Utah lawmakers will have $380 million in new tax revenue to spend in the 2016 Legislature for next fiscal year and $180 million in one-time tax surpluses in the current budget year, GOP Gov. Gary Herbert and legislative leaders were told Monday afternoon.
That $560 million – while still a lot of money — is far less cash than the more than $760 million they had to dole out in last January’s 2015 general session.
The new surpluses are about 6 percent of the $6-billion General Fund and Education Fund, the state’s two primary tax/budget funds.
Lawmakers will take up how to spend the new cash when they convene their 2016 45-day general session Jan. 25.
As is the case every December, the governor’s budget office, Legislature’s fiscal analyst and the Tax Commission met to come up with the new revenue updates.
Herbert will unveil his 2016-2017 fiscal year budget Wednesday morning.
Both Herbert and GOP legislative leaders say don’t expect any significant tax cuts in 2016.
In fact, the 2015 Legislature adopted a gasoline tax hike – which begins this Jan. 1, of five cents per gallon.
2016 is an election year for Herbert, all of the 75 House members and half of the 29-member Senate. So don’t expect any tax hikes in the 2016 Legislature, either.
As is usually the case, Senate Budget Chairman Lyle Hillyard, R-Logan, was singing the blues over the new revenue updates, even though it is hundreds of millions of dollars.
There will be a lot of demands on those recognized funds for fiscal 2016 (the current year) and next budget year, which starts July 1, said Hillyard, who has been in the Legislature since the early 1980s and put together more budgets than almost any legislator in Utah history.
And like always, those demands will exceed the new revenue growth, warns Hillyard.
He reminded fellow members of the Executive Appropriations Committee that the state’s General Fund (mostly sales tax) ended the last fiscal year, June 30, with a $6 million deficit.
Combine that with sales tax monies not coming in this current year as estimated, and lawmakers will have to kick in $39 million to bring the General Fund to balance.
The fund is not losing money, it just is not growing as fast as state economists believed when lawmakers adopted the past two budgets.
There are several reasons for that, said Jonathan Ball, head of the Legislature’s Fiscal Analyst Office.
First, while Utah’s economy is one of the best in the nation, wages here are stagnant, said Ball. That means folks aren’t spending much more, and consumer buying isn’t growing as it could.
Second, more and more Utahns are buying products online – and many online purchases are not taxed.
For example, said Ball, younger people are not buying DVDs or other digital products in stores, but are watching TV/movies and listening to music through online streaming – and that is not taxed in Utah.
Thirdly, as Utahns grow older they are spending more money on health-related costs, and those are not taxed, either.
Combine all this and the state is losing about $190 million a year in sales tax we are not collecting from Internet activity.
“While our (state) economy is growing, our revenue is not keeping pace,” said Ball.
Starting last year, the GOP legislative majorities are “taking money off the table” at the beginning of the budgeting process because they fear overall state tax revenue is growing faster than historical trends.
Ball presented an in-depth analysis of business trends in Utah and identified a certain amount of tax revenue that could be at risk of not continuing.
Hillyard then moved that $15.9 million from General Fund growth and $37.5 million in the Education Fund be put aside and used in future years to repair and improve state-owned buildings.
If the money “above the revenue trend line” doesn’t come in, then those capital projects will not be done, said Hillyard.
House Minority Assistant Whip Joel Briscoe, D-Salt Lake, tried to take that $53.4 million and put it in a special account to be paid as public education teacher bonuses, should the money come in.
Of course, Republicans make all fiscal decisions in the Legislature, and Briscoe’s motion failed; Hillyard’s was then adopted unanimously.
Teachers will almost certainly get pay raises by the 2016 Legislature, but it will come in ongoing fund allotments as is usually the case.