Citizen Referendum Suspends Tax Reform, Resulting in General Fund Uncertainties

Utah Legislators passed Senate Bill 2001, Tax Restructuring Revisions on December 12, 2019, to address decreasing sales tax revenue. Over the past several weeks, a referendum campaign sought to collect citizen signatures to express dissatisfaction over the proposed structure, specifically the increased grocery tax. These efforts culminated in roughly 152,000 signatures in support of the referendum. If the signatures are certified, the referendum will suspend any changes until the General Election in November 2020.

House and Senate leaders aimed to address Utah’s changing economy and bolster General Fund revenue prior to the 2020 General Session. For many years, Utah’s economy has been transitioning from a goods economy to a services economy, leading to a depletion of the general fund. Dramatic alterations to the state’s tax structure were discussed during the 2019 Legislative Session, but failed to pass before the session adjourned. Due to House and Senate disagreement, lawmakers formed a task force to research and draft a bill. Throughout 2019, the task force held 17 hearings totaling 60 hours of public comment.

The Utah Public Employees’ Association (UPEA) released an official position statement on the tax bill on Dec. 9, 2019, with Executive Director Todd Losser speaking on behalf of public employees that evening at the final task force committee meeting before the vote. Losser urged legislators to keep state employee compensation in mind as they give credit to public employees for their money-saving efficiency, which has allowed for a large income tax cut. State employees have not received a pay increase above 2.5% since 2008. The Association advocated for a supported general fund, and for that money to be used to give appropriate compensation increases and benefits to public employees whose compensation is currently far below market.

What the proposed tax bill includes

The most noteworthy aspects of the bill are:

  • A $630 million income tax cut
  • A $475 million sales tax increase, most of which will come from increasing the grocery sales tax from 1.75 percent to 4.85 percent.
  • Increasing taxes on some service-based businesses, such as buses, ride-sharing apps, streaming services, and shipping and handling for online purchases.

In addition, the bill includes tax credits for low- and middle-income households to offset the sales tax increases on groceries.

As a result of the changes, tax revenue will shift from income taxes to the unrestricted general fund, which funds government services, including employee compensation.

Referendum Impacts

During the upcoming General Session, decisions regarding funding allocation will rely heavily on Utah’s tax structure. The referendum causes fiscal uncertainty regarding General Fund disbursement, including employee compensation increases.

Whether or not the proposed changes are implemented, UPEA must convince legislators to fund compensation increases for state employees. Achieving a significant increase will require the hard work of UPEA’s staff, leadership, current members, and all public employees. There is no better time to contact your legislators and boost UPEA membership!

PEP Squad: Estate Planning with Adrienne Jack

The Public Employee Podcast, also known as P.E.P. Squad, now has seven installments!

In this episode, the Squad talks to Adrienne Jack from Kirton McConkie about a new benefit available for UPEA members!

Episode Transcript:

Kendle:

Hello everyone! Welcome back to the PEP Squad! Thanks for joining us. We’ve got a full studio here today, I’m joined by our Executive Director Todd Losser, Hannah and Christy as well as our special guest and new vendor. Todd is going to introduce our guest.

Todd:

Hi, yes, today with us is Adrian Jack, an attorney from the law firm of Kirton & McConkie.  And she’s going to be providing a discounted rate for helping our members write their wills and trusts. This is going to be a huge benefit and it’s something we’re excited to roll out for our members. Anybody who has been considering creating a will or trust or anyone who needs to update their existing wills and trusts can have access to this great service. We’re excited to have her here and so I’ll turn the time over to Adrian and she’s got a presentation and she will talk about what wills and trusts are, how they work, what Kirton and McConkie will be offering you. If you have questions about this, she’s going to leave her contact information, or you can call the UPEA office and then we can set you up to meet face-to-face. I’ll turn the time over to Adrian.

Adrienne:

Thank you. I am excited to be here. I first became interested in estate planning when I was in high school and my grandfather passed away. My grandmother had already predeceased him, and he had remarried, so I had another grandma in my life. Once he passed away there was a lot of family drama about who should receive what assets in the family. The family continued to fight about it and attorneys had to be hired and get involved. A part of my family to this day is not on good terms with other parts of the family because of this. I’ve seen firsthand how the lack of estate planning can really cause a strain on relationships/family and put a burden on families that could be easily avoided with some simple estate planning documents.

