How the Mormon GOP runs Utah with a collectivist touch

  • Paul Lachine
  • Steeples of The Church of Jesus Christ of Latter-day Saints rise above the sprawl of Lehi, south of Salt Lake City on Utah's booming Wasatch Front.

    Ed Kosmicki
  • Matt Godfrey, who just finished three terms as mayor of Ogden, Utah, pushed for downtown redevelopment in buildings such as the former American Can Company, now home to Amer Sports.

    Ed Kosmicki
  • City Creek Center in Salt Lake City, a new downtown project developed by The Church of Jesus Christ of Latter-day Saints.

    Ed Kosmicki
  • The city-sponsored restoration project on Jefferson Avenue, in Ogden

    Ed Kosmicki
  • The church-built Colonial Court apartment complex in Ogden. The church is also renovating its Ogden temple and working on a $250 million mixed-use development surrounding it.

    Ed Kosmicki
  • Utah's mass transit revolution began before the 2002 Olympics with the federally funded TRAX light rail system. It continues to grow with city, state and federal dollars.

    Ed Kosmicki
  • A young family watches indoor skydiving at the Salomon Center sports adventure complex in Ogden, Utah.

    Ed Kosmicki
 

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"We have a vision of the next American economy, which we think is very different than the real estate-fueled consumption economy that crashed," says Muro, of Brookings. "It's one that's much more oriented to production of things, the export of things, it is driven by strong regional innovation systems and industry clusters, and because it exports, it isn't so determined solely by the U.S. business cycle. Utah epitomizes that."

Muro is especially impressed with the Utah Science Technology and Research Initiative, created in 2006 by Republican Gov. Jon Huntsman Jr. The program's goal is to enhance research and innovation at the state's universities, then pair that with businesses, making the universities into high-tech incubators of sorts. Another Huntsman initiative is using incentives to help attract "clusters" of industries of the sorts Muro mentions -- software, aerospace, the outdoor industry.

In the last year alone, the state government has given out more than $100 million in incentives to businesses relocating or expanding in Utah, including eBay, a Family Dollar distribution center in southwestern Utah, and Sephora and Hershey distribution centers. Over the past three years, the state incentivized IM Flash to the tune of $45 million; Goldman Sachs dramatically expanded its Salt Lake City presence with the help of a $47.3 million tax rebate; and Adobe and Morgan Stanley also drew from the state pot. More than $7 million in motion picture incentives were handed out last year, and the state also has strong rural development grants and renewable energy incentives.

Incentives fly in Utah, with support from some of the most conservative legislators, says Jeff Edwards, president of Economic Development Corporation Utah, a public-private partnership, because they aren't paid to the businesses up front. The state writes the check, usually in the form of a tax credit rebate, only after the business has settled in Utah and created a specific number of jobs with higher wages than the average for the area. The approach seems to be working. Utah has gained more than 24,000 jobs since August 2011, with the biggest gains in the manufacturing and "professional and business" sectors.

Ogden has used state incentives -- plus a generous offering of local cash and tax credits -- to help it attract its own branch of the state's outdoor industry gear cluster. Amer Sports, an international conglomerate that owns Salomon, Atomic, Wilson, Mavic and other big names, moved to Ogden in 2007 with about 110 employees. Amer received $2.5 million in state incentives, in addition to some $5 million in local tax credits and incentives, including naming rights to the city-owned Salomon Center. Quality Bicycle Parts, a huge wholesale distributor, received state incentives for locating in Ogden, and ENVE, which builds carbon-fiber bike parts, was offered $1.3 million to "inshore" more than 300 Chinese manufacturing jobs back to Ogden.

Mike Dowse, Amer's Americas general manager, says he was attracted by Ogden's proximity to outdoor amenities (such as federal land), the incentives and the direct flights to Paris from Salt Lake City's airport. There was also cheap housing for his employees, who have bought some 30 homes in the area (the median home price in Ogden is about half that in Portland, Ore.). Dowse was also drawn by the then-fledgling outdoor industry cluster in Ogden, which provides a larger labor pool to draw from, a more collaborative environment and adds energy and bodies to the "high adventure" visions of Godfrey.

Ogden's cluster got its start when Curt Geiger, then vice president of Descente North America, convinced the Japan-based ski-apparel company's higher-ups to move its headquarters from Denver to a downtown location in 2004. They were drawn not by state incentives but by the promise of a gondola, an idea being floated by Godfrey and others at the time, from downtown Ogden to the eastern side of town, with a second leg leading up to the slopes. Goode Skis soon followed Descente, helped along by free access to a lake near downtown, renamed Goode Lake, where it can test its water skis.

