Sustaining Higher Ed Investments to Close the "Tax Gap"

Closing the "Tax Gap" through the creation of high-paying jobs will allow Utah to sustain and grow all state services, legislators at the Higher Education Caucus heard Wednesday morning. Investing in higher education and technology economic development programs such as USTAR are an effective way to do so, according to Dennis Jones, president of the National Center for Higher Education Management Systems (NCHEMS).

Based in Boulder, CO, NCHEMS is a private nonprofit organization whose mission is to improve strategic decision making in higher education for states and institutions in the U.S. and abroad. At the caucus meeting, Jones detailed some national statistics and illuminated where Utah stands relative to other states.

"For more than a decade, Utah's effective tax rate has been very close to the national average, but its tax capacity - the total taxable resources per capita - is well below the norm," Jones said. "There's a tax gap that in the long run affects the sustainability of all state services."

The most effective way to close the tax gap* and to improve the quality of life for all of a state's citizens is to create wealth, he said, particularly through increasing the number of high-skill, high-paying jobs.

"It's all about wealth creation, and programs like USTAR - which attract research dollars into the state and help launch start-up companies based on that research - are great ways to generate new state revenue," Jones said.

Jones cited the important role all higher education institutions have in fostering a state's economy. Research universities are wellsprings of federal funding, and effective technology incubators. Regional institutions provide resources that impact their areas and create a supportive environment for entrepreneurial activity. Technical institutions react quickly to employer needs, helping to train an effective workforce.

Scott Anderson, president and CEO of Zions First National Bank and vice chairman of the USTAR Governing Authority, also addressed the caucus and concurred with Jones. "There are studies that show a $7 economic return for every $1 invested in higher education," Anderson said. "We're already seeing multiples like that for the investment the state has made in USTAR in the last 30 months."

"Legislators have a very difficult job this year," Anderson continued. "If we can remain calm and be creative, we can weather this crisis and come out in better shape - in terms of wealth creation - than almost any other state. We have tremendous momentum in higher education and USTAR and it's very important to support those trends, since ultimately this gives us the ability to invest in social services, infrastructure, primary education and more."

For more information on NCHEMS, visit www.nchems.org.

* On a chart shown at the meeting, Utah's effective tax rate (2005 data) was approximately 95 percent of the national average. Utah's tax capacity at that time was approximately 82 percent of the national average.

ABOUT USTAR
The Utah Science Technology and Research initiative (USTAR) is a long-term, state-funded investment to strengthen Utah's "knowledge economy" and generate high-paying jobs. Funded in March 2006 by the State Legislature, USTAR is based on three program areas. The first area involves funding for strategic investments at the University of Utah and Utah State University to recruit world-class researchers. The second area is to build state-of-the-art interdisciplinary facilities at these institutions for the innovation teams. The third program area involves teams that work with companies and entrepreneurs across the State to promote science, innovation, and commercialization activities. For more information, go to www.innovationutah.com.