H.C.R. 5

             1     

CONCURRENT RESOLUTION TO PROTECT STATE FUNDS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Robert M. Spendlove

             5     
Senate Sponsor: Deidre M. Henderson

             6     
             7      LONG TITLE
             8      General Description:
             9          This concurrent resolution of the Legislature and the Governor declares that if a state
             10      opts out of a federal program, the state should not have to contribute state dollars to the
             11      federal program.
             12      Highlighted Provisions:
             13          This resolution:
             14          .    declares that if a state opts out of a federal program, it should not have to contribute
             15      state dollars to the federal program.
             16      Special Clauses:
             17          None
             18     
             19      Be it resolved by the Legislature of the state of Utah, the Governor concurring therein:
             20          WHEREAS, the 16th Amendment to the Constitution of the United States was passed
             21      by the United States Congress in 1909 and ratified by the states in 1913;
             22          WHEREAS, the 16th Amendment made the income tax a permanent fixture in the
             23      United States tax system;
             24          WHEREAS, the 16th Amendment gave Congress legal authority to tax income and
             25      resulted in a revenue law that taxed incomes of both individuals and corporations;
             26          WHEREAS, the income tax provided the means for policymakers to finance a range of
             27      new federal aid programs;


             28          WHEREAS, as the years passed, the portion of tax money collected by the federal
             29      government and returned to the states was accompanied by an increasing number of
             30      stipulations regarding how states must spend the money;
             31          WHEREAS, many of these aid programs required states to match federal funds on a
             32      dollar-for-dollar basis;
             33          WHEREAS, unfortunately, matching requirements have induced excessive state
             34      spending and continuous program expansion;
             35          WHEREAS, in 1925, President Calvin Coolidge stated that aid to the states should be
             36      cut because it was "encumbering the national government beyond its wisdom to comprehend,
             37      or its ability to administer";
             38          WHEREAS, federal aid has also prompted the growth in state bureaucracies, partly
             39      because aid programs have often required that states set up new agencies to oversee spending
             40      in the prescribed activities;
             41          WHEREAS, when a state has to cut its budget, and it attempts to do it by cutting
             42      federally funded programs, it can only save cents on the dollar;
             43          WHEREAS, because a federal program cut looks more expensive than an equivalent
             44      cut in a state-funded program, states often prefer to cut competing state-funded programs or
             45      raise taxes;
             46          WHEREAS, federal funding programs tend to expand state budgets, and, over time,
             47      those programs grow faster than wholly state-owned functions and account for an ever-larger
             48      portion of state budgets;
             49          WHEREAS, initial state resistance to the expansion of federal aid usually bowed to the
             50      reality that, even if a state opted out of new aid programs, its residents still had to pay federal
             51      taxes to support federal aid spending in other states;
             52          WHEREAS, the number of grants-in-aid programs rose from 15 in 1930 to 132 by
             53      1960;
             54          WHEREAS, during the 1960s, federal aid programs quadrupled from 132 in 1960 to
             55      530 by 1970;
             56          WHEREAS, efforts to trim federal aid in the 1980s were later reversed, and there have
             57      been no major efforts to reform or cut the federal aid system since the mid-1990s;
             58          WHEREAS, in recent years, the many failings of the federal aid system have become


             59      more acute as hundreds of programs have been added;
             60          WHEREAS, the Affordable Care Act, passed in 2010, added a range of new aid
             61      programs and also involved a huge expansion in Medicaid, the largest federal aid program;
             62          WHEREAS, in fiscal year 1993, Medicaid took up almost 12% of Utah's General Fund;
             63          WHEREAS, in 2003, Medicaid took up 15% of Utah's General Fund, and this year,
             64      Medicaid will consume 23% of the General Fund;
             65          WHEREAS, this percentage is projected to be more than 30% in the next 10 years;
             66          WHEREAS, according to Congressional Budget Office estimates, when comparing
             67      federal spending in Utah to federal revenue received from Utah as a result of the Affordable
             68      Care Act, Utah citizens will lose approximately $97 million per year to the federal government
             69      to support the new health care reform law;
             70          WHEREAS, today, the number of federal aid programs for the states is more than triple
             71      the number just 25 years ago;
             72          WHEREAS, the grants-in-aid system is not guided by an overall strategy, but has been
             73      built over the decades as responses to pressures to fix state and local problems with federal
             74      rules and subsidies;
             75          WHEREAS, federal aid stimulates overspending by state governments and creates a
             76      web of top-down rules that destroy state innovation;
             77          WHEREAS, at all levels of the federal aid system, the focus is on maximizing the
             78      money spent and regulatory compliance, not on delivering quality services;
             79          WHEREAS, every dollar of federal aid sent to the states is ultimately taken from
             80      federal taxpayers who live in the 50 states;
             81          WHEREAS, federal grants, which is one form of federal aid, reduce state diversity and
             82      innovation because the grants come with one-size-fits-all mandates;
             83          WHEREAS, federal taxpayers pay the direct costs of the grants, but taxpayers at all
             84      levels of government are burdened by the costly bureaucracy needed to support the system;
             85          WHEREAS, each of the more than 1,100 current aid programs has different rules and
             86      the activities funded by the programs often overlap, causing more confusion;
             87          WHEREAS, the Federal Highway Program's flawed allocation formulas have caused
             88      about half of the states, called donors and located mostly in the South and Great Lakes regions,
             89      to pay proportionately more into the federal Highway Trust Fund than they get back;


             90          WHEREAS, the lure of federal matching funds has led many states to rely too heavily
             91      on this source of funding to address their problems;
             92          WHEREAS, a fiscal analysis of the costs of accepting a federal grant over the life of the
             93      grant would assist states in weighing the costs and benefits of participating in federal grant
             94      programs;
             95          WHEREAS, states can opt out of federal grants-in-aid but must still pay the taxes that
             96      pay for those grants;
             97          WHEREAS, if a state opts out of a federal program, the citizens of that state should not
             98      be required to contribute taxpayer dollars to support the federal program; and
             99          WHEREAS, states should be empowered to address the unique challenges inherent in
             100      meeting the needs of their citizens:
             101          NOW, THEREFORE, BE IT RESOLVED that the Legislature of the state of Utah, the
             102      Governor concurring therein, declares that if a state opts out of a federal program, it should be
             103      able to withhold and redirect federal income tax funds equivalent to the amount that would
             104      have been used to fund federal operations for the federal program in the state.
             105          BE IT FURTHER RESOLVED that a copy of this resolution be sent to the Majority
             106      Leader of the United States Senate, the Speaker of the United States House of Representatives,
             107      and the members of Utah's congressional delegation.




Legislative Review Note
    as of 2-12-14 11:34 AM


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