So, at a high-level, when people think of estate planning, the first thing they think of is who will receive my assets at my death and that is a crucial part of estate planning. But there are several other components that are just as important. You might also consider when do they receive the assets? Other considerations include if there’s a large sum of money or you have children or family members that aren’t financially responsible; you may want that money to be distributed to them in a way.

Also, one of the critical parts of estate planning is making sure that your estate is distributed as efficiently as possible to help avoid the probate process. Probate is a process when the court decides where to distribute a person’s estate and they oversee how that is handled. There are some easy ways to avoid probate which I’ll talk about shortly. Probate can be a hassle, burdensome and expensive for families. Then also to keep in mind with estate planning is making sure you’re being as tax efficient as possible. Right now, the estate tax will only apply if you have $11.5 million to contribute to your beneficiaries. That doesn’t apply to a lot of us, although, I wish it did! So, estate taxes might not be at the forefront of your mind right now, but keep in mind that that 11.5 million is scheduled to go back down to 5 million in 2026; and then it can also change with whoever holds the presidency or Congress.

What happens is that a person is appointed as personal representative or executor of the estate and they then have the power to distribute a person’s assets. To be appointed as a personal representative you often must go to a court hearing to do so and that requires you to hire attorneys and it can be expensive. The court filing fee alone is $400. To probate an estate costs between $2,000-2,500.

Whereas compare that to a simple estate planning that we are offering to UPEA members which is only about $1,000 for an estate plan for a couple, or $700 per state plan for individuals. Avoiding the probate process by planning your estate now will save you a lot of money, headache and hassle for your beneficiaries.

So, when the court goes to distribute your assets it will be done according to your will, if you have one. If you do not, then your assets are distributed according to state law. State law might not meet your best interests. For example, if you have family members that are estranged or that you’re not on good terms with, you may not want your assets going to them. However, if there is no will, state law specifies who will receive those assets and that is not something you can control unless you have an estate planner.

If you do not have a will but you have a spouse and all the children that you have are from that spouse are from a first marriage with no step-children, then all your assets will go to your spouse but if you have children who are from prior spouses, those children can get involved and then half of your estate will go to your spouse and half will go to the children. If you have no spouse, then all your assets will be distributed amongst your children. If there are no children, then your assets go to your parents. If your parents are not alive, then it goes to your siblings, and so on and so forth. So, state law specifies that certain people receive assets and that is not something you can change no matter how tense or adversarial your relationship is.

To avoid the probate process, the simple way to do that is to put in a simple estate plan that transfers assets automatically at your death to the people you want so the court doesn’t have to oversee who receives them. Because it happens automatically, some benefits, like a life insurance policy or retirement plan, will automatically go to your beneficiaries at your death. However other assets like a home, bank account or other personal property does not automatically go to somebody at your death and so that is why your estate-planning can make sure exactly what you want happens.

To avoid the probate process, you need four key documents for your estate planning. The documents we will use in drafting your estate plan. The first is your will, your will state that everyone in your estate will be put into your trust. Within your will is a personal property list and that is where you can specify where certain pieces of property like artwork, guns, heirlooms, jewelry, etc. can pass to a particular person that you specify. That is something you can do after your estate-planning and change it as many times as you like without having to see an attorney. Your trust will when distribute your assets to your beneficiaries and you can specify when you want those assets to be distributed, such as immediately at your death or at certain ages. Once everything has been distributed, your trust will terminate.

Within your trust will need a designated trustee who can handle those assets for you. Oftentimes the same person that serves as trustee will also serve as the personal representative because the rules are very similar. Your personal representative is gathering your assets and your trustee is distributing them. It makes sense that one person as filling that both of those roles.

The third document is a Healthcare Directive and that is giving someone the authority to make healthcare decisions for you as well as make your end-of-life care decisions. Healthcare Directives are sometimes known as living will too. This is an important role to have filled by someone you trust because this role will be someone who can admit you to the hospital, obtain your healthcare records, and be able to decide on life-support options. This person can also help if you become incapacitated and are no longer able to make those healthcare decisions for yourself.

Finally, the fourth document is a Power of Attorney. The power of attorney allows somebody to act on your behalf for financial matters. If your mental health condition deteriorates, you can appoint somebody who is able to help you. They can pay your bills and expenses, access your bank accounts. Additionally, the power of attorney allows them to sell your property on behalf, and act in any way that is beneficial to you. If you don’t designate a power of attorney or a healthcare directive agent, the court will designate that person for you. That might not always be in your best interest. So, it is important that while you have the capacity to do so, you are prepared.

