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Funding, Faith and Fairness - Legislative post by UEA Policy Ambassador Warren Brodhead

3/13/2019

Legislative report submitted by UEA Policy Ambassador Warren Brodhead, retired Salt Lake City School District social studies teacher

UEA Policy Ambassador Warren Brodhead (right) joined
about 60 teachers at Educator Day on the Hill Feb. 1
Under our present economic system, money is rather unreal. Money has become virtual, it is digital. The Federal Reserve, a consortium of private bankers which serves as the U.S. version of a central bank, has two main functions: to control the money supply and manipulate interest rates. When the Fed decides to expand the money supply, it ‘creates’ money by punching numbers on a computer. The process bears comparison to the Book of Genesis: "Let there be a trillion dollars!" Click! "And lo, there was a trillion dollars."

This is how the system saved all those ‘too-big-to-fail’ banks and investment corporations after the 2008 crash. It was called "Quantitative Easing." And it worked, at least from the all-important perspective of the ‘one percent.’ Moral hazard, due diligence, and the work ethic were relegated to the strivings and exasperations of the remaining ninety-nine percent. The process demonstrated another irony of the system: the U.S. dollar is backed up by nothing, or rather by faith, as in "the full faith and credit of the United States." If belief in the dollar takes a nose-dive, then so does the dollar's exchange value.

The State of Utah, in contrast to the algorithmic shenanigans of 2008, is careful to treat its revenues in a fiscally responsible manner. Over the years, the Legislature built up a rainy-day fund and made sure the budget was balanced. Even so, in the Great Recession almost everybody took a substantial hit, including public education. In subsequent years, much has been done to make amends. But public ed funding is still lagging far behind the needs of our students. This is partly because, since 1997, higher ed has taken a good chunk of income tax revenues, to the detriment of K-12.

This explains why so much faith was invested in HB441's tax reform package. By expanding sales taxes to services ("the modern economy"), higher ed could go back to getting most of its money from the General Fund and thus allow more funding (from income taxes) to K-12. The bill's supporters also had faith that the income tax cut (of about $300 million) would generate economic growth, leading to more personal and corporate income and thus more money for K-12.

But HB441 had two major problems. Expanding the sales taxes to services made a lot of small and independently-owned businesses extremely upset. (One such witness before the House Revenue and Taxation Committee dramatically raised his arms, not to shout “Hallelujah!” but rather “I'm a loser!”) Also, not everybody had the same faith that income tax cuts would lead to more money for public schools.

And then there is the matter of fairness. Utah has a modified form of flat tax, and flat taxes are generally considered to be regressive, biased against the poor and working class. Interestingly, Utah's income tax burdens have been rather evenly spread out among all income groups. But when combined with sales taxes, much of the tax burden is on the poor. To compensate, Representative Robert Spendlove sponsored HB103, creating a type of Earned Income Tax Credit for people suffering from “intergenerational poverty.” Low-wage jobs, of which there are many in the service sector, are the lot of the working poor, and statistics show no improvement in the last few years. But with all the frenzy over HB441, HB103 has gone and will go nowhere, at least during this legislative session. And so, we are all in stasis, over which percent group we fall under, and so we shall remain for the time being.

About UEA Policy Ambassadors—

In 2019, seven teachers volunteered to become UEA Policy Ambassadors. These teachers received training from the UEA Legislative Team and have agreed to participate in UEA Educator Day on the Hill, engage with their legislators and share their experiences with UEA members.

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