Despite Big Budget Surpluses, Hughes Says Lawmakers Should Not Cut Taxes Next Year

What do you call these 2015 Republicans in the Utah Legislature?

Moderates? No, they certainly wouldn’t like that.

How about compassionate? Considering the House’s refusal to cover those above 100 percent of poverty in Medicaid, that’s not a fit.

OK, how about fiscally responsible? After all, Utah is ranked as the best-managed state in the Union, currently a fine economic development and jobs-creating machine.


But here’s a few facts that the GOP majority in the state House and Senate may not want their party’s right-wing to know:

— In a $13 billion budget, the state has a $903.3 million surplus. That is a lot of cash.

— Yet the 2015 Legislature raised both the property tax for public school buildings and the state gasoline tax – both officially taking effect next year so lawmakers can say they didn’t raise taxes THIS year.

To see exactly where those cash reserves sit, go to this nifty legislative budget website, and look under “selected reserves.”

Now, before Senate Budget Chairman Lyle Hillyard, R-Logan, starts hitting me with his amazingly large zucchinis (he’s a home gardener extraordinaire), I’ll include these caveats:

— Much of the $903 million is in the Education Rainy Day Fund and the General Rainy Day Fund.

Those hundreds of millions of dollars can be spent by the Legislature, but they are supposed to be kept for fiscal emergencies – and those funds allowed the Legislature to avoid raising taxes or making crippling program cuts during the Great Recession.

— While technically one-time monies – and so are not reoccurring tax revenues – they do earn significant interest every year, which is ongoing money.

— And, as the chart shows, at least $275 million is in “non-lapsing balances.”

Those are funds allocated by the Legislature but not spent, for any number of reasons, by state departments and agencies.

To stop spending sprees at the end of each fiscal year, the Legislature often allows department bosses to carry over from one fiscal year to the next monies not spent in the current budget year.

Again, this may be sensible budget management, but it does allow those balances to increase over time.

— Now, add on top of the $903 million in “selected reserves,” a statement made by Jonathan Ball, the Legislature’ top budget officer.

In last week’s Executive Appropriations Committee, Ball said it is looking good for further budget surpluses when state economists estimate final, year-end revenues/spending next month.

The fiscal year ends June 30.

So, if these new tax surpluses end up at $100 million (and I’m not saying they will), Utah will have $1 billion in the “selected reserves” chart.

Of course, 2016 is an election year for all 75 House members and half of the 29-member Senate.

It is also a re-election year for GOP Gov. Gary Herbert.

It’s one thing to brag publicly how well Utah is doing financially, how our economy and job creation is wonderful.

But wouldn’t it be even better if Republican state leaders could deliver some kind of tax cut in an election year?

Especially with a $1 billion surplus sitting in the state bank (or actually being invested by the State Treasurer’s Office.)

But there shouldn’t be a tax cut next year, says House Speaker Greg Hughes, R-Draper, no great political moderate himself.

“I don’t see a tax cut now,” Hughes told UtahPolicy last Wednesday, the interim study day for lawmakers.

GOP leaders have restructured the summer/fall interim study committees’ assignments to “really dig down into our needs and challenges,” Said Hughes.

And just as Utah has a good tax policy, it also has a good spending policy, he added.

“I’m a supply side guy – it is better to leave money in people’s pockets and let them decide” how to spend it, said Hughes, an apartment owner and builder in private life.

“But we have some real needs. And they will still be there in 2016.”

Utah had a lot of extra tax revenue in 2015, and lawmakers and Herbert put tens of millions more into public education.

Still, the basic Utah school taxing formula increased by just over 4 percent.

The Idaho Legislature put more than 7.5 percent more into its public schools this last general session.

Utah is not keeping up with education spending across the nation.

Various business and good government groups are calling for a tax INCREASE for public schools and students.

And it is the state’s individual and corporate income taxes that are growing the most, the state sales tax – which funds non-education state department budgets – is not growing very fast.

So how could lawmakers cut the growing state income tax (education funding) when so many Utahns want public and higher education funding to increase dramatically?

Historically, when state revenues are growing as fast as they are currently, re-election bound GOP lawmakers have looked to some kind of tax cut – if only a small one.

But SB54 – and the petition-gathering route to the GOP primary ballot – could be a history-changer.

Not facing 50 or 100 archconservative delegates (or if the candidate taking the dual-path, gathering signatures to get on the ballot but still going to convention where displeased delegates COULD NOT end your political career), could mean 2016 legislative incumbents can do the responsible thing – as Hughes puts it – and not give a general tax cut next year.

We’ll all have to wait to see.

But you might want to go to the Legislature’s home page, click on “Fiscal Health Dashboard” and read some really interesting stuff.