Utah’s good economic times are still with us.
But they may not be as good over the next year as they were last year, a group of top legislative leaders were told Tuesday.
The Executive Appropriations Committee, made up of the leaders of the House and Senate, both political parties, got their annual October revenue updates from their budget/fiscal staff.
You can read the report here.
The staff economists said the last fiscal year – ending June 30 – had a $96.2 million revenue surplus.
(Gov. Gary Herbert’s budget office uses a slightly different formula, and Tuesday he issued a press release saying the state had a surplus of just over $100 million. The Legislature uses its own method in officially setting state budgets.)
After some automatic transfers to the Rainy Day Funds and other requirements, lawmakers will have $43.8 million in surplus to spend, save or whatever in the 2016 Legislature.
However, the bad news is the state’s General Fund, mostly fueled by the sales tax, actually ended fiscal 2015 with a $23 million deficit.
This gives House Republicans more political ammunition in their continuing battle against wholesale Medicaid expansion.
The conservatives maintain that the current Medicaid program is eating up more and more of the General Fund revenues each year.
And expansion – even though the feds will pay 90 percent and the state only 10 percent – has the potential to do even more damage to GF revenues.
That means, says House Speaker Greg Hughes, R-Draper, that down the road Medicaid expansion could take money away from Higher Education funding, and in turn harm Public Education funding as well.
Back to the new numbers:
— Individual income tax revenues continue to grow impressively. The Education Fund saw a $119.2 million surplus in fiscal 2015. The income tax saw a 9.3 percent growth last fiscal year, pretty darn good.
— But the sales tax is lagging, and could be off even more this current fiscal year.
You may recall that lawmakers in the 2015 general session had more than $700 million in surplus funds – when current year surpluses were combined with the fiscal 2014 surpluses.
Don’t expect such good tax news come the 2016 Legislature, which starts the end of January and runs through mid-March.
Economists told leaders Tuesday that the current fiscal year – now three-and-a-half months into the cycle – could see a broad range of tax take — overall deficits of $40 million or surpluses up to $190 million.
Even at the top number – a $190 million surplus – add that with the $96 million surpluses for last year and you get $286 million in extra cash come the 2016 Legislature, compared to the more than $700 million legislators had last general session.
Economists warned that the General Fund could actually be in the red as much as $70 million come June 2016.
Still, all this is good news compared to most other states’ finances, legislative bosses were told.
The state has more than half a billion dollars in two Rainy Day Funds, so overall there is little to worry about.
In fact, Medicaid expansion aside, the new revenue updates could actually be good news politically for legislative Republicans.
2016 is an election year for all 75 House members and half of the 29-member Senate.
After lawmakers raised the gasoline tax in the 2015 Legislature, and also required increases in local school district property taxes to equalize capitalization among the various districts – there could well be pressure to cut taxes in an election year.
But now legislators can sing the sales tax/General Fund blues to would be tax-cutters come January – saying it would be foolish to cut taxes if the state’s General Fund could see sizable revenue shortfalls shortly.
