While other U.S. states are struggling economically and face great financial uncertainty, Utah’s upcoming legislative session should be relatively stable, with no tax increases. And sufficient funding should exist for spending hikes for public education, and even a small pay raise for state employees, top legislators tell UtahPolicy.com.
In separate interviews, House Speaker Brad Wilson, R-Kaysville, and Senate President Stuart Adams, R-Layton — both recently re-elected to their top leadership posts by their Republican caucuses — say while the state continues to struggle with the coronavirus, state finances actually look solid.
“There is good reason to be cautiously optimistic” on the financial front, said Adams.
The state’s economic outlook “bodes well,” added Wilson.
Final revenue estimates for fiscal year 2021-2022 will come in December, when outgoing GOP Gov. Gary Herbert releases his recommended budget for next fiscal year — adopted at the end of the 2021 general legislative session in early March, beginning next July 1.
But Adams and Wilson, along with other members of the all-powerful Executive Appropriations Committee, have some ideas on how the state’s tax collections are going now, and will go over the next budget year.
Of course, because of the coronavirus’s financial impact on citizens — and thus state tax collections — next year “won’t be a banner” financial period for the state, said Wilson.
Before the virus cut the financial legs out from under many Utahns and the state starting last spring, the 2020-21 fiscal budget saw more than $1 billion in new monies. Lawmakers came back into special session in April and June to trim all new spending back for the current year — except for a 2 percent increase in public education funding, something no other state could accomplish.
As UtahPolicy.com readers may recall, in an agreement with public education supporters aimed at getting their support for a constitutional amendment passed in early November, lawmakers promised (and passed new laws to ensure) that each future year public education would get almost automatic inflation and student growth funding each year.
Those hikes come in what’s called the “base” state budget bills passed the first two weeks of each general session (which starts Jan. 19 this year).
Those education increases will be in the January base budgets, both Adams and Wilson promised.
On top of that, said Adams, he hopes there will be enough new, ongoing revenue to add to public education spending AND give small pay raises to other state workers.
In other words, state spending will actually go up next fiscal year, starting in July.
Few, if any, other states can do that, the top leaders believe.
2021 is not an election year for the Legislature, and usually tax cuts don’t come in off-years. So, don’t expect one in the upcoming session, either.
But both men promised there will be no tax hikes considered, either.
Instead, outside of public education, pay raises, and a few other needs — each year there always seems to be more spending required on Medicaid — any ongoing tax surpluses should go into one-time spending on infrastructure — roads, water projects, and other construction projects and repairs.
In future good economic years, those ongoing tax collection increases can then be clawed back and spent on ongoing state program growth — whether new students, more UHP troopers, prison guards, mental health programs and on and on.
One reason the state’s finances are looking OK is that this year around $12 billion in coronavirus stimulus has been spent in the state by the federal government.
Of course, that money is about run out (there is still around $300 million yet to be spent).
And it is still unclear if U.S. Senate Republicans will agree to any more virus stimulus spending.
On the congressional table could be direct federal monies going to the states but, while talked about, it may never be approved by a divided Congress.
If it came, Utah’s 2021-22 spending plan could really get a shot in the arm — outside of individuals’ vaccinations coming to all Utahns around July, just as the state’s new spending year begins.
“It would be unwise” for legislative-budget-setters to count on any of that money now, said Wilson. And the state’s new budget will be put together without any such hope.
“We have low unemployment” compared to other states, said Adams. The state’s Rainy Day Funds are still healthy, even though they were tapped to balance budgets this year.
There is still hundreds of millions of dollars in the state’s “financial tool kit” which could be culled from non-lapsing surpluses in agencies and such, ready to be used if need be — should Utah’s tax collections take another big dive.
But right now that isn’t expected, as Herbert’s last budget should reflect in early December.