These estate planning documents are what you need to be working on now, gathering your asset information. Think about what assets you have, what their value is, and who you want your assets to go to. Other information you need gather is what life insurance policies you have, your policy number, who your life insurance agent is. You need to ensure that you know where you bank and what are your bank account numbers are. This is especially important not only for your estate planning attorney but also your family. Unfortunately, we see clients all the time who are struggling to find where their parents’ assets were, and they have no idea where their parents banked or if they even have life insurance policies. All that information is vital to estate planning. Oftentimes, the only way for children to find their parents’ information is to get bank statements in the mail and that can take a long time. So, it is very important to gather that information now and have it accessible for your beneficiaries so they can know exactly what you have and where to gather it. You can also start thinking about who you trust to make these decisions for you, and who would you like to be your personal representative or trustee.

At our law firm we have prepared packets of information on estate planning that we can give our too interested individuals. These documents can help you make these considerations and determinations to begin the process of estate planning.

I am very grateful to work with public employees; my husband is a public employee and I appreciate all the UPEA members in all that they do to make our state so wonderful. I’m happy to meet with you to discuss any estate planning objectives you have. I can meet with you in person as I mentioned, it costs about $1,000 for couples and $700 for individuals.

If you’d like to contact me, you can contact the UPEA offices or my email is: AJack@kmclaw.com My phone number is 801-850-7644. Thank you and I look forward to working with you.

Todd:

Great! So, if members are interested in taking advantage of this great offer, going forward, how long would something like this take?

Adrienne:

Typically, before we meet, I will send you a list of documents you need to gather and a packet of information to fill us prior to us meeting. That way you can work on your own time. Our first meeting is usually 30 minutes to an hour. After that meeting our law firm will prepare the documents you bring and ensure they are acceptable. We will send up a written estate plan to you to ensure it is acceptable on your end. From there, we will meet once more to sign the documents which takes another 30 minutes. It does take a bit of your time, but it will save so much time, money and resources in the future.

Hannah:

When is a good time to begin estate planning?

Adrienne:

That is a great question. Usually when people have children, they begin to investigate guardianship of their children if something were to happen to them. This helps to ensure that their children’s guardian will be somebody that they’re comfortable with. Once you are older and reach your 40s or 50s, that’s a great time to start figuring out your estate planning. All the information that we put into your estate plan are totally amenable so if something happens you can change it to reflect new information.

 

Kendle:

I know Adrian talked a little bit about cost in her presentation, but I just want to clarify that this is an awesome deal! As she said I just it is about $700 for an individual and $1,000 for a couple and you get this for this all-inclusive package to plan your estate fully with a highly rated law firm. When you ask for a quote at other places their estate planning can range from $2,500 to $4,000, so this is a huge deal and the members to take advantage of.

Todd:

Awesome, thank you Adrian for sitting down with us and going over this. We’re excited for our members to take advantage of this opportunity. Like Adrian mentioned, you can contact her directly or just reach out to the UPEA office we will put you in touch.

Submit Your Applications for the UPEA/MACU Scholarship by February 28

Every spring, Mountain America Credit Union (MACU) partners with the Utah Public Employees’ Association to offer three $1,000 scholarships to members of the Association or their dependents. The 2020 Mountain America Credit Union Scholarships are financial awards based on skill, scholastic ability, community service, and future career plans. The scholarships will be awarded at the 2020 UPEA General Council Recognition Banquet on Thursday, March 26, 2020 at the University Park Marriott Hotel.

Click here to view and print the application and scholarship instructions. Only members of both Mountain America Credit Union and UPEA, their spouses and/or their dependents are eligible. Individuals that have been awarded this scholarship within the past two years are not eligible. This two-page application must be completed by the student. All applications must be received or postmarked by 5:00 p.m. on Friday, February 28, 2020.

Please include your:

Please mail your completed application packet to:

UPEA

Attn: Kendle Zdunich

1000 W. Bellwood Lane (5380 S.)

Murray, Utah 84123-4494

Or email your completed application and supporting documents to Kendle Zdunich at kendle@upea.net.

If you have any questions, please contact Kendle at 801-264-8732 ext. 209.

