Utah Capitol 27

House and Senate leaders are still searching for common ground as they attempt to hammer out a budget for next year.

On Monday night, Senate President Stuart Adams, R-Layton, said the two sides were getting closer, but it appears that both bodies will pass their own budgets, then attempt to reconcile them before the end of the session on Thursday at midnight.

“We’ll keep talking,” said Adams. “We’ve been talking since the first day of the session and we’ll keep talking for the next three or four.”

If that deal isn’t made, and most likely it will be, then both bodies can pass 1stSubHB3, which UtahPolicy.com is told balances out the budget so at least there is a fallback if no other budget bills pass before adjournment midnight Thursday.

Said one House Republican to UtahPolicy Monday night about the substituted HB3:  “This is us making the necessary transfers so that no matter what happens we balance the budget. We are also highlighting what goes on…this transfer of funding to and from higher education because of our structural problems” between the General Fund (sales tax) and the Education Fund (income taxes.)

At issue is a $340 million imbalance in the General and Education Funds. Both funds are growing, but sales tax revenue, which goes into the General Fund, is not keeping up with the needs of the state. Currently, lawmakers transfer money out of the Education Fund into the General Fund to cover the cost of higher education. But with that slowing growth, this is essentially the last year they can use that financial maneuver.

As a remedy, the House and Senate were pushing hard earlier this session to pass HB441, which levied sales taxes on services that previously weren’t subject to taxes. Legislative leaders pulled the plug on that proposed change, opting to put it off to a special session later this year.

Ending that effort has led to the current budget imbroglio, which is causing frayed nerves on Capitol Hill.

“There are a lot of nervous people in the hallways,” said Sen. Evan Vickers, R-Cedar City on Monday. “I’ve been joking that I could be dispensing a lot of anti-anxiety meds.”

One veteran House member told UtahPolicy.com that he hasn’t seen this kind of division over a budget in his decade in the House. “I hope we can work this out,” he said.

On Monday evening, the Senate passed their budget bills, which adds approximately $1 billion in spending to last year’s totals. Meanwhile, the House is insisting on holding back approximately $400 million from that total to pay for a sales and income tax cut once they hammer out the tax reform package. The slimmed down House proposal, dubbed the “skinny budget” adds about 4% to education spending and not much else.

Of course, lawmakers could end up doing nothing and simply let the base budgets already passed and signed by Gov. Herbert go into effect. The base budgeting process was designed as a fail-safe for the legislature in case the governor were to veto part or all of the budget.

However, HB3 is needed to balance out the budget completely, House leaders told UtahPolicy.com Monday night.

In the time of crunch politics at the Legislature, you never really know how one type of political ploy can change into another one.

Way back when Gov. Olene Walker wanted $15 million for an early reading program, the Republican-controlled Legislature didn’t want to give it to her — or didn’t want to give all the $15 million.

So Walker threatened, behind the scenes, to veto the whole budget.

That would mean legislators would have to be called back into a special session — the date Walker’s decision alone — and deal with the problem, since it was unlikely GOP leaders could get two-thirds votes in the House and Senate for a veto override.

The next general session, GOP leaders devised a way to get around that problem: Adopt a “base budget” early in each session, send the bills to the governor’s desk, and if he or she refused to sign them there was time, before adjournment at 45 days, to fight out the issue politically.

Now the base budgets adopted earlier in this session, and signed by the governor, are acting as a great backstop for House GOP leaders.

For if the Senate won’t go along with the “skinny budget” that House Republicans want (GOP Gov. Gary Herbert, by the way, supports the “skinny budget” House approach), then the base spending plan for 2019-2020 is already in place.

The Republican senators don’t have much, or any, leverage with their House GOP colleagues.

Yes, the Senate could stop passing House-sponsored bills.

But then the House would stop passing Senate-sponsored bills.

And at adjournment midnight Thursday, the only folks to suffer would be House and Senate GOP legislators — who wouldn’t see their bills passed this year.

There’s a new wrinkle to all of this bravado — by two-thirds votes, lawmakers can call themselves back into a special session. They no longer have to rely on the governor to do that for them.

So, House Republicans — if they are willing to sacrifice their bills — can just wait a few months and come back into a special session to fix the huge expansion of the sales tax, and pass sales and income tax cuts.

And at that time adopt a for-real 2019-2020 budget — which takes effect July 1.

They will have updated revenue estimates then and can budget more precisely. They could even take up a few of the unfinished bills left on the other body’s last-week calendar.

But all this looks bad — majority Republicans in Utah not able to work together to conduct the most basic responsibility of the Legislature: Adopting next year’s budget.

Can you say: “This looks a lot like Congress to me?"

That’s why it’s likely House and Senate Republicans will work out a budget deal before Thursday night.