Herbert’s 2018 Budget Proposal is 6.2% Larger than Last Year (Updated)

Gary Herbert

GOP Gov. Gary Herbert wants to spend $16.1 billion next year, his newly-released budget shows, with a 4 percent increase in basic public school spending and an overall budget increase of 6.2 percent – an analysis by UtahPolicy shows.

Herbert, as he told UtahPolicy previously, has no general tax hikes in his new spending plan, and so does not address the movement by Our Schools Now which wants a 7/8th of 1 percent increase in the personal state income tax rate for schools.

We are nearly halfway through the state’s 2016-2017 fiscal year, which ends June 30 – a spending plan of $15.1 billion adopted by last March’s Legislature.

By law, the governor must submit a balanced budget recommendation about a month before the Legislature’s general session, which starts Jan. 23.

Herbert’s budget can be found here.

The Legislature’s current budget summaries can be found here. (It should be noted that the governor’s Office of Management and Budget and the Legislature’s Fiscal Analyst Office use slightly different measurements on calculating total budget expenditures. For example, Herbert says this year’s budget is $15.7 billion.)

While the state’s economy is still doing very well, tax revenue growth is slowing down – especially when compared to the last two fiscal years.

For example, Herbert’s new budget shows only an $80 million surplus in one-time monies for the current budget year and new, ongoing tax growth of just over $287 million next fiscal year.

That $287 million in “new” money compares to $668 million in “new” revenue growth with which lawmakers ended their budget-setting in the 2016 general session, the Legislature’s website shows.

State law enforcement officers are set to get a generous raise under Herbert’s budget, as are prison guards, who will also get a career ladder step program.

Herbert officials say that 60 percent of prison guards have five years or less of experience, and that early turnover has cost the state $17 million over that same time period.

Poor pay and difficult working conditions contribute to that turnover. The Corrections Department is down around 100 officers now.

Herbert recommends $7.6 million out of his new budget in correctional employ pay raises.

Higher education professors and administrators should get 2 percent pay hikes, with some additional money going into merit raises.

State workers should get 1 percent across-the-board raises with another 1 percent going to “targeted” jobs that are way under the average pay in other governments or the private sector.

But the Weighted Pupil Unit – out of which individual school districts give teacher raises – is set at 4 percent ($116 million more).

That’s not to say public education teachers will get 4 percent raises, but it is a greater percent increase than other state workers and more money than in recent state budgets.

The difference could provide some budget battles among various employee groups before the Legislature.

The governor is proud of how much money he’s recommended going into public schools over the last few years. He says Utah’s K-12 education system needs more than $1 billion over a five year period, and professes his new budget reflects the needed step funding increases.

However, by comparison, if lawmakers raised the personal income tax from 5 percent to 5.85 percent (7/8th) – as Our Schools Now wants — that would provide around $750 million new dollars for public schools each year, not $116 million Herbert recommends for fiscal 2018.

Herbert — perhaps in a sideways warning to OSN – said that just spending more money is not always the way to go, but that efficiencies must be taken also.

The governor said as his “cousin” Benjamin Franklin once said, “a penny saved is a penny earned.”

And spending money is a lot easier than saving money – and saving money is something his administration has done over the last six years.

Herbert said he doesn’t support OSN now – but could later.

For now, he said, it is better to reduce tax exemptions, collect off-site sales tax on Internet sales ($200 million owed, but not collected), and reduce earmarking of current tax receipts, and those steps should be taken before just raising a tax rate.

With $900 million more in public education over recent years shows “we are out of the trough” in school funding and building on that every year.

He then recited some “very good results” – better student test scores and high school graduation rates — and “working together” we can be No. 1 education in the future.

But that goal simply won’t be reached without some increased tax dollars going to schools, say the OSN backers, who’ve decided they will bypass Herbert and legislators and gather petition signatures to get the 7/8th increase on the 2018 ballot, so voters can raise their own taxes for public schools.

Herbert said he will soon release a 10-year education plan, and hopefully get past some controversy (like Common Core, a political wedge Herbert has had to face politically).

Herbert said, in state generated funds, more than $4.5 billion will go into education in his new budget; a recent-year record.

How much weight Herbert’s budget will bring to lawmakers is unknown.

As in recent years, GOP legislative leaders say they may take Herbert’s budget as a starting point. But in reality the legislative budget committees don’t much look at the governor’s effort.

Rather the Executive Appropriations Committee – made up of House and Senate leaders, both parties – set a “basic” budget at the first of the session for each state agency, and then look for add-ins under the guidance of the House and Senate GOP caucuses.

GOP leaders also don’t support a 7/8th income tax increase now – and that is why OSN is taking the petition route instead of lobbying Herbert and GOP lawmakers for a direct tax hike.

House Speaker Greg Hughes, R-Draper, said he, too, doesn’t favor OSN at the current time. And Hughes said he welcomes Herbert’s budget proposal: “It let’s us know his priorities – education is first and I agree with that.”

The House’s Revenue and Taxation committee will be charged with looking at tax exemptions. “What is our effective tax rate?” asked Hughes. Maybe some exemptions could be repealed and thus the tax could generate more money for public education.

Senate President Wayne Niederhauser, R-Sandy, told UtahPolicy that he’s come to more and more respect Herbert’s budget recommendations.

“The big rocks” of state budgeting are in Herbert’s 2018 recommendations, said Niederhauser.

There may be some “small” disagreements, like how to give fair pay raises to public education teachers, higher ed folks, and regular state workers.

But Niederhauser doesn’t see any major disagreements with the governor from what the president sees at this time.