Just 120 days ago Utah’s budget for next year was overflowing with cash. Revenue projections in mid-February gave lawmakers $921 million dollars in extra money to spend, most of it in the Education Fund.
The economic downturn from the coronavirus has wiped out those rosy financial projections, and lawmakers on Thursday took the first steps to cut $850 million from this and next year’s budgets.
“We went through all the budgets and made sure we were being fair and focusing on the things that are essential to the state of Utah,” said Senate President Stuart Adams, R-Layton.
Gone is all the new money that lawmakers put in when they adjourned their general session in mid-March.
Instead, across the 2021 fiscal year budget, which starts July 1, are a cut of 1.7 percent. But some state agencies will see much worse cuts -- like 18 percent cut in Infrastructure and General Government budget subcommittee -- so many buildings are now off the funding list.
Despite that hefty revenue shortfall, lawmakers said they were actually able to increase education funding marginally. That included a 1.8 percent increase in the WPU, which is about $54 million. They also appropriated $50 million for the expected growth in student population and put another $125 million in federal coronavirus relief money toward education needs, such as infrastructure and information technology. Taken all together, and public education, K-12, will see more than a 2 percent INCREASE over this year’s base budget. However, lawmakers ended the 2020 general session after passing a 6 percent WPU increase, or $140 million.
Lawmakers also passed HB5011, which guarantees an annual increase in the WPU.
To make ends meet, lawmakers were able to tap reserves, shift ongoing money that was slated for construction projects to bonding, and tap the state’s rainy day fund. Legislators took approximately $100 million out of the rainy day fund, but they hope to put it back in July when expected tax revenues start coming into the state.
“We’re treating that as a loan, and we want to put it back as soon as we get to tax day on July 15th,” said Sen. Jerry Stevenson, R-Layton, the Senate’s budget chairman.
Stevenson said the budget looks dire, but they’re seeing some indications the state’s financial picture is beginning to rebound.
“Our sales tax numbers came in a little better than we thought they would. One of the reasons is people are spending their stimulus money. It looks like some are using it as down payments on big-ticket items or things they’re going to be paying on a lot,” he said.
“But we’ve got a few more months of this to get through before we can put this behind us,” he warned. Another special session in August may just bring enough good news to include some greater funding just after this fiscal year begins, said Rep. Brad Last, R-Hurricane, the House’s budget chair.
The budget adjustments passed the House and Senate easily on Thursday afternoon.
Lawmakers moved Thursday to set up a state-run $62 million program to help small businesses get money starting Aug. 1 to help them reopen.
HB5010 passed by the House will be a state GOED program to help some specific groups -- like arts and tourism -- but just about every area of business can apply, said Rep. Robert Spendlove, R-Sandy, the bill’s sponsor.
Most of the CARES federal money has already been claimed -- with lots of Utah businesses saying all the money was gone by the time some small firm owners tried to apply through their local banks.
The new state program’s individual benefit is no more than the harm that local businesses lost, said Spendlove of the new program. And 75 percent of the money for small businesses, he added.
“We’ll move forward very quickly,” Spendlove said, with the hope that all the money will be gone by the end of August.
The money lost due to the coronavirus by the firms must have come from March through the end of June.
“Trying to get people going back to restaurants, movie theaters and our great state and national parks in Utah,” said Spendlove.
Combined with some local governments’ grants and loans, the new state program should be a kick-start, he added.