Budget negotiations ‘better,’ but talks still ongoing

Utah Capitol 04

GOP legislative leaders appeared to be working toward a budget deal Tuesday morning.

And part of that will be a special task force to study the “structural imbalance” between the state’s General Fund, supported by sales taxes, and the Education Fund, supported by the income tax.

House Majority Whip Mike Schultz, R-Hooper, spent the morning shuttling between House leaders and Senate leaders, clearly working a deal.

Just before noon, Schultz asked permission of the House to open a bill file on the budget task force – which, of course, House members agreed to.

How to fix what lawmakers call the “structural imbalance” between the two main state government funds is critical, GOP leaders say.

As readers of UtahPolicy.com know, the huge sales tax reform effort is because of this imbalance, where the state sales tax is growing at a much smaller rate than are state income taxes.

Within four months, UtahPolicy.com has been told, the General Fund will no longer be viable – and to fund state programs out of it state bosses will have to borrow money, or take money out of earmarked programs, or dip into the state’s surplus Rainy Day funds.

None of these are viable alternatives.

So, there must be a solution to the overall sales tax collection problems. And one idea briefly floated – raise the sales tax rate temporarily – is, of course, politically undesirable for conservative GOP lawmakers – the majority in the House and Senate

It’s anticipated that House and Senate GOP caucuses will reach some kind of budget deal either Tuesday or Wednesday.

The 45-day session ends at midnight Thursday.

“Negotiations have been better today,” said one member of GOP leadership amid the hectic negotiations.

UtahPolicy.com is told that House and Senate leaders had agreed to a budget framework at the end of last week, but that agreement fell apart at the end of the week after the tax reform measure was shelved. House and Senate negotiators met over the weekend and felt they had once again found common ground on the budget, only to see that deal collapse on Sunday afternoon.

House leaders are pushing a so-called “skinny” budget, which would put 4 percent more into the state public education spending, but do little else.

Sometime this spring and summer, lawmakers will come back in special session to deal with HB 441 – the huge sales tax reform bill that will extend a smaller sales tax rate to most services in the state, now not taxed at all.

Tax cuts could come at the same time.

At the same time, if possible, something will be done about the structural imbalance between the General and Education funds – although it is unclear if a task force could have a recommendation by then.

If a short-term fix can be found to the dwindling General Fund, then lawmakers and GOP Gov. Gary Herbert have a year – and a task force – to find a longer-term fix.

In any case, it is expected that GOP legislative leaders and Herbert will figure about a temporary budget that will get lawmakers to at least the early summer.

The 2019-2020 budget takes effect July 1.