On a sunny September day, I slip away from the notebook and the interviews for a run through the streets and hillsides of Ogden. I head east from downtown, past the stately First Security building, which yearns for some ski or software company to come in and ease its emptiness, continuing toward the mountains, along streets lined with brick arts-and-crafts style bungalows in various states of disrepair that would easily fetch a half-million each in Boulder, Colo., but sell for a fifth of that here. I wave to a crowd milling in front of the Al-Anon place, and hear angry screaming from inside a rundown bungalow and wonder if I should call the cops.

Whatever's in Utah's secret sauce, one thing is clear: It hasn't been dolloped out to everyone. As much success as Ogden has had in bringing jobs to downtown, the greater metro area continues to have unemployment and poverty rates higher than its neighbors. Likewise, the Wasatch Front's prosperity has not trickled outward to many other parts of the state, where small isolated communities like Green River struggle chronically and now wait desperately for something, anything, even a nuclear power plant. And even as the state hands out millions of dollars worth of incentives to Wall Street giants, it is the worst in the nation at funding elementary and secondary education, a slap in the face to long-term economic prosperity.

The pavement ends and I head up a steep trail to a place where I can sit and look out at the gob of humanity that sprawls to the edge of the Great Salt Lake. It was not far from here that, 165 years ago, Brigham Young looked out onto this scruffy and treeless valley and saw it as the Promised Land, or at least decided it could be, with enough hard work. He knew that he couldn't simply unleash his minions and expect them to go forth and build a cohesive home in this hostile land. The Western frontier ethos wouldn't work here. They'd need guidance, cooperation and strong central planning to make the "desert blossom as a rose." Young never retreated from that, even when it got ugly: He forbade Mormons from selling wheat to Gentiles (though Gentiles could work for it), and in at least one instance failed to stop violence against Gentiles.

And then there's Matt Godfrey. He wanted Ogden to be the kind of place he would be happy to call home, a bustling downtown with young folks heading out on mountain bikes from not-too-expensive homes after a day at high-paying, professional jobs with outdoor gear companies. It took a lot of hard work, sacrifices and a sometimes-heavy hand from the government.

True, some of his efforts crashed: The gondola remains no more than a dream, as does the $14 million velodrome and the free-standing ice-climbing tower. Descente moved out into the suburbs and fired Geiger, who subsequently started his own downtown gear business. Even Envision Ogden, a nonprofit started by Godfrey and others to provide a non-governmental economic development organization, perished after it got caught up in a campaign finance scandal that's still under investigation.

Still, by nearly everyone's reckoning, Ogden's come a long way in the past decade. There are new jobs, great trails and a pleasant downtown peopled by a vibrant new community of folks drawn by the changes. Some of the credit goes to Godfrey, but mostly it's attributable to the paradoxical politics of Utah, a pragmatic if unlikely blend of free-marketeering and a pro-planning, Keynesian approach. Godfrey embodies that.

"I'm financially very conservative," says Godfrey, responding to those who have compared him to Joseph Stalin more times than he can count, "but I also don't believe in a free lunch. If we're not willing to invest in our own community, why should we have the gall to ask others to invest in our community? People were saying, 'It's a big gamble.' Yeah, it is, but doing nothing is a much larger gamble."

This coverage is supported by contributors to the High Country News Enterprise Journalism Fund

Jonathan Thompson is a senior editor at High Country News.

Rusty Austin
Rusty Austin Subscriber
Oct 30, 2012 04:14 PM
The LDS is nothing but a gigantic tax dodge, to the detriment of everyone that isn't a mormon bishop. What a bunch of hypocrites and thieves. It is appropriate that the IRS is the single largest employer in Ogden, while at the same time the state gives Goldman Sachs $43 million no strings attached. Perfect poster child for today's GOP.
Jeff Gerke
Jeff Gerke
Nov 06, 2012 06:19 PM
I know a lot of LDS people that are not hypocrites or thieves. The type of people that would give the shirt off their back for anyone. Of course there are some bad apples.
Rusty Austin
Rusty Austin Subscriber
Nov 07, 2012 11:37 AM
Jeff, I agree that a lot of LDS people are really good and beautiful people, I have spent many years traveling in the Southwest and have met, partied with, and been helped by them. I should have made clear that I was speaking of the bishops, they are the people that have bought shopping malls and ranches and department stores and gas stations and avoided paying taxes by making those businesses part of the church. By paying those taxes to the LDS instead of the elected local, state, and federal governments, they have created a de facto government within the LDS. I think most Americans agree that churches should not be running governments.
Kathleen Hersh
Kathleen Hersh Subscriber
Nov 11, 2012 07:23 PM
I am curious why in the statistical chart on federal spending the editors chose not to include defense spending. Also there is no indication on the charts whether the government jobs chart does or does not include defense jobs.
Jonathan Thompson
Jonathan Thompson Subscriber
Nov 12, 2012 07:47 AM
Kathleen: Excellent questions. I'll do my best to answer:

1. Typically such comparisons as these don't include defense spending. That's because one could argue that since federal defense spending is for the benefit of the entire nation, it's unfair to put it into a particular state's expense "column" (despite the fact that that spending does benefit that state's economy). Obviously, if defense spending were included, each state's "debt" to the federal government would be much greater.

