announcer: Funding for "The Hinckley Report" is made possible in part by the Cleone Peterson Eccles Endowment Fund.

Jason Perry: Tonight on "The Hinckley Report," as a record breaking session comes to a close, what major priorities got funded and what was left on the chopping block?

While legislators race to pass bills in the final hours, what major policy changes are they considering?

Join us as we examine the final days of Utah's 2023 legislative session.

♪♪♪ ♪♪♪ Jason Perry: Good evening, and welcome to "The Hinckley Report."

I'm Jason Perry, director of the Hinckley Institute of Politics.

Covering the week we have Senator Daniel McKay, Republican from Riverton; Lindsay Aerts, reporter with KSL News Radio; and Frank Pignanelli, political commentator and lobbyist with Foxley and Pignanelli.

I'm so glad to have you with us here on the last night of the legislative session, and it has been a lot throughout the last 45 days.

Lindsay Aerts: It's done, we're finishing.

Jason Perry: Almost there, almost there.

I want to talk about sort of the overall themes here a little bit too, because when you look back over the last 45 days, Frank, we'll start with you, a lot of really, really big issues were on the agenda.

Frank Pignanelli: I'm going to pay the legislature the ultimate compliment, and that is I'm going to refer to that amazing cultural icon known as the "Godfather."

There's a phrase, "We settled all family business," and the legislature settled all the family business.

Issues that have been around for ten years or ten weeks were dealt with this session very efficiently.

It was a lot of hard work, but I was impressed.

They got a lot done in 45 days, and it ran the gamut all the way from regulating social media, ESG, taxation, changing how we deal with education, changing judicial nominations, goes on and on and on.

So, they settled family business.

Jason Perry: What do you think, Senator McCay, you agree?

Dan McCay: I was--last night I was at dinner, and we were trying to figure out what we left undone, and it's really interesting, because my sentiment is this is one of the most substantial sessions, if not the most substantial session of my 12-year career.

Jason Perry: So, Lindsay, talk about that for a second.

I wanna get into the issues in just a minute, because they are very big, but there were some of these big themes, and I think this is sort of the general agreement from the legislature is we tackled the hard stuff the whole time.

Lindsay Aerts: Yeah, I would agree.

It felt like every week there was a new theme to this session.

Everything like you're mentioning from social media to taxes to abortion to curriculum in schools.

A lot of people had criticisms of some of those issues, but at the same time there were a lot of projects.

And just talking about the funding too, money for education, money for water, money for transportation.

I'm probably missing some in that list.

But lots of money went out as well.

Dan McCay: Those are the substantial big rocks that we had this year.

I mean, almost a 20% investment, you know, increase in education, and substantial, you know, savings, and really my hat has to go off to legislative leadership in a lot of ways.

Hopefully they aren't watching this, they don't feel like--you know, it gets right to their head, but the way that we have planned for just in case the, you know, the economy takes a turn for the worse, and that we put some of this money into projects that we know that we can really pull the money back if we don't need to, it's really smart.

Frank Pignanelli: The other dynamic I want to just throw out there is that Utah is the first state to adjourn across the country.

And so, it's a dynamic that's been so for many years, but it was really present too, you had all these national organizations watching and oftentimes participating, trying to pass or kill bills, and that was a really big dynamic that was happening this session, I felt like.

Jason Perry: Yeah, so, Lindsay, that's an interesting point right there, because even as you talk about who was on the hill this year, there are a lot of lobbyists, but it was people looking at other states as well, looking at what happens here to signal what might happen in their states.

Lindsay Aerts: Yeah, we had a lot of legislation that just sort of dealt with, again, that transportation piece, the education piece.

We had, you know, the school voucher, school choice bill that came out right at the beginning.

And so, we also had some bills that took language from other states, right?

That often happens when drafters get 900 bills they've got to figure out, they copy and paste some language at times.

And so, yeah, we saw a lot of that this session.

Jason Perry: Okay, Senator, I want to talk about money for just a minute more.

So, this is a $28 billion budget.

When you look at how much money you have allocated this year, the big buckets that you feel like you and legislative leadership were pushing the most?

Dan McCay: Well, I think you saw, first of all, our number one priority has always been and it is still education.

Even during the deepest recession that we had in '08, '09, we held education harmless where education didn't, you know, we didn't pull money out of education.

And here you have a year where we have a lot of surplus as far as income tax, and we've made significant investments in education.

Not only, you know, in the voucher program was talked about, but also in teacher salaries and direct to classroom types of initiatives, and those things I think are very substantial for the state.

