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Utah state government is going to be $850 million short as the current fiscal year ends June 30 and the new fiscal year starts July 1, new revenue estimates say.

Legislators will go into a special session Thursday morning, called by Gov. Gary Herbert, to take up this year’s budget shortfall and the anticipated shortfall coming over the following 12 months.

The estimates say:

-- A General Fund one-time shortfall of $26 million and an Education Fund shortfall of $67 million, for a total of $93 million less than budgeted for at the end of the general session mid-March.

-- In ongoing tax collection shortfalls, $106 million in the General Fund and $651 million in the Education Fund, for a total of $757 million.

Add it all together, and legislators and Herbert are going to have to cut $850 million and/or cull monies from the Rainy Day funds, cut state budgets from the fiscal 2021 year, and make other adjustments.

No one is talking about tax hikes, so that option is off the table in this general election year, which sees a governor’s race (Herbert isn’t running, he’ll retire), all of the 75-member House up and half of the 29-member Senate.

It’s going to be a long two days -- and likely more -- up on Capitol Hill starting Thursday, as Herbert has called a special legislative session with an unprecedented 26 items on the agenda.

Likely never in Utah history has a special session had so much to do -- balance this and next year’s budgets; further fight the coronavirus, including various kinds of immunity for governments and their workers; deal with some Black Lives Matter policing issues; and more.

As UtahPolicy.com first reported, state leaders hope to keep public education, the K-12 schools, spending at this year’s level -- adjusted for the growth in new students coming into the system this fall.

But other state budgets may be trimmed by 2 percent, 5 percent, or even 10 percent, depending on new revenue estimates and ongoing tax collections.

Under the Constitution, once the governor calls the Legislature into a special session it has 30 days to conclude its work, taking breaks as members see fit.

Certainly, this special session won’t go 30 days. However, because some lawmakers may not be attending in person, again because of the virus, that means those attending virtually online must be given extra time to vote and/debate various issues.

Here is the list of work Herbert and GOP legislative leaders want lawmakers to consider: 

  1. Adjusting the fiscal year 2020 and fiscal year 2021 budgets and making statutory changes relating to those budgets;
  2. Making changes to data privacy provisions relating to the State’s response to COVID-19;
  3. Providing rent and mortgage assistance for individuals and small businesses affected by COVID-19;
  4. Recognizing the students graduating from high school and institutions of higher education in 2020;
  5. Changing private investigator residency requirements;
  6. Amending provisions relating to the unveiling of the statue of Martha Hughes Cannon in the United States Capitol and extending the repeal date of the Martha Hughes Cannon Capitol Statue Oversight Committee;
  7. Correcting a mistake made in S.B. 90 from the 2020 General Session;
  8. Making technical corrections to the Utah Code;
  9. Making changes to municipal annexation requirements;
  10. Modifying alcohol policies at the Salt Lake City International Airport;
  11. Modifying unemployment insurance provisions;
  12. Addressing certain methods of restraint by peace officers;
  13. Extending the COVID-19 state of emergency;
  14. Making changes to the Federal Funds Procedures Act and the Emergency Management Act to require notification by the governor to the Legislature before the expenditure of federal funds received during a pandemic emergency;
  15. Addressing the operation of the Open and Public Meetings Act during an emergency;
  16. Addressing governmental immunity related to exposure to COVID-19;
  17. Addressing exposure to bodily fluids by first responders and correctional facilities staff;
  18. Addressing testing for COVID-19 of staff and residents of residential care facilities;
  19. Establishing targeted assistance programs with CARES Act Funding;
  20. Making adjustments to the Utah Fund of Funds;
  21. Providing approval of the purchase of two pieces of real property and transferring funds from the Fleet Motor Pool Fund to the State Fuel Network Fund for the purchase of the real property;
  22. Approving a proposed settlement agreement to resolve the Hepatitis C class action lawsuit against the State of Utah and the Department of Corrections;
  23. Addressing the transfer of reserve funds from the state health insurance pool to the state;
  24. Modifying Section 53F‐8‐303 to allow school districts to use revenue generated by the Capital Levy to fund the school district's general fund for the FY21;
  25. Making changes to the state’s workers’ compensation insurance program related to first responders who allege that they contracted COVID-19 during the performance of their job duties; and
  26. For the Senate to consent to appointments made by the Governor. 

No doubt some items/bills can be dealt with quickly. But others will take some time. Also, Herbert can add items to the call.

However, because the governor called this session, not legislators themselves, only items the governor wishes can be considered by legislators.

Wednesday, the Executive Appropriations Committee -- made up of partisan leaders in both the House and Senate -- will adopt the new tax revenue estimates for fiscal 2020-2021, which starts July 1.

While it may sound off, but a shortfall of $850 million over the two fiscal years is not as bad as some legislative leaders were talking about over the last month. The range being talked about just weeks ago ranged from $600 million to $1.3 billion in less revenue because of the coronavirus shut down of the Utah economy.

So, legislators will have to cut back next year’s budget from the tax-collection-flush fiscal 2021 budget the Legislature adopted upon their general session adjournment in early March.

Pre-coronavirus, the state was seeing a $1 billion surplus in tax collections, with public schools getting a huge 10 percent increase in spending for the next fiscal year.

But as Utah’s then-thriving economy was shut down by the virus, it quickly became clear the state’s tax take next year was going to be really hurt -- probably worse than the 2008-2009 Great Recession.

All that new spending will be gone, legislative leaders tell UtahPolicy.com -- anticipated employee pay raises, expansion of many state programs citizens want, and so on.

For the first time, in the 2020 general session lawmakers put student grown funding in the base school program budget.

And since the various budget subcommittees two weeks ago took all new funding, and then cut recommended budgets by 2 percent, 5 percent and even 10 percent, public schools at least don’t have to find money to pay for the growth in new students come the fall.

State leaders are looking at any number of actions to blunt the fall off in tax collections. (Congress has talked about sending federal money down to states and local governments to help defray lost tax revenues, but done nothing on this as of yet.)

These include bonding for new buildings and roads, and taking those taxes for other programs.

Tapping into the state’s two Rainy Day Funds, now at more than $817 million dollars.

Sweeping up some of the individual departments’ unallocated fund balances.

But it may well be that legislators will have to start spending one-time cash surpluses on ongoing program/salary costs -- something the conservative budgeters hate to do. At least until the Utah economy begins to open up again and people get back to work and their pre-virus buying habits.

However, lurking over all of the special session will be the fact that Utah coronavirus infections are on the rise, social distancing and mask-wearing doesn’t seem to be working and a “second wave” of infections/hospitalizations may be coming in Utah -- if it is not already here.

Sweeping up some of the individual departments’ unallocated fund balances.

But it may well be that legislators will have to start spending one-time cash surpluses on ongoing program/salary costs -- something the conservative budgeters hate to do. At least until the Utah economy begins to open up again and people get back to work and their pre-virus buying habits.

However, lurking over all of the special session will be the fact that Utah coronavirus infections are on the rise, social distancing and mask-wearing doesn’t seem to be working and a “second wave” of infections/hospitalizations may be coming in Utah -- if it is not already here.