for health-related costs for alcohol abuse. She posed the following questions: Is it fair for the
taxpayers to bear the cost of this burden or should the users pay for the cost? Is increasing the
beverage tax the best way to find funds to meet the need for more money? What will be the impact
on sales in the state? Rep. Stephens suggested the following options to raise additional funds for
treatment, prevention, and education:
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index a percent of the alcoholic beverage profits and earmark those revenues for these programs; or
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increase the criminal surcharge on offenders and earmark the surcharge specifically for these programs.
She suggested three ways to ensure that the money can be earmarked:
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set up a new fund specifically for these areas;
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do a one-time appropriation with intent language that the money become a part of the base budget; or
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increase the amount of the cap and appropriate the full amount to these programs.
Colonel Richard Greenwood, Superintendent, Utah Highway Patrol, distributed a document
which included a proposal to utilize alcoholic beverage revenues to fund alcohol-related law
enforcement prevention and treatment programs. He indicated that the following programs and
services are needed.
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DUI Squad for Davis/Weber Counties
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Three hearing offices for Driver License Division
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Two alcohol technicians, including specialized training
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Enhanced liquor law enforcement
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Overtime for officers conducting checkpoints
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DUI Enforcement Technology
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Controlled Substances Prescription Data Base
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Enhanced crime lab services
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Special DUI courts and adult and juvenile drug courts
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Funding for substance abuse prevention and treatment
Mr. Patrick Fleming, Director of the Utah County Human Services Program Substance Abuse
Treatment and Prevention Services and Representative of the Public Substance Abuse Treatment
Programs, distributed two handouts from which he presented his remarks. He indicated that during
the last session the Legislature appropriated $2.9 million rather than $4.35 million for the Liquor
Control Fund. He believes this needs to be rectified and suggested earmarking some money out of
the liquor control profits to help with alcohol treatment programs.
Mr. Doug McDonald, Chief Economist, Utah State Tax Commission, presented an overview
on beer consumption in the state. He discussed the impact of variables such as: population growth,
legislative changes, and price.
Mr. William E. Christoffersen, President, Utah Beer Wholesalers Association, said that the
Association believes that the state is already collecting enough money to more than cover alcohol
abuse rehabilitation programs. He indicated that the Association is in favor of doing something
about the misuse and abuse of alcohol, but it doesn't feel that the burden should be put completely
on the users of the products who are law abiding citizens. He distributed a pamphlet containing
facts concerning beer distribution in Utah.
Mr. Brian Harris, Northwestern Regional Director for the Distilled Spirits Council of the
U.S., said the Council is opposed to any additional increase in liquor taxes. He distributed a chart
showing federal, state, and local liquor taxes and stated that 60 percent of the cost of the retail price
of a bottle of spirits goes to taxes. He suggested that funding for rehabilitation programs should
come out of existing revenue.
Mr. Jim Olsen, President, Utah Industry Association and representing the Retail Merchants
Association, stated that the more the liquor taxes are increased, making the state disproportionate
with the surrounding states, the more bootlegging is going to take place. When the liquor taxes were
increased before, that money was to be earmarked and used for rehabilitation programs. That money
needs to be funneled to those programs.
Rep. Stephens stated that an alcoholic beverage revenue study group has been formed to
work on this issue. Three options the committee can explore to raise additional revenue are:
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to increase taxes on beer and/or wine and liquor and to earmark these new revenues for the programs that have been identified;
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to make better utilization of the $4.35 million; and
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to designate the alcoholic beverage tax net profits specifically for identified purposes.
The study group would like the committee to discuss these options and then it would like to
come before the committee again in October or November with a specific plan.
4. Use of Impact Fees - Sen. Poulton told the committee there are two issues regarding impact fees:
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the need to make sure that the money for impact fees is not used for general purposes, but for specific purposes that benefit specific individuals and groups of people; and
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how to control the impact fees.
Ms. Patricia Owen, Associate General Counsel, distributed an Impact Fees Packet and gave
an overview of the history of impact fees, the Impact Fees Act itself, its principles, and examples of
impact fees.
Sen. Mansell stated that the purpose of SB 4 was to hold impact fees relatively stable so they
wouldn't continue to increase. The bill had a lot of opposition from the cities and the bill passed by
the Legislature was vetoed by the governor. The Legislature renegotiated the bill again and each
time it was renegotiated, it opened up the parameters where impact fees could be charged and the
formula under which the fees could be charged. The formula is wide enough now that instead of
controlling impact fees it has given municipalities license to open them wider and for higher
numbers. He suggested that the committee look at taking the national average of impact fees across
the nation, or the seven western states, to come up with an average amount that is being charged.
