Cox's $30.6B budget targets Social Security tax, nuclear power, school safety

SALT LAKE CITY — Utah Gov. Spencer Cox unveiled his proposed $30.6 billion budget for the next fiscal year Thursday, which proposes eliminating the state tax on Social Security benefits, investing in nuclear power and implementing school safety legislation passed earlier this year.

Cox described the budget as a "return to normalcy" that represents a "modest" but "healthier type of growth" for the state coming off of several years of federal COVID-19 stimulus. After approving $1.2 billion in tax cuts through his first term — primarily through reductions of the income tax rate — the Republican proposed eliminating the state's tax on Social Security benefits, something he said will impact about 150,000 retired Utahns who are living on fixed incomes.

"We have an aging demographic out there, and that silver tsunami — as boomers are starting to retire — is something that we're concerned about," Cox told the KSL and Deseret News editorial boards Wednesday. "We're behind the national curve on that because we're a younger state, but we're certainly heading in that direction. ... They struggled as much through inflation — maybe more through inflation than anybody else — those who are on a fixed income."

The governor announced his budget asks at the William E. Christoffersen Salt Lake Veterans Home Thursday morning, and emphasized the provisions focused on older adults and veterans. Along with the proposed elimination of income tax for Social Security, he asked for money to address the higher rate of suicide among veterans and to build and maintain a second veterans cemetery in northern Utah.

Dan Butz, a 74-year-old resident of the veterans home who spent 21 months on a Navy river boat during the Vietnam War, said he's lucky to have a healthy retirement fund, but many fellow veterans and older adults struggle to get by on their Social Security benefits.

"It's going to be a major thing," he told reporters. "When I was younger, I put money in the right places, but for the bulk of the people, they didn't, and consequently, they're hurting."

Utah is one of only nine states that taxes Social Security benefits, and Cox said his budget would save about $950 per year for the average filer — a total of $143.8 million across the state. Lawmakers had set aside some $200 million to cover a proposal to eliminate the state sales tax on food, but that effort was tabled after an accompanying constitutional amendment was struck from this year's ballot.

That amendment would have ended the educational earmark on income tax, and without it, Cox is proposing to use that money that was set aside to offset eliminating the Social Security tax as well as expanding the state's child tax credit to cover children who are younger than 1.

The governor's budget is just a recommendation to the Legislature, which controls the purse strings for the state budget, and the proposal serves as the first offer in what will be ongoing negotiations during the upcoming legislative session. Cox said he hasn't yet had an "in-depth discussion" with top legislative leaders on eliminating the income tax on Social Security, and said potential bills could be brought forward to fulfill his request or take a more modest approach by reducing the tax rate on Social Security or phasing out the tax over the next several years.

That's the approach taken by West Virginia, which will reduce its Social Security tax this year and next year before eliminating it by 2026.

Cox said, "It's an embarrassment" that Utah is one of only a handful of states that taxes income from Social Security and said the state has a "moral obligation to do this this year."

Asked if he's comfortable with mirroring West Virginia's approach, the governor said: "That's where negotiations come in, and we'll certainly have those. That's better than nothing, but my proposal is better than that."

Butz said he's skeptical lawmakers will give Cox what he wants but was thrilled the governor made it a high priority going into the legislative session.

"Getting it done is going to be a very difficult thing. I think people fight that stuff," he said. "Because it's good for the people, and the Legislature sometimes doesn't do what's great for the people. I'm just not totally that impressed with our Legislature. I think that if (Cox) gets it done, it'll be a great thing and it'll change the way I feel about it. That's a huge, huge step that he's making."

Nuclear energy

With growing demand for energy due to Utah's growing population and the emerging artificial intelligence industry, Cox in October announced the ambitious Operation Gigawatt to double the state's energy production over the next 10 years. His budget proposal would lay the first seeds of that project, by investing $20.4 million in nuclear power and another $4.3 to boost geothermal production.

