The Utah State government’s financial picture has not been harmed as severely as economists/legislators/Herbert administration officials feared earlier this spring, a fiscal year-end revenue report shows.
The year-end TC23 state Tax Commission report, analyzed in the “Monthly State Revenue Snapshot” summary, shows state revenues are down around 4.2 percent from the year before.
The state’s fiscal year runs July 1 to June 30, so the report shows the differences from June 30, 2019, to July 1 of this year.
In a June special session, the Legislature formally moved $770 million from the new fiscal year back into the last fiscal year to account for the federal government’s delay in the paying of federal income tax from April 15 to July 15. The state’s income tax is based on the federal income tax, so the delay had to be moved over for Utah state personal and corporate income taxes, as well.
The snapshot numbers reflect that switch in revenue.
Overall, state government will take a considerable hit because of the coronavirus’s impacts on the economy.
The hit just isn’t as big as state economists believed earlier in this year — which of course is a good thing.
As Gov. Gary Herbert has said time and again, various governmental experts believe Utah overall, and especially a few Utah cities and counties, are well-positioned to come out of the virus-caused economic downturn better than most other areas in the U.S.
And when lawmakers in June reworked the new fiscal year’s budgets — which started July 1 — they were able to hold public education (K-12) harmless. Well, they were able to not cut school spending by more than was spent last fiscal year.
Before the virus, Utah’s main tax sources — the sales tax, income tax and gasoline tax — were on course for significant revenue increases this current fiscal year, 2020-2021.
In fact, schools were looking at a large 10 percent spending increase overall.
But all of those spending increases were wiped away by the coronavirus, which came with layoffs of workers and reduced consumer purchasing.
In June, tens of millions of dollars were trimmed from non-education budgets from a year ago.
The new “snapshot” report shows:
— The personal and corporate income tax take last year — even with the $770 adjustment — was down 10.1 percent.
— Sales tax was up 5.9 percent.
— And the per-gallon gasoline tax was barely up, just 0.1 percent.
The sales tax especially turned out better over April, May and June than originally believed because of the federal government’s economic stimulus package of $3 trillion, state economists said in the new report.
Utahns’ got $1,200 in a federal stimulus check and those who lost their jobs got $600 per month additional unemployment compensation.
Folks spent that money, thus helping out in the sales tax.
But that extra unemployment ends this month. And Republicans and Democrats in Congress are arguing over how to allocate a new $1 trillion virus-fighting economic package.
Even so, Utah’s income tax take did suffer last fiscal year, down 10.1 percent.
Utah’s unemployment rate never hit the national average. And with the opening up of the state’s economy in May, the latest job rates show unemployment at just over 5 percent, second-lowest in the nation.
While Utah’s coronavirus rates were climbing steeply in June, Herbert has declined to rollback any of the economic openings. He hasn’t even mandated the wearing of masks, which may harm the economic recovery here even though it wouldn’t close down in-person dining at restaurants, attending theaters, or other business openings.
The Legislature will come back into special session Aug. 20. But it is yet unclear if lawmakers will have to make further cuts to state budgets.
Or could they then even decide that more tax revenue will come into the state over the next 10 months and increase some spending?
While the year-end “snapshot” is not as bad as previously believed, Utah’s tax take is still down from a year ago.
And certainly, the halcyon budget projections seen at the end of the March general session — spending up by double digits in some programs — is yet still far, far away.
