Utah Capitol 17

Utah GOP Gov. Gary Herbert will release his recommended 2020-21 fiscal year budget recommendation Wednesday, one reflecting the new tax reform $160 million income tax cut and a huge estimated revenue surplus of $682 million.

Most likely the governor will continue with making his No. 1 spending priority public education -- he has recommended (and the Republican-controlled Legislature agreed) in recent years to fully fund growth in public schools, along with a healthy increase in additional student spending.

Last year, the state again facing large revenue surpluses, Herbert wanted a new $100 million for air quality, but legislators gave just a fraction of that.

Herbert’s new budget will also reflect full Medicaid expansion -- up to 138 percent of poverty funding for Utah’s lower-income residents.

Republican legislative majorities have been stingy with Medicaid spending over the last half-dozen years -- first rejecting Herbert’s Healthy Utah expansion and then his modified Healthy Utah 2.0.

Various iterations of Medicaid expansion were finally approved by the GOP lawmakers, only to fail to get expected waivers from the Trump administration.

In November 2018 voters approved a citizen initiative to fully fund Medicaid expansion (with a small sales tax hike to help pay for it.)

But, again, the GOP majority changed that initiative -- with the backup for full expansion should federal waivers not come. Well, they didn’t.

And so Jan. 1 the back-up took effect, with a more favorable financial split as the federal government will pay 90-percent of the cost for the population covered under the expansion. 

With the $682 million surpluses -- $482 million coming in new, ongoing revenue growth in tax revenues -- covering the state's 10-percent of the overall cost shouldn’t be hard this upcoming general session, which starts Jan. 27.

But unless GOP leaders can find some kind of compromise with public education advocates -- which will allow the Legislature to pass a state constitutional amendment decoupling income tax revenues from only public and higher education funding -- then down the road Medicaid funding could be much more difficult -- as the state sales tax which funds it not growing as fast as income tax revenues, despite the recent tax reform.

Historically, the Republican legislative leadership doesn’t pay a whole lot of attention to the governor’s proposed budgets -- perhaps looking at his spending priorities a bit, but much more giving the job of drafting a new budget to the all-encompassing budget sub-committees (upon which sit all 104 lawmakers), with the final decisions in the hands of GOP leaders on the powerful Executive Appropriations Committee.

During last year’s interim, budget subcommittees were supposed to take in-depth looks at 20 percent of their budget areas, with an eye toward reprioritizing or cutting spending.

Time will tell if that work, with reevaluation each summer of a rolling one-fifth review, will actually end up with spending reallocation or cuts.

Herbert will certainly recommend a larger state spending plan for fiscal 2021 (which starts July 1) than this year’s budget -- $18.53 billion -- adopted by lawmakers at the end of the 2019 general session last March.