The failure lies not with the GOP-controlled state House and Senate, but (and aren’t we seeing this a lot these days) with Congress.
The Republican U.S. House and the Democratic U.S. Senate have agreed to raise the national debt ceiling for several more months, and won’t seriously take up deficit/budget reductions until at least the end of March.
Thus, Utah – which has one of the earlier and shorter annual general sessions among the 50 states – won’t know for sure how much federal money will be coming its way until after Beehive State lawmakers adjourn March 14.
Now, Utah’s 104 part-time legislators will adopt a balanced budget for fiscal 2013-1014 before adjournment, as law requires.
But leading legislators said last Thursday almost for sure legislators will have to come back in a special session sometime in early summer to rebalance the budget in light of congressional spending changes.
House Speaker Becky Lockhart, R-Provo; Senate President Wayne Niederhauser, R-Sandy; and House Budget Chairman Mel Brown, R-Kamas; told the Utah Taxpayers Association pre-legislative seminar that the Legislature can’t put together a realistic, balanced budget in the 45-day time frame allowed in the general session.
None of them are happy about this.
“Trying to figure out how to term this, the only thing I could come up with is that we’re facing a year fraught with mine fields,” said Brown, who served as speaker before taking a several-year break from the Utah House and is one of the most senior lawmakers.
“We face some real serious problems in trying to balance” the $13 billion state budget, 28 percent of which is made up of federal monies and grants.
Just an educated guess by legislative staff budgeters is that $44 million less would be coming to Utah from the federal government based on the fed’s 2012 contributions (the budget that ended last June).
“What we’re facing in Washington is that we don’t have all the cards to play in balancing our own budget,” he added.
Said Lockhart: “Special sessions are not a good place to make law, but we have to do it.”
Brown said the natural nature of a special session means there is less time to hear from the public, less time for legislators and the public to digest and learn the issues involved.
“Special sessions ain’t so special. We have a very limited public process. Legislators don’t have time to become informed as they ought to be. There is an attitude of “Let’s get this done and get out of here.””
Actually, once the governor calls a special session (and only he can set the agenda), then legislators have 30 days to do work before they must adjourn. They can recess within that 30-day window as often as the want, taking time to go back to their districts and seek constituent input.
Brown said that in this session, like always, legislators will take the February updated revenue estimates for the next fiscal year, which begins July 1, and will set a balanced budget.
But federal action can really change Utah’s state revenue picture.
And not just in the straight cash that Congress gives to Utah and other states, but also its federal tax policy.
For example, raising federal taxes on Americans making $400,000 or more a year has an impact on the Utah state personal income taxes. As does changing federal income tax deductions.
Utah works off of the federal taxable income, said Brown.
Niederhauser, entering his first session as Senate president, said Utah lawmakers, in part because of the good staff work on the budget, “are nimble; we can move pretty quickly” – within a few days of adjournment of the general session – if Congress can give the states some idea of the federal money coming later this year (the federal fiscal year runs from October to October).
Entering the session, state economists say, there will be an additional $300 million in new revenue next fiscal year and $121 million in surplus tax collections in the current fiscal year, which ends June 30.
That, of course, sounds good.
But Thursday Brown detailed an additional $324 million in ongoing needs – like new student growth – and $209 million in onetime expenses – like paying for last summer’s costly wildfires.
So, without adding any new programs or increased spending on some non-educational programs, the Legislature could be looking at a $24 million deficit in ongoing revenue and $88 million deficit in one-time expenses.
You can see Brown’s slideshow of spending possibilities here. (Bryan put in the Brown stuff here.)
Of course, every year lawmakers are asked to spend more money than they have by special interest groups, education-backers and so on.
And certainly starting the budget-setting process with an estimated $300 million more in tax revenue growth is better than seeing revenue fall-offs, as lawmakers did during the Great Recession.
Still, with the looming federal budget cutbacks and deficit reduction efforts, it is clear to Utah’s rosy state revenue picture will dim over the next few months.
Leaders say they will be cautious in how they approach next year’s spending plan.
Usually when new revenue forecasts show multi-million revenue growth the Executive Appropriations Committee puts growth in education monies in the base budgets passed at the first of each general session. (More spending is added in later before the final budget is balanced and set.)
But base budgets to be introduced this coming week won’t include public education growth monies – about $130 million – to cover the estimated 6,500 new students coming next fall.
Funding public ed growth is always a top priority with GOP lawmakers (who with a huge majority will be making budget policy this session).
Among the other ongoing revenue demands: $35 million for state employee health benefits; $45 million in new employee retirement benefits; $55 million in state building maintenance; and $19 million in jail contracting for state prisoners.
Lawmakers do have $280 million in its Rainy Day funds.
But GOP lawmakers are loath to use such monies short of a real budget crisis – and it’s likely Republicans would rather cut increased spending on various state programs rather than tap those monies.
Besides, Rainy Day funds may be needed if Congress drastically cuts back on monies coming to the states later this year.