Cox is hopeful that the incoming Trump administration will make good on its promise to fix the federal permitting system for nuclear energy, which the governor said is "broken."

"We can't build stuff in this country anymore," the governor opined Thursday. "Again, we've gotten so stupid as a country. The regulatory overload that has happened in our nation is embarrassing. It's an embarrassment to us as the greatest nation in the history of the world. It's an embarrassment to the rest of the world where they still can build stuff and we cannot. The only time we can build stuff quickly is when a disaster happens."

He said permitting is the primary roadblock preventing more nuclear power from being brought online but praised Sen.-elect John Curtis' efforts on that front and said he's "optimistic that we can move the needle."

Because nuclear power has been out of fashion in recent decades, Cox said much of the expertise in building nuclear generators is aging, giving the state a "window of opportunity right now to actually fix this and get it right."

Although many across the country have been wary of nuclear power since the partial meltdown of a reactor at Three Mile Island near Middletown, Pennsylvania, in 1979, Cox said new technology has made modern reactors much safer. The governor noted that Japan — which saw three reactors meltdown at Fukushima following an earthquake and tsunami in 2011 — has planned to restart nuclear power plants to bolster cleaner energy production.

"Please don't freak out," Cox said, when asked what he would say to skeptics of nuclear power. "Please follow the science. ... If you really believe that we need to eliminate carbon from the air, you have to be pro-nuclear. There is no other way possible to do this."

It's unclear where a future nuclear power plant might be based in Utah, but Cox said the $20 million proposed investment would largely fund site identification and preparation in hopes of incentivizing future private investment. The governor said he has had initial and ongoing conversations with the leaders of neighboring Idaho and Wyoming about coordinating efforts on the nuclear front to benefit all three states.

Cox described energy as his No. 2 priority behind lowering the cost of housing, which featured prominently in his budget last year. Lawmakers approved a $300 million state fund to give low-interest loans to developers who build affordable housing units, which has recently gone into effect. Cox said he is still focused on other policy measures to address home prices but held off on requesting further investment in home building this year.

"A lot of that money hasn't been spent, or it's just getting spent," he said. "One of the fears about releasing this budget today is that it would sound like we're taking our eye off of that — we're moving on to the next thing. And I just, I can't be more clear: This is still my No. 1 priority."

Education

Cox's proposal includes funding for K-12 education and the state's higher education system. While lawmakers have pushed for budget cuts to higher education, Cox's budget doesn't request any cuts, but it does ask higher education leaders to reevaluate the need for certain degrees. The budget also asks for $2.5 million to increase capacity at technical schools and $2 million for a pilot program to design general education curriculum to develop better critical thinking skills and civics.

The governor said he is "very supportive" of the effort to reorient higher education programs to promote the workforce needs but wants to see money saved by cutting programs reallocated to bolster other degrees.

"A 10% reallocation is really what the discussion is honing in on," Cox said. "That money would be set aside as programs are eliminated, then it can be used to facilitate additional programs."

He said he thinks higher education has "lost their way across the country in very important ways," and said many higher learning institutions are "more in the advocacy business than seekers of truth."

While he believes the institutions have become too ideological, "we can't go too far the other way" when trying to fix the problem, he said.

"These are taxpayer-funded universities; that's what we're talking about," he said. "Taxpayers — citizens of Utah — are putting their money into these universities ... which means the people who are funding these universities have a say in what gets there. How do they have a say? They have a say through their elected representatives."

Cox's proposed budget also includes about $130 million to help K-12 school districts implement school safety measures passed last legislative session. Asked about which piece of the budget proposal he is most worried about, Cox pointed to the school safety funding.

"The one that keeps me awake that is in there is the school safety piece," he said. "That's the one, you know, every governor just waits for that phone call."

The funding would help schools implement various school security measures, including technology to remotely lock the doors of the school and potential remodels of certain schools to limit the deadliness of an active shooter.

Cox — who has advocated for schools to ban cellphones during class time — also requested $3.7 million to help schools purchase pouches where students can leave their devices while class is in session.

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