans for both a 5% and 25% reduction in Federal funding. 

Of course, to do this, you first have to know how much of your budget comes from Federal sources.  Ken was kind enough to forward me a copy of the report.  Here is a list of state agencies and their corresponding dependence on Federal funds:

Pretty surprising results in some cases.  Here are some highlights:

1. 84.4% -  National Guard 
2. 45% -  Department of Community and Culture
3. 87.2% - Department of Workforce Services
4. 73% - Department of Heath

There are plenty more in there.  The bottom line is that in the event of the Federal fund spigot being turned off or reduced, these agencies would be hugely impacted.  What would a more self-reliant state funded bureaucracy look like?  The whole report is 250 pages so I am still digging through it.  More to come.   

Tuesday, December 20, 2011

December Caucus 2011

We met as a Republican Caucus today to review some up and coming issues regarding state business.  Here are some highlights:

The Budget

The Governor made his budget proposal recently.  Interestingly, his budget contains about $30 Million more than our consensus budget figures show.  This is an interesting discrepancy.  It appears that the Governor believes that there are accounts somewhere that can be tapped to cover this difference.  If so, the House and Senate are not privy to the whereabouts of these funds and will be allocating funds accordingly.

The State is now at 90% of our constitutional borrowing limit due to a 7% decline in property tax assessments statewide this year.  The state is also running at a $52 Million ongoing budget deficit that needs to be corrected.  Also, student population growth increased 12,000 that needs to be funded.  Even though it is widely reported in the press that we have a $120 Million surplus this year, this "surplus" will likely be consumed entirely in funding student growth, correcting our ongoing budget deficit, and paying down our debt.

Interestingly, a comparison was also given to us today showing how much we have eroded away at our Rainy Day Funds.  In 2007 our Rainy Day Funds and reserves totaled $1.56 Billion.  Today we have just $348 Million.  Rainy Day Fund renewal should be a budget priority as well if possible.

Health Care

We heard a presentation on the Affordable Care Act (i.e. Obamacare).  I didn't like what I heard.  You won't either.  Here is what you have to look forward to:
  • Those aged 25-34 will have their premiums increase 40% by January 2014.
  • Those who choose not to purchase a policy will be fined 1% of their yearly income.
  • If an employee chooses a wrong policy, their employer will be fined.
  • Transgender assignment surgery will be covered in all policies.
  • As your premiums increase, the Feds will subsidize your premiums (with money they taxed from you.)
  • ...and more unsettling regulations.
We also discussed that Utah has 600 individuals on high risk state funded insurance called HIP.  This small group of people have consumed $40 Million in just two years ($33,360 per individual per year).  The Federal government granted Utah the $40 Million to help this group a couple years ago with the idea that the funds would last through 2014.  Today, the money is gone and rather than discontinue the program, the Federal Government has cut Utah a check for another $40 Million in order to prevent embarrassment and discrediting of the program.   

Public Education

The Legislature discussed the concepts of merit pay for school teachers and some of the dynamics at play.  Although no details were discussed, it appears that the body is leaning toward this type of compensation plan for teachers.  Of course, the devil is in the details.  Keep your eyes peeled on this issue in the weeks to come...

Note:  Federal funds equal just $280 Million of our $3.4 Billion public school budget.  Is it worth the strings that are attached?  Let's figure out a way to jettison Federal dollars and exercise freedom to teach under our own recognizance.  

Land Issues

In a big push back at Federal overreach, Ken Ivory is proposing a bill that will force the Federal Government to sell public lands to private owners.  The National Parks would be deeded to the U.S Government but the remaining land would be sold off with 5% of the proceeds going to school funds.  The remainder would be revenue for the U. S. Government (and hopefully would pay down the debt.)

It's a bold idea.  I support it.

Look for more updates to come....

Thursday, December 15, 2011

Rollback: Reducing the Burden of Unemployment Insurance

I am sponsoring three unemployment insurance related bills this year.  Two of them are technical in nature and bring Utah's code in line with Federal law regarding reporting procedures and accounting practices.  I won't bore you with the details.