And then, you know, always our next issue that we really want to focus on is infrastructure.

With a fast-growing state, we have got to provide and make sure that we're trying--doing our best to stay in front of the infrastructure needs and demands, and those two things have largely been taken care of.

Jason Perry: Frank, going back to your days when you're in the House, your minority leadership of the House, $28 billion?

Frank Pignanelli: Yeah, and the numbers are staggering to think how we've evolved.

But it's actually a credit to the leaders of, you know, the governors for the last several decades, because our economy has grown so big.

Because when I was up there, we were facing recessions all the time.

Sometimes it's just Utah's facing recessions, and the planning that's gone into making sure we have diverse economy really has paid dividends.

And so, it's a compliment to the leadership of the state for the last several decades, and it's where we are and will continue to be because it is very different than it was back then.

Back then also we were pumping the Great Salt Lake 'cause it had too much water.

Jason Perry: That's true, so much has changed.

I want to get to some of these bills.

Dan McCay: Was Brigham Young in the legislature then, or no?

Frank Pignanelli: He had just left.

Lindsay Aerts: Shots fired.

Jason Perry: It's starting already.

Lindsay, you're gonna have to help us on this one, okay?

I want to talk about a couple of these bills, but I'll tell you what's interesting is the number of them, how quickly they're moving.

Adam Brown, Professor at BYU, I thought this was interesting, kind of keeps track of this.

Just on Wednesday, 104 bills were passed.

The average up until that time was 53 on the third from the last day.

Kind of shows you what's happening yesterday and today.

We're going to watch going forward.

Let's start with tax bills and the tax cuts in particular.

Lindsay, you've done some great reporting on this, all right?

The tax cut, you're going to start us off, because the person running this tax bill right next to you is going to help us with that a little bit.

Talk about the big picture.

Lindsay Aerts: So, this big tax bill all got rolled into one omnibus tax package, if you will.

Initially, these lawmakers here had the state portion of the sales tax on food in separate legislation, but they rolled that into one.

I never got a chance to ask you, Senator McCay, why that was done, but Senate leadership told us that you wanted it all in one place just to kind of run this big package.

But the biggest piece of this that is still outstanding as we tape this show is the educational earmark for income tax.

So, yes, we're gonna cut income taxes, yes, we're gonna give some other targeted cuts on there, but there's still kind of a piece hanging out there is this earmark for education.

And right now, as we said, we don't really have education groups on board with this, because the language--and this hasn't been approved yet, we're still waiting for this, but maybe it will by the time this show airs, is putting in a statutory framework for how we fund education, but education groups are saying it doesn't protect us constitutionally, it protects that we statutorily protect education, but it doesn't protect us constitutionally like they have now with the income tax earmarks.

So, that's one of the criticisms we're still hearing, but that could get addressed as we hear this bill.

Jason Perry: Why don't we start with that one, Senator McCay?

So, this is Senate Joint Resolution 10, your resolution about this constitutional earmark.

Let's talk about that first and see, and then we can talk about how it gets into the tax cuts themselves.

Dan McCay: You know, it's interesting, when you put spending measures, earmarks, those kinds of things in constitutional language, it becomes really difficult to manage a budget.

And if you look at the totality of the budget back when the earmark was passed, income tax was really only 15%, 20% of the entire budget, right?

And every year that has grown, and income taxes--we've shifted more and more to services; income tax really is the way that we are collecting, really, tax on some of those services.

As people shift away from buying goods, necessarily, sales tax is becoming a smaller portion as a percentage of the revenue to the state, property taxes as well, and income tax continues to grow.

And we know that that pressure is going to continue, so we're trying to find long-term systemic balance.

Meanwhile, we have, you know, this earmark that's out there in the constitution, and it makes it really hard to balance everything that needs to be balanced.

And like I said earlier, education has been held harmless during our deepest recessions.

And so, I've looked at--and most of our colleagues feel the same way, the earmark really hasn't been the, quote, "constitutional protection" it is, but really what it is in the future is a great risk to funding things like, I don't know, highway patrol or long term firefighting initiatives if we have wilderness issues, you know, our snowplow drivers in the winter.

You start to look through the things that we're doing as a state that are, you know, really essential services, and if somehow we had an earmark and couldn't provide those things, I think we would be in a situation where things would be a lot harder to balance.

And I totally understand it creates some fear or some insecurity, but I know that my colleagues, my commitment, everyone's commitment to the state is to make sure that education is held harmless and that we're going to continue to fund growth.

