Michael O. Leavitt Center for Politics & Public Service

Project Prologue

Sales Tax Diversion

Sales Tax Diversion to the Water Loan Programs February 1994 A water development bill, sponsored by Sen. John Holmgren, passed the legislature. The bill directs 1/8% of sales tax revenue to water projects. Revenue would be split among state water boards as follows: 50% to the Board of Water Resources; 25% to the Water Quality Board; and 25% to the Drinking Water Board. In the second year of funding the bill provided for 50% of the revenues to go to the Department of Transportation provided two conditions occurred: 1) if state surplus revenues are greater than $200 million; and 2) the legislature did not pass a gasoline tax to fund transportation needs.  The funding would initially provide $5 million per year to fund needed wastewater projects. In 1995 this percentage was amended to 1/16%.  Governor Leavitt was opposed to this legislation. Governor Leavitt’s Campaign to Stop the Use of Using Sales Tax Funds To Help Fund Water Projects December 2002 Governor Leavitt attended a joint meeting of the Water Quality Board and Drinking Water Board to speak to his plan to petition the legislature to discontinue the pledging of 1/16% of sales tax revenues to the water loan programs. His plan was to sell a bond and pledge the future revenues from repayments on outstanding water loans to service the bond. The proceeds of the bond would be used to help address the projected deficit in the state budget.  The Governor’s opposition to the sales tax set-aside was based on his belief that sales tax funds should not subsidize water development and that subsidized loans impede water conservation.While the Utah Wastewater Loan Program is primarily funded through federal capitalization grants and repayments on loans made from those grants, a 25% reduction in the loan funds would have resulted from the Governor’s proposal.

Michael O. Leavitt Center for Politics and Public Service