Utah legislative leaders got some really good news Tuesday — lawmakers will have $360 million in new tax revenues to split up come January’s 2015 general session.
It was anticipated that the new estimates would be higher, but at $360 million it’s almost back to the pre-Great Recession days of tax surpluses for Utah.
Having the extra money is much better than facing a shortfall.
But in an odd way it may not be the best news for several groups that want a lot more — billions of dollars more for public education, road building and water development.
Those groups are expected to lobby the 2015 Legislature hard to make major commitments in Utah’s future, various groups have told UtahPolicy.
In early December of each year, the governor’s office, legislative economists and the Tax Commission, together, come up with new revenue estimates for the coming fiscal year — estimates that lawmakers will use in putting together in March the next fiscal year’s budget, which takes effect July 1.
Those official revenue updates were given Tuesday afternoon to the all-powerful Executive Appropriations Committee.
In a sheet passed out at the meeting, it shows that revenues are estimated to grow by 6.5 percent next year, or $357.4 million dollars.
In a $13 billion state budget (which includes federal monies) that is a lot of new cash.
But, as they usually do, GOP leaders cautioned that much of those monies are already spoken for.
For example, growth in the number of school children must be paid for, money set aside for the two Rainy Day funds in state government, increases in state employee health insurance, and many other demands.
In addition to the anticipated $357 million in new revenue growth, lawmakers will have $112 million in one-time surplus left over from the fiscal 2014 budget (which ended June 30) and $148 million in anticipated revenue surplus for the fiscal year we are in now.
All told, that is $617 million — more than half a billion dollars — that legislators will have on the table to deal with in some way or the other.
And with all that cash — even if some of it is already earmarked — it will be tough for the GOP-controlled House and Senate to impose any kind of tax hikes next year.
Incoming House Speaker Greg Hughes, R-Draper, has already told UtahPolicy that he doesn’t see any tax increases coming in the 2015 Legislature, which convenes Jan. 26.
Hughes doesn’t rule out, however, some kind of “tax reforms,” which could include restructuring the current per-gallon state gasoline tax to make it more reflective of inflation in the road-building, road-maintenance, spending.
As is tradition, in the December meeting of the EAC the GOP legislative bosses adopt the new revenue figures and allocate monies to the various legislative joint budget subcommittees.
And, as is tradition, the minority Democrats on the EAC try to put more of the early money into public education.
That script played out Tuesday, but with one new wrinkle: After hearing a report on a new revenue computation, GOP leaders voted to take, right off the top of the $360 million, $116 million.
A fiscal analyst study – new this year – tries to predict how much of the new revenue estimates are solid, and will continue year after year, and how much are a “bubble.”
A revenue “bubble” is broadly defined as revenue that will come to the state, but which is outside of a normal revenue estimate trend line: It could come year after year, or it could be more like a one-time tax-take bump coming because of an overheated economy.
The Republicans didn’t put that $116 million anywhere, just for now took it off the table.
After the February revenue updates come in, GOP leaders said, then they will reconsider what to do with the $116 million.
It could be spent on ongoing programs, like public education.
It could be put into the state’s Rainy Day Fund.
It could be spent on one-time items, like a new building or road construction.
Or it could be placed in a combination of the above.
This is the first time any accounting has been made for “bubble” tax revenues, said Jonathan Ball, director of the Legislature’s budget office.
Democrats unsuccessfully tried to trim that $116 million back to $58 million. But in opposing that effort, Senate Budget Chair Lyle Hillyard, R-Logan, said a more prudent approach would be to take the money off the table now, and look at it later.
Lawmakers set the final budget in the last two weeks of the 45-day session.
The Republicans, like in recent years, voted to give each of the budget subcommittees 98 percent of the money they have in the current fiscal year, and then have the subcommittees adopt “building blocks” of spending as the budget process unfolds.
Democrats, again unsuccessfully, tried to give the Public Education Appropriations Subcommittee $54 million extra that budgeters say will be needed to pay for the higher number of K-12 school children coming next fall.
Republicans have, previously, included such “student growth” allocations in the so-called base budgets.
But they stopped doing that several years ago. Hillyard said in all likelihood student growth will be fully funded for next fiscal year, but that all budget subcommittees should start out equally – each getting 98 percent of what they have this year.
Meanwhile, a special executive/judicial compensation commission gave its report to the EAC.
Those folks said Gov. Gary Herbert should get a “substantial” pay increase of 36.5 percent – from $109,900 a year to $150,000 a year. You can read the recommendations here.
The other four elected officials, lieutenant governor, attorney general, auditor and treasurer, each get 95 percent of the governor’s pay – so they would get 36.5 percent pay hikes as well, from $104,400 a year to $142,500.
The compensation commissioners – a group of volunteers – said that compared to state elected officials’ pay in other states – Herbert’s pay is too low.
The commissioners said a district court judge’s salary should go from $136,500 to $160,000 a year; an appellate judge from $143,325 to $168,012 and a Supreme Court justice from $150,150 to $176,325.
These are just recommendations. The legislators have given pay raises some years – rarely as high as the commission suggests — other years haven’t.
The 104 part-time legislators themselves are not up for a pay rise this year, those raise decisions are made in even-numbered, election-year Legislatures.
Legislative pay raises come automatically unless lawmakers vote them down; a different citizen commission makes those recommendations.