And I tell you, I tell you this analogy, and I don't mean for it to be pejorative, but in a lot of ways everybody knows that oldest child in their family, right?

They want the most attention, they are really, you know, they really excel, they're really loud, and they want to be, like, they just want to be the focus of the family, but you've got other kids, and this state has-- is a big family in my opinion, and we've got to care for everybody.

Jason Perry: Frank, talk about this tension just a little bit too, about the taking care of everybody idea.

This constitutional earmark for education from income tax is something that we've been talking about for many, many years.

Frank Pignanelli: We have been, and back in the Bronze Age when I was serving, it was not an issue, because actually sales tax was subsidizing public education, but that's been changing.

And so, when the income tax was first adopted here in the state, there was this agreement that, okay, we'll apply this to education to get your support.

So, I think it's--this is a question that has to be answered, are we going to keep the earmark or not?

Because the legislature and the governor, we've got to figure out moving forward and in a 21st economy--21st century economy how we deal with it.

And so, in my mind there needs to be a vote.

It was the people who put this earmark on; let's have a vote of the people.

We can have the discussion, do we leave it on, we take it off?

But we've got to do something soon.

Dan McCay: Well, and that sales tax imbalance, really, Jason, is the problem that we have when people say, "Do away with the food tax, we hate it, it's terrible."

We don't love it either, but the point of the matter is many of our, you know, state initiatives have to be funded with income from sales tax, and if we just slice $200 million dollar out of the budget, it's going to be a problem.

Jason Perry: So, that's the food tax number, is $200 million, right?

Lindsay Aerts: The other thing I will say, though, is education groups don't love the fact that the food sales tax coming off is contingent on the fact that they change the education earmark, because we've seen this as a tactic of the legislature, frankly, this session, where we tie two issues together and then lawmakers, if they want to support the entire tax package, have to vote on it all at once.

And education groups are saying, "Well, wait a second, can't you protect us constitutionally but also take the food sales tax off?"

And lawmakers have said, "Well, we need the flexibility in the budget in order to balance these two pots of money."

But there was one time money that could have potentially been used.

We chose not to do it for that, for taking the food sales tax off.

Also, this won't happen until 2025, and only if voters approve that.

So, I think this contingency piece is kind of rubbing some people the wrong way.

Dan McCay: But that's how, I mean, Lindsay, that's how the budget works.

You know, it's not like I get separate pockets in my family budget, and I'm like, oh, well, I'm only going to deal with transportation out of my left pocket, you know, pay for gas and that kind of stuff, and all my food has to come out of the right pocket.

No, I put it all in a pot, and I try and decide how I balance it.

And honestly, that is the budget principle that provides flexibility between the two.

Nobody ever anticipated back when the earmark was started, nobody ever anticipated we would be in this situation, right?

And so it is tough, I--anyways.

Jason Perry: Senator, really quickly, what are the discussions this afternoon on this food tax?

Kind of what's breaking down?

Dan McCay: Yeah, so, I mean, the conversations are still ongoing trying to see if we can find a place where education can at least be neutral on the concern.

Putting the two--putting this on the ballot lets everyone in the state know, look, we are trying to balance the budget, and these are the two things we have to juxtapose to each other.

Jason Perry: Okay, one more thing on taxes, and, Frank, because this has existed since you were in the legislature as well, and it came up this year on electronic vehicles.

Not much time on this, just an interesting point is that the revenue from gas tax is something the state has relied on, and less and less of it as more and more people buy these electric vehicles.

Representative Mike Schultz from Hooper has a bill, it's House Bill 301, which did pass, which imposes a tax on electricity that these electronic vehicles use and reduces the gasoline tax.

Also, there's a registration increase to offset that cost.

Just talk about that very briefly, because that's a little thing coming to the future.

Frank Pignanelli: As I was just entering the legislature out of the horse and buggy days, the gas tax has always been viewed as a fair tax, because you're using the gasoline to drive on the roads, and therefore you're paying your freight, you're paying your way.

And if you're biking or walking, you don't have to pay the gas tax.

But with the introduction of electric vehicles expanding in the marketplace, they don't pay that gas tax for charging at home and other charging stations.

So, the legislature last several years and most recently with Majority Leader Schultz's bill is saying, okay, we've got to figure out a way, because they are using the roads, they are using the public safety systems and everything else, they need to start paying their fair share for that.

So, they're looking for different ways.

Increasing registration fees, things like that, then offsetting against lower gas tax, apparently, this bill here.

Jason Perry: Interesting one.

I want to get into some of these very big issues.