The other bill is more substantive and should be a blessing to taxpayers this year.  First though, let me give you some background on Utah's Unemployment Insurance (UI).

UI is derived from a formula that is written in the state code.  The final number that determines the Overall Contribution rate paid out by any employer is determined by several factors that combine together and produce a figure.  Here are a few components of that:

1.  Employer Contribution Rate - This part of the equation equals all the UI benefits paid out on behalf of the employer over a four year period divided by all the taxable wages of the employer for that same period.  If you are a new business and have no employment history, then the rate you pay will be the average of rates paid by businesses in your industry until you get enough history behind you.

2.  Social Contribution Rate - This rate is derived by calculating all the UI benefits paid out statewide over a four year period and divide it by all the taxable wages in the state over that same period.

3.  Reserve Factor - This is a multiplier that is used like a gas pedal or brake pedal to keep the UI fund solvent.  The fund is designed to hold 18 to 24 months of benefits at any given time.  Ideally, the reserve factor is set at 1.0.  If there is too much money in the account the reserve factor reduces to 0.5.  If there isn't enough in the fund, the rate can change to 1.5 or 2.0 depending on the circumstances.

Here is the formula found in statute to determine what you pay in UI:

Employer Contribution Rate  x  Reserve Factor + Social Contribution Rate  = 
Overall Contribution Rate

The bill that I am sponsoring dose a couple things:

A.  It places a cap on the Employer Contribution Rate so that it cannot exceed 7% for 2012.  Currently that cap is at 9%.  

B.  It caps the Social Contribution Rate at 0.4% for 2012.  Currently, that is scheduled to be 0.5% if this bill does not pass. 

So what is the benefit? Well, Utah's maximum rate is the second highest in the Union.  Maintaining the current course places our business recruiting efforts at a considerable competitive disadvantage.  Encouragingly, it is also estimated that these changes will put an additional $26.4 million in the pocket of Utah taxpayers this year.

UPDATE 12/20/2011 - Here are the links to the bills:

HB22 - Centralized New Hire Registry Act Amendments
HB23 - Special Administrative Expense Account Amendments
HB30 - Unemployment Insurance Amendments
If you have any questions or concerns, please contact me.


Wednesday, December 7, 2011

Utah's Promising Money Infusion: From Russia With Love

I recently had the opportunity to talk with Alexander Aginsky of the Aginsky Consulting Group.  He runs an asset management and investment firm specializing in bringing capital from world markets to investment opportunities in the United States.

His business, as you can likely guess from the name, has a particular niche in placing Russian money in opportunities is the U.S.

In our conversation, I discussed Utah's interest in human capital and our desire to bring well-educated and skilled people to our state.  I also discussed our desire to have people invest financially in our community.

What Mr. Aginsky had to share was fascinating in my opinion.  Due to the current brain drain going on in Russia, talented individuals are seeking opportunities abroad.  More interestingly, wealthy Russians are seeking a way to transfer their assets to the safe haven of the U.S. while also obtaining green cards to live here.

As it turns out, our government has a program where wealthy individuals can "buy" their immigration into the U.S. by committing a certain level of funding to invest in American businesses.  With the creation of 10 jobs through the investment, the foreign investor is granted permission to obtain a green card.  This is certainly exciting news for several reasons.

First, given Utah's innovative economy, it may be ripe for such capital investment.  Secondly, the money comes with extremely affordable terms.  The point of the investments are to preserve and protect capital rather than to push it to astronomical returns.  Such a motive provides cheap money for local businesses to grow.  Third, this process opens the doors for desirable immigration as those of means and education come to the U.S. to establish themselves.  This process in essence increases the wealth and prosperity of the community that receives both the financing and the people making the investment.

So what kind of opportunities benefit from this proposal?  The Aginsky Group does underwrite all the potential investments for viability.  However, he did say that real estate developments, medium sized existing businesses, and commercial real estate are excellent places for their client's funds.  Funding infusions can be as low a $1 million and as high as $200 million.   Required returns can be as low as 0.5% (not a typo).

If you are looking to finance the growth of your company, expand a product line, finance a real estate development, or invest in commercial real estate, the Aginsky Consulting Group may be a good place to start.