Feature

2009 Legislative Priorities
for Economic Development

When the Utah Legislature opened its session two years ago the state was sitting on $1.6 billion in surplus revenues and the primary question was how to spend the money. During the 2009 legislative session, which opens January 26, the question will be just the opposite -- how best to cut the budget in a shrinking economy.

As with past Legislative sessions, this year's session can expect a variety of bills important to Utah economic development. Jason Perry, director of the Governor's Office of Economic Development (GOED), says his team is keenly interested in several economic development-related initiatives that could have significant impact on Utah's economy.

Motion Picture Incentive Fund

First is Senate Bill 14, sponsored by Senator Lyle Hillyard, R-Logan, which would strengthen the Motion Picture Incentive Fund by granting approved motion picture projects a 20 percent tax rebate on their in-state spend. Production companies would thus receive a percentage of every dollar spent in the state.

Currently, approved motion pictures filmed in Utah may receive a rebate of 15 percent of their in-state spend with a cap of $500,000. Perry says this is one of the lowest incentive percentages among the 50 states and precludes Utah from attracting any big budget films to the state. In preparation for Hillyard's bill, GOED spent months drawing upon economists and experts in the film industry to develop a detailed financial model that demonstrates the exact economic impact a film can have on the state.

"We wanted to be one of the first states to create an economic model that substantiates the multiplier effect of film production in a state and that's what we've done," Perry says. "Our model shows that every $1 spent in the state by a film production company turns 2.5 times or translates into an additional $2.5 for the state."

Hillyard's bill also includes an imputed income requirement, which allows the state to capture some of the income taxes on wages earned by actors filming in the state. Perry says the incentive is designed to do much more than attract big budget films and would actually put Utah in the right path to attract motion picture studios to locate here.

The film industry can have an enormous economic impact on rural Utah, since the state's varied landscape can emulate many other locations -- even other worlds like the Vulcan planet (a production company recently spent two weeks filming part of the new Star Trek movie near the San Rafael Swell in Emery County). Incidentally, this latest Star Trek sequel is the eleventh feature film based on the Star Trek series and is slated for release in May.

Hillyard's bill has already been recommended by the Workforce Services and Community and Economic Development Interim Committee and Perry says he'll be on Capitol Hill to add his support to the measure.

Healthcare Reform

Legislation aimed at healthcare reform is also a priority for GOED. Healthcare costs are escalating so dramatically that they can't be sustained by business and industry. Perry expects there will probably be multiple bills addressing various issues of healthcare reform and says addressing the issue at the state level is important to Utah economic development.

Sales Tax on Food

Another priority for this session is the removal of the remaining sales tax on food. Last year the Legislature cut the sales tax to 1.75 percent. Perry says Governor Jon Huntsman would like to see the remaining tax removed completely.

“Such a step will have an economic benefit for every person living in the state," he adds.

Economic Kick Start Plan

The Governor's economic stimulus package is also a legislative priority. Governor Huntsman calls it his “Economic Kick Start Plan," which is actually a three-pronged approach to economic stimulus. First, the plan would keep Utah's road construction projects on track. In December the state halted $3.9 billion in planned construction due to budget uncertainties. Perry says putting those projects back on track would preserve some 20,000 construction jobs and associated wages of approximately $700 million. Funding could be accomplished via bonding that would be paid for by an increase in vehicle registration fees.

Second, Governor Huntsman would like to stimulate the housing market by creating liquidity, which would allow new mortgages to be issued and help Utahns get into homes. Perry says there are approximately 4,000 unsold homes in inventory around the state and helping to reduce that inventory would stabilize prices and bolster the residential construction industry. Governor Huntsman has set aside $5 million from his own budget and is working with various government agencies and programs to help qualifying individuals make home purchases. The construction industry has lost approximately 13,500 jobs over the past year, so stimulating the housing market would serve to bolster the industry and perhaps recoup some of those lost jobs.

Third, continuing the state's capital building projects. This would protect approximately 3,000 associated jobs. Perry says funds to continue the construction projects will come from private donations and public/private partnerships. The Salt Lake Chamber of Commerce estimates that every $100 million spent on state buildings generates about 4,000 local jobs.

EDCUtah President and CEO Jeff Edwards says the Utah Legislature is generally attuned to supporting economic development efforts. Past legislatures have supported economic development incentive reforms and initiatives such as USTAR (the Utah Science, Technology and Research initiative) and the expansion of the Utah Fund of Funds. Both Perry and Edwards are hopeful that this Legislature will continue to advance the state's economic development position.

CALENDAR

Jan. 14:  Washington County Economic Summit, 7 a.m. to 2 p.m., Dixie Center, St. George, UT www.whatsupdownsouth.com

Jan. 15: Utah Commercial Real Estate Symposium, Salt Palace Convention Center, Room 255. Register here.

March 24-26:  JEC Composites Show (Paris, France) http://www.jeccomposites.com/jec-show/