Coronavirus 11

No pay raises for state workers, public education teachers, or college professors; no funding increases for state programs; no growth in social services.

In short, a state budget that starts July 1 that is the same as the state budget for the current fiscal year, which ends June 30.

That’s the bleak forecast -- caused by the coronavirus and shutdown of Utah businesses -- legislative leaders heard about Wednesday.

Remember all the great funding bumps adopted just two months ago when the 2020 Utah Legislature adjourned: 6 percent increase in the Weighted Pupil Unit, the basic per-student state public school funding proposal; more than $1 billion in revenue surpluses; increases in Medicaid; a big jump in pay for state workers, especially prison guards.

All gone. Kaput.

The Legislature’s Executive Appropriation Committee -- made up of Republican and Democrat leaders in the Utah House and Senate -- heard really bleak projections from their budget staff in a Wednesday morning meeting that stretched on and on, with the voices of the staffers sounding more disappointing over the audio-only virtual livestream.

Some top lines from the meeting:

-- The all-legislator budget subcommittees will virtually meet May 26-29 and make budget/program cut recommendations for next fiscal year of 2 percent, 5 percent and 10 percent.

-- By mid-June the top bosses will review those possible spending cuts and the Legislature will come into a special session to decide exactly which budgets will be cut by which amounts.

-- Preliminary revenue updates for fiscal 2020, which ends June 30, could be as deep as $600 million in the red, or as narrow as $200 million short in the combined General Fund and Education Fund.

It’s too late in the fiscal year to do much about this year’s red ink. But when the final budget/tax collection numbers come in for this year, lawmakers will have to deal with it in a future special session later this year.

-- Preliminary estimates for the next fiscal year, which starts July 1, could be a drop in tax revenues from $1.287 billion in the two main state funds to a shortfall of $592 million.

For now, those are just guesses. New revenue updates will come by mid-June’s special legislative session -- where next year’s budget will be “completely” redone -- the budget that was adopted the middle of March as lawmakers rushed to finish their 2020 general session.

Senate Minority Whip Luz Escamilla, D-Salt Lake, told her Executive Appropriation colleagues “there will be panic” when state employees, schoolteachers and those who advocate for and are served by state services hear the news that upwards of 10 percent of the upcoming fiscal year’s budgets could be cut.

Yes, said Senate budget chair Jerry Stevenson, R-Layton, it will be bad. Just how bad won’t be known --maybe even by the mid-June special, where next year’s $20 billion budget will be cut.

“But we may well” just push the current’s year’s spending plan into the next 12 months -- no real budget increases for anyone, for any program.

It was, in a very real way, a schizophrenic meeting.

While the state’s financial world is collapsing next year, another report by legislative fiscal analyst Jonathan Ball showed that over the next five years, the state will have enough money to weather what is now perceived as the financial impact of the coronavirus.

That’s because the state has two Rainy Day funds and other expected pots of money that could be shifted into ongoing programs and salaries -- basically one time monies used for ongoing programs and salaries, something the conservative, GOP-dominated Legislature hates to do.

The state will have several billions of dollars in lost tax revenues -- we don’t know how much yet -- but upwards of $5.4 billion in all these other “pots.”

Through conservative budgeting, the Legislature has put the state into a “pretty strong fiscal” position over the next five years, said the Legislature’s top economist Andrea Wilco.

“We can expand the idea of have a “working” Rainy Day fund and sweep all the (one-time) money from cash construction (of state buildings) and bond” for them, said Ball.

But those “debts” will have to be repaid later, “when times are better,” he added.

Stevenson noted that the ideas that state lawmakers used back in the 2008-2009 Great Recession could be used again. He lived through those tough times, but the drop off in state tax revenues was slower and not as deep then as the current coronavirus “crisis” is happening now.

Here is the monthly “state revenue snapshot,” which shows how state tax revenues are dropping drastically as many Utah businesses are closed or doing much less business.

Unemployment has skyrocketed, over 11 percent from a record low of 2.3 percent earlier this year -- so there will be less income taxes being paid.

Personal income tax is down 12.9 percent, when it had been growing considerably each year, above 10 percent.

Corporate income tax is down 27.2 percent.

Those paying attention to UtahPolicy.com and other media reports over the last eight weeks have generally known these shortfalls were coming.

But some of the real numbers were disclosed Wednesday.

“We (some of the GOP leaders) have been having a lot of meetings” over the last several weeks, said Stevenson -- as a few Democratic leaders have been complaining they have not been kept in the fiscal loop.

One of the big “unknowns” is just how bad the coronavirus will hit Utah in the near future.

Ball said none of the current updated coronavirus fiscal impacts have considered a rebound of the virus, or a “second wave,” that could come this summer or fall.

GOP legislative leaders have been pushing Republican Gov. Gary Herbert to hurry up in opening up the state’s businesses -- and Herbert has moved the state from a “red” close down to an “orange” responsible social distancing, even as the case of the virus and deaths continue to climb.

So a “second wave” impact would make the numbers and projections given Wednesday even worse, with no one tallying up those costs currently.