New tax revenue updates by legislative budget staffers shows Utah state government will end its 2015 fiscal year June 30 with between $20 million and $180 million in surplus.
Actually, the chances are much better that the surplus will be in that upper range, rather than in the lower range, Andrea Wilko, a PhD economist in the Office of Legislative Fiscal Analyst, told the Executive Appropriations Committee on Tuesday afternoon.
Utah state government has been rolling in extra cash the last several years.
At one point in the 2015 Legislature, lawmakers had more than $670 million in unallocated tax revenues, or one-time and ongoing tax surpluses.
The report given by Wilko is impressive in numbers.
— Year to date personal income tax collections are up 10.2 percent; corporate income tax up 20.4 percent.
— The Education Fund tax revenues should exceed estimates by $60 million up to $180 million. Those are personal and corporate income taxes.
— The state’s General Fund – mainly made up of the state sales tax – could come in $40 million in the red, or up to $20 million above estimates.
While that sounds a bit iffy, Jonathan Ball, head of legislative budget staff, said the fiscally-conservative Legislature kept up to $120 million in general fund reserves last session, so even if the GF ends up in the red there is plenty of time to address the issue come the 2016 Legislature.
Senate President Wayne Niederhauser, R-Sandy, a CPA in private life, said it is great Utah is doing so well financially.
But he worries there will be political pressure (coming from various conservative groups) to cut income taxes soon – maybe in the 2016 legislative election year.
That’s a problem, said Niederhauser, on several fronts.
First, income tax supports public and higher education. And citizens are calling for more education funding, not less.
Secondly, across the nation – and Utah is no exception – it appears state sales tax bases are shrinking, hampering General Fund growth.
— So legislators and policymakers are being pressured to cut taxes, but the only tax that can really be cut are ones that are growing, and that is the income tax.
“The U.S. is grappling with some of the highest income tax rates in the world – which is really a tax on productivity; while it is even harder to adjust the income tax rates to stay competitive,” said Niederhauser.
Still, said Senate budget chairman Lyle Hillyard, R-Logan, it is always better to hear tax revenues are coming in surplus, rather than deficit, and lawmakers don’t have to look at cutting budgets with two weeks left in the fiscal year.