Even though Utah State government has suffered financially because of the pandemic, the state is actually doing better than originally anticipated, and certainly much better than most other states.
The Legislature’s top bosses, sitting as the Executive Appropriations Committee, Tuesday after heard report after report, most showing how well the state is doing considering what it has faced in the loss of hundreds of millions of dollars in expected tax collections.
As reported previously, lawmakers were looking at huge revenue surpluses when they adjourned their 2020 general session last March — just as the coronavirus pandemic started to hit the U.S. and Utah.
Lawmakers came back in April and June in special session to cut the budget — which started July 1 — drastically. But because of previous budget planning, they were able to keep public education funding basically intact, and did fund money for inflation and student growth starting when classes came back into session in August.
Tuesday, the Legislative Fiscal Analyst Office reported some impressive revenue growth numbers — based on the tax commission’s latest TC23 report:
— Sales taxes were expected to grow by 1.3 percent, but it actually went up 10.2 percent.
— Income taxes were expected to go up 29.7 percent (for the whole fiscal year), but has gone up 53.7 percent in the first four months.
Now, it must be said that especially for the income tax take so far this year, it is “apples and oranges,” the report said. That’s because Utah, like other states, had to follow the federal government’s movement of tax filing deadline from April 15 of this year to July 15, or from one Utah fiscal year into the next.
Still, income taxes are looking good.
That’s because even into November (this month) the PPP federal monies to citizens are bumping up state income tax collections.
Unemployment is not as bad in Utah as was originally believed — good news all around. And you may recall that federal dollars put an extra $600 a month into unemployment benefits.
But those have run out.
And it is unsure if President-elect Joe Biden can get a severely divided Congress to extend those payments — and add a new federal pandemic financial aid package — after he takes office Jan. 20 — just as the 2021 Utah Legislature comes into general session.
It is fair to say that Utah state government has fared so well, to a large degree, because the Legislature’s budget office has for years been proactively anticipating all kinds of scenarios about what could happen to state revenues and spending if certain really bad things happened.
Certainly, the experts and economists never anticipated something as economically horrific as the pandemic.
Still, the fiscal experts have, over recent years, built in “buffers” in income — mainly in savings of monies in various accounts — like the General Fund and Education Fund’s Rainy Day accounts.
Jonathan Ball, head of the Legislature’s budget office, said just one “buffer” — cash flow tracking throughout state agencies and universities — allowed the state to deal with the big shifts needed in delaying income tax payments from last fiscal year to this one.
Utah was able to deal with that shift rather easily, while other states had to borrow or just end their fiscal years in deficit.
But even with Utah’s relatively good economic standing right now, there are all kinds of uncertainties ahead.
As usual, state Medicaid costs will go up. By Utah voter demands in the 2018 election, the state fully expanded Medicaid under Obamacare, which continues to be under attack by federal Republicans and outgoing Pres. Donald Trump.
Ironically, the state’s health plan, PEHP, is doing well financially under COVID-19 because fewer health care costs outside of the pandemic are being paid for. For now, current reserves will be enough, although Utah is certainly not at the end of the pandemic yet, leaders were told.
Among the state employees, COVID-19 has cost $4 million, with 46 employees being hospitalized at a cost on average of $25,000 each for their stays.
In a December meeting, the legislative bosses will set early budget guidelines for the 2021-22 budget, which will start next July 1.
Under a deal made last session with public education advocates, to get their support for Constitutional Amendment G passed by voters, the cost of inflation within public education spending PLUS the cost of student growth enrollment will be part of base budget bills routinely adopted within the first several weeks of each general session.
But legislative budgeters said because of the pandemic’s impact on schools, there is yet no good number of all of the students enrolled in public schools. They hope to have that number for the December meeting — and so inflation and enrollment numbers for the base budgets can be adopted then.