Mr. Ron Thorne, Homebuilder and President of the Homebuilders Association of Utah,
discussed the hidden impact fees that are included in the costs that cities are charging and are not
regulated in any way by anyone in the state. As a builder, he sees these hidden costs being pressed
onto our children and our children's children and costs of housing will continue to rise.
Mr. Tasman Biesinger, Utah Home Builders Association, said that because of the state's
growth, more houses must be built and as more houses are built, more infrastructure is needed. The
question is: How are we going to pay for that infrastructure? Mr. Biesinger explained the following.
The trend today is to require new residents to pay up front for the entire cost of the infrastructure
under the guise of impact fees. In Utah, the average household income is about $43,000 and the
average cost of a house today is about $145,000. The housing market is slowing down because
homes cannot be built in the range that the average Utah household can afford to buy.
Mr. Blaine Walker, Utah Association of Realtors, said that when S.B. 4 was written, it was
with the understanding that impact fees were fees that could be charged to help cities take care of
their rapid growth. There are abuses of impact fees and the bill needs to be revisited to strengthen
its position and make it more simplified.
Mr. Brent Gardner, Utah Association of Counties, said that county government is very
limited in what they have used impact fees for and there are only four counties that have impact fees.
There is a real pressure with growth for local government to find ways to finance it, but the county
level has been very conservative in its use of impact fees and will continue to be.
Mr. Ken Bullock, Executive Director, Utah League of Cities and Towns, stated that the
League believes that it is too soon to know how the enabling legislation for impact fees is working;
but that it is happy to work with the committee on any review. Mr. Bullock further explained that
consultants who are experts in this field go through the process of helping the communities develop
their capital facility plans and the fees they are charging.
Mayor Dan McArthur, St. George, said the growth in St. George has gone from eight percent
to 20 percent and the need for sewer improvements and water has increased dramatically. As people
have moved into their communities, the city has felt that the growth needs to help pay for itself. The
city has spent considerable time on impact fees and have set their fees at about 75 percent of what
the recommendation was in most areas. He believes impact fees are a critical source of revenue for
communities.
Mayor Jerry Stephenson, Layton, said he has seen what impact fees can do with
development. Layton has had impact fees in the community for many years and some great projects
have been done with impact dollars. The city feels their fees are reasonable and are needed in order
to cause more product to come on the market.
Mr. Stewart Adams, Layton City Councilman and member of the Board of Directors of
Northern Wasatch Homebuilders, said his experience with impact fees has been mixed. Impact fees
can have a leveling effect for extra large improvements if they are administered properly, but the
implementation of impact fees is very difficult and can have a negative impact.
Mr. Chris Childs, a homebuilder in Utah Valley and also past president of the State
Homebuilders Association, said that fairness is the issue here. He encouraged the committee to look
at where the abuse is really happening. There needs to be some sort of a check and balance system
with regard to impact fees so that the people doing these studies are more accountable to the end
home buyer who is the one paying the impact fee.
Mr. Steve Erickson, Director, Utah Housing Technical Assistance Program, suggested that
there needs to be some additional offsets for those who are trying to develop housing and paying fees
to the cities.
Mr. Elliott Lawrence, West Valley City, said that impact fees are not intended to make new
development pay for new things, but are intended to help the cities provide the same level of service
to all of its residents.
Rep. Adair stated that he is a real estate broker and declared a conflict of interest.
Rep. Way said that he is in the homebuilding industry and declared a conflict of interest.
Rep. Harper said he works for a municipality and feels that the vast majority of communities
have followed the intent of SB 4 and have done what they felt was required by this law. The
question the committee needs to consider is who should pay for the services that are being generated
by the new growth.
Sen. Poulton said he doesn't agree that new growth should fund itself, but the committee will
have an opportunity to discuss this issue further at a future meeting.
MOTION: Sen. Buhler moved that the committee request the Legislative Audit Committee to direct the Legislative Auditor to do a compliance audit of local governments to see to what degree
they are following SB 4 so the committee can have some basis to go on as to how well the law is
currently being followed. The motion passed unanimously. Sen. Mayne and Reps. Barth and
Johnson were absent for the vote.
MOTION: Rep. Adair moved to adjourn at 12:13 p.m. The motion passed unanimously. Sen. Mayne and Reps. Barth and Johnson were absent for the vote.