Lindsay, let's start with some, and you worked on this bill, so we'll give you a chance here in a second as well, Senator.

But the abortion bills, talk about the state of Utah being one of the first out to work on legislation after the Supreme Court has said states have the ultimate say in this issue.

Lindsay Aerts: Yeah, and I'm sure Senator McCay will correct me if I get this wrong, but essentially what the--what one of the bigger abortion bills does is prevents clinics that license abortions in the state, that perform elective abortions, to no longer do that starting the first of next year.

So, we're not going to provide any new abortions starting mid-year this year, and then no clinics that perform elective abortions can operate after the first of the year.

It also puts a little more restriction on the carve-out for rape and incest victims.

So, people, women who have been victims of rape or incest and become pregnant, they can no longer get abortions after 18 weeks of pregnancy.

And when I spoke with Representative Kera Birkeland, who was kind of involved in some of the abortion legislation last year, she maintained that that was already kind of an assumption of the law, so it's possible that we were just clearing that up.

But it seems to me like that is a little bit more restrictive than our law has been in the past.

This also changes some of the language for doctors, because under Utah's current trigger law there was some concern about the way they could be penalized or not penalized, and so we shored up some of the language there.

But this bill just goes to take away some of the services that clinics can provide, and they're operating under the assumption that Utah's abortion trigger law is going to take effect, because they say that once that injunction is lifted, they presume that that abortion ban will be in effect, and then there'll no longer be the need for clinics in Utah.

Jason Perry: Senator, talk about that, because you are the author of that law that was the subject of the--of the trig--of the current ban.

Dan McCay: Yeah, well, when we were passing the trigger law, it was, you know, a hypothetical, really.

I mean, and, you know, we put together language that we thought was administrable, but even the opponents of the bill, when you listen to public testimony back in the day, it was mostly, "This is ridiculous.

This is nothing more than a message bill.

We don't need this, yada, yada, yada," and then within a year and a half, two years, the Supreme Court ruling came, and then we were in a different situation.

And what we found, and really, this happens a lot.

The courts, you know, found places in the law that weren't as well defined, potentially, and opponents of the law found place in the law that weren't as well defined, and so what we wanted to do is step back and try and figure out how we make this administrable and make it, you know, a fair and transparent law that I think everybody can rely on.

Representative Lisonbee and I worked with medical providers, both University of Utah and with IHC, and spent time trying to, you know, get the law right so the doctors knew what to do.

And, honestly, you know, I personally think this is one of the best written laws in the state.

I'm obviously partial.

Or, sorry, in the country.

But I think it tries to balance, really, the policies in the right way.

Lindsay Aerts: One thing I'll just add is that this bill also provides that abortions have to be performed in hospital settings, and then that was one of the big pushback from Democrats was, okay, now we're essentially funneling anyone who qualifies for a legal abortion in Utah to be performed in a hospital, but hospitals are allowed to refuse care based on a board's beliefs or someone's beliefs who's making those decisions, right?

And so, that was one of the changes that Democrats tried to put through was shoring up that language so that victims who had to go to a hospital could not be refused service.

Dan McCay: The freedom of conscience stuff only applies to elective abortions though, and this is--this is really what the crux of the debate was, but it really--because federal law, EMTALA, says you have to provide medical care.

There is no conscience objections either way with federal law as it relates to emergencies, to those kinds of things.

Really, the freedom of conscience stuff is really focused on when we were providing elective abortions, and now we're not.

Lindsay Aerts: Fair enough.

Jason Perry: Frank, let's get to another side of this equation here too, because there was an issue the Democrats are pushing for a very long time that seems to have found bipartisan support.

This is on Medicaid coverage for postpartum for people who are already part of that program.

This is Senate Bill 133, Representative Cheryl Acton in particular this week very active on extending Medicare, Medicaid coverage for women enrolled in the program until 12 months.

This is something that got pretty broad support.

Frank Pignanelli: It did; I think what was happening is that as they were debating these issues, not just recently, for the last several years, I think the Republicans want to demonstrate, you know, we are pro-life; at the same time, we understand some of the issues facing these these mothers and the families and things like that.

I think this was a good faith attempt to say, "We know things are happening when in these situations, especially those that are poor; let's expand the resources available to it."

So, I think they're trying to show they're good to their word to understand that this is more than just that particular issue.

It's a broader issue, and what can we do to help?

Lindsay Aerts: Democrats did try to run this issue for a lot of years, and this year it got through because it was being backed by Republicans, which often happens in the super majority here in Utah, but this bill will-- Dan McCay: You make it sound like a bad thing.