UPEA Backs Bill That Would Create a Statewide Pay Plan for Public Safety Officers

The Utah Public Employees’ Association (UPEA) and Rep. Lee Perry, R-Perry, on Thursday announced a plan to pursue a statewide pay plan for law enforcement officers.

The announcement followed a town hall meeting UPEA hosted earlier in the day at the UPEA offices, during which state public safety employees discussed recruitment and retention of quality employees within the existing state employee pay structure. They overwhelmingly agreed that public safety employees need a separate pay plan.

“Public safety and law enforcement employees are at a critical crossroads” said Perry, a Utah Highway Patrol (UHP) lieutenant. “Better pay is essential to address the challenges they face.”

Perry said he will sponsor a bill, Law Enforcement Salary Plan Amendments, during the 2020 legislative session, which begins in January. If approved, the legislation will direct the Utah Department of Human Resource Management (DHRM) to create a career ladder system for all Peace Officer Standard and Training (POST)-certified officers employed by the state.

Perry has long been an advocate for better pay for public safety employees. He supported a legislative appropriation to fund a career ladder system for UHP officers. During the 2019 Legislature, he also cosponsored Senate Bill 129, Public Safety and Fire Fighter Tier II Retirement Amendments, with Sen. Wayne Harper, R-Taylorsville. The legislation passed and enhanced retirement benefits for public safety officers and firefighters in the Tier II retirement system.

Like UHP officers, correctional officers also have a career ladder system, but officers who work in Division of Wildlife Resources, Adult Probation and Parole, State Parks, and the Tax Commission are not included in any such system.

Todd Losser, executive director of UPEA, said UPEA will lobby lawmakers to adopt Perry’s bill. “This is an important issue and part of UPEA’s mission.”

UPEA is the largest association representing public employees in the state of Utah.

UPEA 2nd Vice President Primary Elections Begin Dec. 15

Primary elections for the Utah Public Employees’ Association (UPEA) second vice president position will be held Dec. 15 – Jan. 15. Please familiarize yourself with the candidates and make an informed decision. Within UPEA, the second vice president’s responsibilities include:

    • serving as chairman of the Resolutions Committee, which reviews resolutions and makes recommendations to the General Council and proposes a platform for the coming year
    • Represent the State Board as a voting member of the Citizen Action by Public Employees’ (CAPE) Committee

All UPEA members will receive ballots by email when it is time to vote.

Here are the three candidates and their platforms:

 

Wayne Anderton

Hi, my name is Wayne Anderton. I have been employed by Tooele County for the past 22 years, and I’ve been a member of UPEA for 20 years. I have spent the past several years as an active member of UPEA in Tooele County, working full time and pursuing my bachelor’s degree in natural resource management. The experience I have gained through my employment, my higher education, and the opportunities I have had working with UPEA on issues such as wage disparity, cancellation of post-retirement benefits, and leave compensation changes give me the confidence and leadership skills to help guide the Association for the next four years. I have confidence in my ability to work with UPEA’s officers and leadership to make the organization stronger and more unified. I intend to focus on the following objectives as second vice president:

UPEA has a diverse membership that includes state, county, local government, public safety, and retired members. The Association has something to offer every public employee, and I am committed to work with UPEA staff to create a strong voice for all public employees. Through communication and representation, I will work to increase UPEA’s membership.

Utah’s greatest asset is its public employees. As an officer of UPEA, I am committed to create a positive public perception for public employees through education of both the public and elected officials.

I will work with the excellent UPEA staff and leadership to effectively communicate to elected officials the economic position and needs of Utah’s public employees. I will help create a plan to educate policymakers and other stakeholders about the tremendous work public employees do for the citizens of this state. In return, public employees’ pay and benefits need to be at the forefront of discussions, and I will help organize and implement a long-term plan to address the pay and benefit needs of public employees.

Desmond Lomax

Hi, my name is Desmond Lomax. I have been employed by state of Utah and Utah for the past 20 years, and I’ve been a member of the Utah Public Employees’ Association (UPEA) for five years. I have spent the past several years as an active member of UPEA in the Law Enforcement District. I am currently on the Advisory Council and I love it! I hope to expand my role with UPEA by helping to support the following initiatives:

I want to reach out to all facets of government to encourage UPEA membership. I believe in using technology and providing future members with a better understanding of the benefits UPEA offers. I believe sharing our personal stories of the benefits of UPEA on our online newsletter for current and incoming members would be a powerful start.