2. Defense jobs are included in the jobs chart. They are included here because a defense job has an impact on the economy that is similar to any other similar-paying job.

I hope this answers your questions.
 
Kathleen Hersh
Kathleen Hersh Subscriber
Nov 16, 2012 05:38 PM
I guess I am confused as to what the chart shows then. I thought it showed how much money tax payers of a given state send to the federal government and how much money the federal government sends or spends in the state. So if the Defense Department buys planes built in California or spends money to maintain Air Force or Naval bases in Washington that wouldn't show in this chart?
Jonathan Thompson
Jonathan Thompson Subscriber
Nov 19, 2012 12:03 PM
Kathleen,
It's a really good question, and unfortunately I don't have a great answer, although I can tell you why I chose to leave defense spending out.

This type of comparison is going to be messy and inexact no matter how you slice it. That's true if you're trying to figure out whether a particular individual is getting more from the federal government than he/she pays in taxes; it's even more true, I think, when you try to extend it to the state level. But the defense spending thing...

1. The first reason is for consistency's sake. Typically, when this federal revenues vs. spending comparison is done, defense spending is left out. I suspect that this is for the reason I gave before: Because defense spending is for the benefit of the whole nation, it's could be decreed unfair to put defense spending in the "expenses" column for a particular state, even if the spending was done in that state (as opposed to social security, Medicaid, or grants to schools, for example).

2. Of course, this leaves plenty of grey areas like the ones you mention. If a Utah company is paid by the military to build rockets, it's providing jobs to the people in that state, in the same exact way as the IRS is providing jobs to people in that state, for the benefit of the entire nation.

3. This is where it gets messy, and the person who's making a graph like this one has to make somewhat arbitrary decisions about what kind of spending to include, and what kind not to include. The Consolidated Federal Funds Report is set up in a way that makes it easy to pull defense spending, in general, out of the equation. It has two major categories of spending: Defense and Non-Defense. Everything else is a line-item.

So, this is where precedent comes in again: In order to be consistent, I chose to leave out defense, though I had the exact same qualms and questions that you had.

Generally speaking, the overall message remains the same whether you include defense spending or not: Nearly all Western states receive more in federal spending than they collectively pay in taxes. With defense spending added in, things simply become more lopsided for every state. Colorado is the exception to that: Without defense spending, it pays more in taxes than it gets back. With defense spending added in, it, too, has a spending deficit with the feds.

Thanks again for the questions.
Kathleen Hersh
Kathleen Hersh Subscriber
Nov 25, 2012 02:06 PM
Thank you, Jonathan, for your comments. I may have been operating under a misconception or things have changed. Because a number of years ago, I saw numbers that showed that Oregon was a net exporter of federal taxes with the explanation that Oregon has no bases or large military contractors. But that may have been when Oregon's economy was in better shape. And when Oregon wasn't getting timber payments.
I also think that since Defense is something like 60% of Congress's "discretionary" spending that the impact of that money should be noted when we look at the decisions that the western Congressional delegations make.
Jeffrey Mendenhall
Jeffrey Mendenhall Subscriber
Feb 18, 2013 11:13 AM
The LDS heritage of collectivism is an ironic fact of history rarely, if ever, acknowledged by the typically rabid GOP extremists in control of the Utah state legislature. As a former teacher and curriculum writer, I've seen an admirable commitment to education become a hostage to political views so outrageous as to call the word "democracy" a "code word" used by Communists to indoctrinate our children. The Alpine school district went so far as to remove this word from their century-old district charter! The consequence of such utter nonsense is that Utah has the lowest per pupil spending in the US, in part due to our ridiculously high birth rate, lower even than Mississippi. Stupid, selfish, and demonstrably wrong for continued investment into the state (dumbing down a previously well-educated workforce). If governing for the "common good" as Jefferson called it is beyond the ideologues on Capitol Hill in SLC, then simple, basic dollars and cents must motivate semi-enlightened decision-making. Brother Brigham would hate this city, and this state today.