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."


"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."


"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!