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$47M new revenue for budget won't be enough to restore cuts

By KSL.com | Posted - Feb. 22, 2011 at 5:40 p.m.



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SALT LAKE CITY — The good news is that there's more new revenue projected for the upcoming budget year.

But the bad news? It's only about $47 million.

That's nowhere near enough to restore the 7 percent in cuts already made this session in the preliminary base budget and take care of growth in public school enrollment and other needs.


It doesn't solve all our problems, but it's a lot better than it's been in a long time.

–House Budget Chairman Mel Brown


House Budget Chairman Mel Brown, R-Coalville, acknowledged the projections fall short in presenting the new numbers to his fellow representatives.

He still, however, said the projections are better than they've been in the past few years, when lawmakers saw revenues continue to drop because of the economic downturn.

"It doesn't solve all our problems, but it's a lot better than it's been in a long time," Brown said, noting there is another $31 million in one-time money expected to be left over at the end of the current budget year on June 30.

Later, Senate Budget Chairman Lyle Hillyard, R-Logan, offered a similar assessment of the work ahead.

“We have some pretty serious challenges,” Hillyard said. “It’s a doable task.”

The Senate budget chairman, too, attempted to sound upbeat. “It means more people are working and earning money and that’s always a good sign,” Hillyard said.

Tough choices ahead for lawmakers

Lawmakers had already expected the state to collect another $216 million in revenues in the new budget year beginning July 1.

It would take about twice that much, though, to add back the money already taken out of the $11.9 billion budget proposed by Gov. Gary Herbert, cover the $75 million price tag for new students and growth in Medicaid.

“Democrats opposed the budget cuts put forward at the beginning of the session. Today’s revenue estimates support our position that those cuts were unnecessary." -Senate Minority Leader Ross Romero
“Democrats opposed the budget cuts put forward at the beginning of the session. Today’s revenue estimates support our position that those cuts were unnecessary." -Senate Minority Leader Ross Romero

The new revenue report means lawmakers will have to make some tough choices.

GOP leaders had hoped to make up all of what's called the structural imbalance this session, the $315 million hole left in the budget now that federal stimulus funds and other one-time monies are gone.

The governor has said continued economic growth should take care of that imbalance over the next couple of years and proposed a new source of one-time money, a switch from annual to quarterly income tax payments for the self employed.

Another option for lawmakers is restoring the state sales tax on food and delaying the corresponding decrease in the general sales-tax rate for six months or more.

Brown said lawmakers are about $50 million short of solving the structural imbalance and some $60 million short of what's needed to pay for enrollment growth. With other unmet needs, he said the shortfall is about $140 million.

"We can spend the $31 million to solve some of that," he said, referring to the money expected to be left over from the current year's budget.

As for making up some or all of the rest, Brown said he'll be meeting individually with the heads of the Legislature's budget subcommittees "to personally talk about the direction we might go with this."

Reaction to numbers subdued

There was little reaction on the floor, expect from the speaker pro tem, Rep. Merlynn Newbold, R-South Jordan.

Newbold called the numbers "a great way to start out the week."

In the Senate, the reaction was more measured.


Lawmakers are about $50 million short of solving the structural imbalance and $60 million short of what's needed to pay for enrollment growth. With other unmet needs, the shortfall is about $140 million.

“We still have some dark clouds on the horizon that we have to be very watchful for,” Sen. John Valentine, R-Orem, said.

Senate Minority Leader Ross Romero, D-Salt Lake, however, said the new numbers reflect an improving economic picture for Utah.

“Democrats opposed the budget cuts put forward at the beginning of the session," Romero said. "Today’s revenue estimates support our position that those cuts were unnecessary."

House Democrats also said they would work to ensure schools and social service programs get the money needed.

“Our economy is definitely heading in the right direction,” said House Minority Leader Dave Litvack, D-Salt Lake. “We now have an opportunity to revisit the base budget from earlier in the legislative session and to restore some of the threatened and serious cuts to critical programs.”

Gov. Gary Herbert said in a statement he was encouraged by the numbers.

"Today's revenue estimates clearly demonstrate Utah is on track toward a stronger economy," the governor said. "It certainly gives the Legislature greater confidence that the numbers in my recommended budget are solid. My budget is not only viable; it's sustainable."

Herbert said the state must invest in education first.

"It will pay dividends for decades," he said, adding "our efforts in the Capitol should be all about jobs, jobs, and more jobs. The forecast shows the horizon is bright, with job growth not only improving, but almost doubling in 2012. I'm very encouraged."

------

Story written by Lisa Riley Roche with contributions from Dennis Romboy and John Daley.

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