The purpose of that constitutional amendment was to ensure that any taxes in excess of $41 million would be placed into a permanent trust fund for the future, and only the interest could be spent. In order to use the principal, a three-fourths approval is needed in both houses, and requires the governor’s signature.
Rep. Jim Nielson, R-Bountiful, told The Davis Clipper that the legislators have found a loophole, and those monies are not being put into the trust fund.
“We are spending our grandchildren’s inheritance,” he said. “We have set a policy to save this money for the future, but we’ve left a loophole that, by majority vote, we can spend every bit of it (before it goes into the fund). That’s what we’ve been doing.”
Nielson said he has created a bill and a constitutional amendment for voters to tackle in November, which would require that money to be put in the trust fund, without the loophole.
He said he believes this bill is one of the most important bills in the upcoming General Session – more so than his bill to get rid of Daylight Saving Time, which has attracted a lot of media attention.
“(This bill) is far more significant,” he said of the Severance Tax Trust Fund Reform bill. “(It has) a huge impact on our budget today, and in our future. People pay more attention to the rainy day funds.”
Nielson said the severance trust fund is supposed to be used only in a much more serious emergency and should probably be called the “Tornado Earthquake Hurricane fund.”
Nielson said the basic concept of the fund is to stop using one-time tax revenue for ongoing expenses. He said that once the non-renewable resources run out, the state would no longer be able to collect taxes on them. Therefore, the state should stop relying on that money now for ongoing expenses in the budget.
“We haven’t honored that intent,” he said. “The legislature has constantly increased the amount in the general fund and have put (almost) nothing in our severance trust fund.”
The loophole allows the legislature to collect the taxes and divert them to the general fund with only a majority vote. Nielson wants to close that loophole so that the money goes straight into the trust fund.
Nielson said it is time the legislature “honor our commitments.”
“Let’s just start doing the right thing now and move forward,” he said.