Lindsay Aerts: No, that wasn't an implicate-- don't impugn on me, Senator, no impugning here.

Dan McCay: Just checking.

Lindsay Aerts: Just neutral here.

One of the things this bill did was provide longer coverage for women who use Medicaid for a year after their birth.

It also increased the federal poverty level on when women can apply for federal Medicaid up to 185% of the federal poverty level, so-- Dan McCay: And we're also working on--it didn't get done this year--we're also working on, like, you know, greater access to, you know, preventative birth control, right?

And so, like, there's some of these things, Frank and Lindsay, you both talked about it, where it's like, yes, we are dealing with abortion, but we are also doing things to try and improve life and try and improve the conditions of families, you know, and handling and bringing up young children.

Lindsay Aerts: I would just argue that--I would say there are other groups who just feel differently, that taking away the right to abortion doesn't make life better for some victims, especially in the case of this specific bill that's going to require victims go to hospitals.

It's also going to require anyone under 14 years old is presumed a victim of rape or incest, but any teen who becomes a victim of rape or incest between the ages of 14 and 18 when they are no longer a teen will be essentially forced to carry that baby, and so, there was some discussion there about increasing that age to make it so teens are a little bit more covered.

Frank Pignanelli: But I will say this, they're trying to do something years past that would not be looked at, but at least I think they're trying to say, okay, we understand there's a broad spectrum of issues in this, and they're trying to deal with it.

I said--credit needs to be handed out for that.

Jason Perry: One corollary issue here, and then I want to talk about one more of your bills there, Senator.

The governor announced yesterday, Lindsay, free period products in all state buildings.

Lindsay Aerts: This is a big deal, because we did this also for K through 12 schools last year.

We put free period products in all of our K through 12 schools.

Now they're going to be in all state buildings, which includes our public universities as well.

And so, this is important for women.

I know there are groups that are behind this, The Policy Project and The Period Project are behind this.

And this is just something that women deal with every single day, it impacts their life, and when we say that we value women in this state, this is one of the ways that the legislature has shown they're putting their money where their mouth is.

We're funding some important things like this that are meaningful to women specifically.

Jason Perry: Thank you, and, Senator, are we going to have a new state flag?

Dan McCay: I hope so, because otherwise this is going to get really, really uncomfortable.

Jason Perry: Is that what I think it is?

Oh, it is.

Lindsay Aerts: Stop it.

Jason Perry: So, you--your bill passed this week.

Dan McCay: I have a problem.

Jason Perry: Is that permanent, is that permanent?

I don't know.

Dan McCay: So, the bill is permanent, the tattoo is not.

The Senate Bill 31, we worked on it over the last few years, started in 2018, a project to look at our state flag.

Believe it or not, I was the deciding vote in committee in 2018 to kill the bill.

And here we are, fast forward, more than 70,000 Utahns participated.

We just did a poll of registered voters; guess how many are--how many would you assume know about the process to redesign the flag?

You think it'd be low, right?

Seventy percent.

So, this issue has gotten into almost every household in the country--or in the state, and a lot of people are involved, and a lot of people care.

Lindsay Aerts: Senator, I have a friend who is holding a Utah day with her fourth grade class, and I was with her last night, and she was saying, "Oh, we're gonna talk all about the flag, we're gonna talk about the old flag, and now the new flag, and how it came to be."

And she just asked me, "Why was this--why did we need a new state flag?"

And I was like, "I don't know, I don't know if I've ever asked that question."

So, I'd like to pose it to you.

Why did we need a new state flag?

Dan McCay: Look, we've got a few seconds, I'll just tell you, go to Roman Mars, type in Roman Mars, YouTube, city flags, and watch that 18 minute video, and you will learn all you ever wanted to know in a very entertaining short form about why you need a new state flag.

Jason Perry: Go ahead, Frank, last couple seconds.

Frank Pignanelli: Well, I have the lapel for the historical flag here.

As the good senator knows, I actually-- Dan McCay: Which we can totally see, and it's perfectly clear.

Lindsay Aerts: But we only call it historical and not the old flag.

Jason Perry: We're gonna have to leave it with that one.

Watch that one very closely.

Frank Pignanelli: Because I'm older, I love the historical flag.

Jason Perry: Thank you all, and thank you for watching "The Hinckley Report."

This show is also available as a podcast on PBSUtah.org/HinckleyReport or wherever you get your podcasts.

Thank you for being with us.

We'll see you next week.

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