State revenues may fall short of projections, lawmakers warned

SALT LAKE CITY — Tax revenues may be falling short of projections, leaving less money to spend this session, members of the House GOP caucus were warned Thursday.

"There is a hell of a lot less money than we think there is. So whatever you think you're going to get, you're not," House Majority Assistant Whip Brad Wilson, R-Kaysville, announced.

While the latest budget projections won't be ready until Feb. 19, they may well be below the estimates agreed to by legislative leaders and Gov. Gary Herbert late last year, House Budget Chairman Dean Sanpei, R-Provo, said.

"Most years, February revenue estimates come in higher and we have more dollars than we thought we did in December. But if there were ever a risk the revenue estimates were going to come in lower, it could be this year," Sanpei said.

The reason is tax collections tied to oil and gas extraction are down due to the low prices at the pump "that have fallen off a cliff," he said, as have stock market earnings, which will affect income tax collections.

"It's really hard to imagine how revenue numbers could be up," Sanpei said.

The consensus in December was that the Republican-controlled Legislature could count on an additional $180 million in one-time surpluses and $380 million in ongoing revenues for the 2016-17 budget.

It's been six years since the overall revenue estimates agreed to in December turned out to be too high. The anticipated shortfall is in expected revenue growth in the education fund, made up of income tax collections, and in the general fund.

Much of that money is already spoken for, Sanpei said, including $90 million to cover increased public school enrollment, $39 million to cover increased costs in existing Medicaid services, as well as pay increases for teachers and public employees.

A single percent increase in the state's funding formula for public education is $26 million, while every 1 percent increase in public employee pay costs $7 million, he said.

Also on the list are proposals to deal with a number of big issues, Sanpei said, including homelessness and providing limited Medicaid expansion for at least some of the low-income Utahns who otherwise have no health care subsidies.

"We are going to have to make some hard choices. There's no question in my mind," the House budget chairman said on the deadline for submitting appropriations requests. "It will become real."

House Speaker Greg Hughes, R-Draper, said it's time to temper expectations when it comes to budget requests.

Hughes said he's looking at tying Medicaid expansion to efforts to help the homeless and the state's justice reform efforts. Salt Lake County and Salt Lake City officials are asking the Legislature for $27 million to realign homeless services.

The speaker said he's brought advocates of all of those initiatives together "to say, since we don't have any money, what can we do that's going to start to hit on those different areas."

He said lawmakers have to be positive about the money available, because otherwise "it's just too hard to try to make it all work with what we're facing right now. … We're going to be rebuffing a lot of good things that need to be done."

The Senate is also raising concerns about the money available this session.

"It will be a very tight year as far as the budget's concerned," said Sen. Jerry Stevenson, R-Layton, vice chairman of the Executive Appropriations Committee. "There's not a lot of money out there, and we've got lots and lots of needs and requests."

The governor wasn't ready to talk about a possible shortfall in revenue estimates.

His spokesman, Jon Cox, said "it would be premature for the governor to comment on the outcome of a revenue estimating process that has not taken place yet."

Contributing: Dennis Romboy Email: lroche@ksl.com Twitter: DNewsPolitics