I have a degree in political science with an emphasis in American government. I believe I have the tools to add new ideals to our representation at the Capitol. We need to be seen as a whole body or collective of people with a desire to change and improve our government for the benefits of our membership. We can and will do this!

With enhanced representation, I believe better compensation and benefits will be accomplished.  We need to improve the benefits for our retired people. (I soon will be one of you.) We also need to improve the day-to-day salaries of all employees. While the growth of the state is evident, the state has fewer employees. We are doing more with less and we need to be compensated for this.

I invite you to vote for me. I can be reached via email, desmondlomax@gmail.com. I would be happy to answer any other questions you may have.

Christie Workman

My name is Christie Workman and I am thrilled to be running for UPEA second vice president. I have worked for the state of Utah with the Office of Rehabilitation for 23 years. I joined UPEA during my first year with the state and I’ve been participating and supporting ever since. Currently, I serve on the UPEA State Board of Directors and am chairwoman of the General Council Committee. I truly believe in the Association and its ability to enact positive changes for public employees, and I feel proud to be involved.

If elected as second vice president, I would prioritize educating employees about UPEA’s importance. There are several employees who are unaware of what UPEA does to protect the workforce and enhance all aspects of our jobs. We are stronger in numbers and I want all individuals to know that their membership is important to UPEA’s success. I will work to increase awareness and support for the Association.

Additionally, I will support the legislative goals of the Association, especially increasing total compensation. In my 23 years with the state, I’ve seen a lot of changes when it comes to employee compensation. During the recession and all of the benefit changes that followed, employees were promised increased compensation when the state recovered. Now is the time to make good on that promise. Compensation should not take a back seat during the legislative session and I intend do everything I can to increase legislators’ awareness.

I’m humbled to be a candidate for UPEA second vice president. Thank you.

Compensation Study Shows State Worker Salary Remain Below Market

State employees on average earn 11 percent less than the market average, according to results of a new compensation study performed by a third-party consulting group.

However, they fare slightly better when total compensation is considered, according to the study performed by Gallagher Surveys. Total compensation, which includes health, dental, and vision insurance, and retirement benefits in addition to salary, is 2% below market for Tier I state employees and 10% below market for Tier II employees.

In addition, state employees’ leave accrual outpaces that available in the market overall as demonstrated by the graphic below.

DHRM will use Gallagher’s findings to recommend what lawmakers should focus on as they consider state employee compensation. The Legislature’s Retirement and Independent Entities Interim Committee on Sept. 19 discussed the study. Paul Garver of the Division of Human Resources Management (DHRM) and Mark Goldberg of Gallagher led the discussion.

Based on study results, Gallagher recommended that the state focus on addressing salaries for positions for which pay is 15% below market. Because the state is more competitive when it comes to total compensation and leave accrual, it made no recommendations in those areas.

Rep. Lee Perry, R-Perry, took issue with the salary recommendation. He explained that Box Elder County is unable to recruit or retain employees for positions that pay 10% below market. Addressing only positions with an even greater disparity does nothing to solve the problem, he said.

Rep. Craig Hall, R-West Valley City, agreed. “Until we increase the number of dollars in people’s paychecks, we will not be able to retain our employees.”

Hall addressed the idea that the state offers an above average total compensation package. “I believe that people should evaluate benefits and retirement when considering working for the state; however, it doesn’t matter what I think they should value. When it comes to recruitment and retention right now, what matters is the pay.”

Garver agreed that younger workers do not value benefits as much as previous generations. Salary is the main driver, he said.

“However, the state will never compete with the private sector on pay alone,” he said.

The private sector moves too quickly and can match any increase the Legislature passes. “We cannot erode our competitive benefits as a means of closing the gap on salary” Garver said. “We must focus on increasing base pay and giving employees more flexibility in their benefits.”

He noted legislation passed during the 2019 Legislature that allows employees on the STAR plan, PEHP’s high deductible plan, to convert half of their Health Savings Account (HSA) contributions to cash. He also noted Gov. Gary Herbert’s push for more state agencies to allow for telecommuting options.

Sen. Wayne Harper, R-Taylorsville, said lawmakers need to address both salaries and benefits. “You’ve got to get people in the door; a strong, competitive salary will do that. Then strong benefits will help to retain them.”