Utah Capitol 11

Legislative leaders announced they will have $921 million more to spend this year following new revenue estimates for the coming fiscal year. Most of that cash is in the state’s Education Fund, while the tight picture for the rest of the budget got a little looser, but not by much.

The revenue estimates, made public on Thursday morning, added an additional $150 million to the Education Fund next year. That includes $77 million of ongoing cash and another $73 million available in one-time funds. In all, the Education Fund has $518 million in ongoing cash and $323 million in one-time money.

On the other hand, the state’s cash-strapped General Fund will have an estimated $50 million more in ongoing money and an additional $38 million in one-time funds. That $50 million is a bit misleading as the state is starting to see revenue come in due to sales taxes from online transactions. Don’t expect a similar boost next year. That gives lawmakers about $92 million in ongoing money to spend this year. But, they are still running a deficit in one-time cash. Coming into the session, they were in the red by $51 million. The new one-time money cuts that deficit to just over $12 million. 

20200220 Revenue Sheet

With the final revenue numbers in place, lawmakers now get down to the nitty-gritty of what to spend that cash on as they race to set the budget before they adjourn in three weeks.

As reported many times before, there’s plenty of money for schools in the Education Fund, but not much else to go around elsewhere. About ⅔ of the ongoing revenue in the General Fund will be eaten up by a proposed cost of living increase for the state’s employees and increased costs from Medicaid. Legislators also made a $24 million mistake in the base budget by inadvertently omitting ongoing money for the tourism marketing fund, so that cash needs to be added back in.

With $238 million more new money from Thursday’s revenue estimates, coupled with the estimated $686 million from pre-session estimates means it’s going to be really difficult for lawmakers to get out of this session without enacting some sort of tax relief. Legislators already set aside $80 million to pay for an income tax cut in the previously passed tax reform that was jettisoned at the beginning of the session. 

It’s hard to say ultimately what any tax relief will look like as any cut will have to come out of the ongoing money in the Education Fund since you can’t pay for an ongoing tax cut with one-time money. Some lawmakers have suggested fixing the problem created for taxpayers with children that was created by the Trump tax cuts in 2017 which ended up creating a tax increase for some Utahns. Others have proposed eliminating the tax on social security income or giving a tax cut to veterans.

House Majority Leader Francis Gibson, R-Mapleton, said while it is great that Utah’s economy is going so well, and generating new ongoing and one-time tax revenue, comparatively little is coming in sales tax -- which feeds the General Fund and non-education programs.

“Yes, the Education Fund (driven by personal and corporate income taxes) is taking a big hit” in new revenue growth,” said Gibson, who led the tax reform effort in the House in a now-failed effort to balance out the General Fund and Education Fund.

“We are looking at a tax cut,” he added. But how that should look, rebates or some tax rate reduction is still being discussed.

“Remember, we tried to give a $160 million tax cut” in tax reform. “And look what happened?” He said spreading his arms wide. Will citizens see a new tax cut as just legislators trying to put lipstick on a pig of tax reform? he added.

One idea making the rounds on the Hill is providing a one-time tax rebate rather than a permanent cut. That plan is attractive as lawmakers would not be locked into a long-term solution, but could make the rebate a permanent cut once they pass tax reform sometime in the future.

Had the tax reform package remained intact, the amount of new money would have remained the same, but it would have shifted about $250 million in the ongoing money from the Education Fund to the General Fund as it was designed to take in MORE sales tax money and LESS income tax, along with an overall $160 million tax cut for Utahns. 

Utah is unique among the state legislatures in that all members sit on budget committees. These committees have finished their work, making recommendations to the all-powerful Executive Appropriations Committee, made up of leaders in the House and Senate from both political parties. Because Republicans hold majorities in both the House and Senate, they control the budget-making process.

Lawmakers have recommended a little more than a 4 percent boost in school funding through the Weighted Pupil Unit (WPU), or $136 million. They’ve already spent another $50 million of the ongoing new money in the Education Fund to fully fund enrollment growth. The Utah Education Association has asked for a 6 percent boost in the WPU, or $198 million. 

Below are links to the final budget recommendations by the individual budget committees, with lists of a few of the top recommendations for spending for next fiscal year’s state budget, which will be around $20 billion, starting July 1. Not all of these priorities will be funded, but the higher they fall on the list, the more likely it is that they’ll get some of the cash.

A number of wildlife license fee increases are recommended, listed here.

  • Infrastructure and General Government: $15 million to refinance some state bonds; $38 million build the Bridgerland Health Center.
  • Public Education: $136 million to increase the WPU by 4 percent; $3.3 million teacher pay supplement; $3 million early childhood grants.
  • Business, Economic Development and Labor: $5 million art grant program.
  • Executive Office and Criminal Justice: $1 million pay raises UHP raises; $932,000 court technology upgrades.
  • Higher Education: Overall $86 million more in ongoing revenue, $91 million more in new buildings; some of the major items: $29.5 million pay raises; $27 million new college buildings.
  • Natural Resources, Agriculture and Environmental Quality: $10 million wildlife suppression and rehabilitation; $2 million carbon recapture demonstration; $50 million Bear Lake Marina construction.
  • Social Services: $24 million CHIP and Medicaid caseload increases; $5.9 disability services increased needs.