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Utah has extra $560M for upcoming budget, but sales tax revenue down

Utah has extra $560M for upcoming budget, but sales tax revenue down

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SALT LAKE CITY — State lawmakers will have more than a half billion dollars in new money to spend next year, according to revenue estimates released Monday.

And even though legislative fiscal analysts say Utah's economy is strong, sales tax revenue is down $39 million from what was projected in the current year's general fund.

"Consumers are not consuming as much as we thought they would," Jonathan Ball, director of the legislative fiscal analyst's office, told the Executive Appropriations Committee.

Ball attributed the shortfall to stagnant wages and increased health care spending and online purchases, neither of which are taxed. Utah, he said, is losing $190 million a year in taxes on Internet sales.

Overall, though, the Republican-controlled Legislature has an additional $180 million in one-time revenue and $380 million ongoing for the 2016-17 budget it will adopt during the general session that starts next month, according to "consensus" numbers agreed upon by the Legislature and the governor's office.

Most of the new money falls into the state education fund, fueled solely by personal and corporate income tax. The general fund, made up largely of sales tax, funds state government outside of education.

"Utah's economy continues to be the envy of the nation, and today's budget numbers reflect that growth," said Gov. Gary Herbert. "Our continued commitment to fiscal conservatism has led to an encouraging budget projection for the upcoming fiscal year."

Herbert is scheduled to release his state budget proposal Wednesday at Salt Lake Community College, possibly signaling an emphasis on education.


House Speaker Greg Hughes, R-Draper, said there's going to be "high, high competition" for the new dollars as lawmakers grapple with the budget. The Legislature, he said, needs to take a measured approach.

"These new revenue estimates will help us put together a budget that addresses the critical needs of the state," Hughes said.

Funding for the $115 million first phase for relocating the state prison is among the big-ticket items legislators will consider.

Senate President Wayne Niederhauser, R-Sandy, said he found the new numbers encouraging, noting tax revenues rose 6 percent. "Although revenues are up, we need to carefully examine the entire budget to make sure we find the right fiscal balance," he said.

Assistant Minority Whip Joel Briscoe, D-Salt Lake, unsuccessfully tried to set aside $53 million for teacher bonuses, calling it "a sign that would put people before things."

The committee rejected the proposal along party lines and voted to put that money toward building projects.

Committee members also voted down Democratic proposals to divert $55 million for Medicaid growth and $91 million for public education enrollment growth.

GOP legislative leaders will not ask appropriations subcommittees this year to only plan for up to 98 percent of state agencies' current-year spending for what's called the base budget.

Senate Minority Assistant Whip Luz Escamilla, D-Salt Lake, calls that practice of the past couple years "abusive" because lawmakers end up restoring the 2 percent before approving the final budget.

"There is something ethically and morally wrong about lying to people for the purpose of practicing the budget cuts," she recently told the combined Deseret News and KSL editorial boards.

"As Democrats, we have said we don't want to do this practice," Escamilla said. "We don't want to practice cutting 2 percent and creating chaos in the community, so then we can come back and say, 'Don't worry. We're not going to cut it.'"

Sen. Lyle Hillyard, the Senate budget chairman, said lawmakers decided not to do that this year because it didn't work very well.

Appropriations subcommittees, however, will be asked to budget to the level they are currently receiving. If they want to fund a new program, he said, they would have to find the money internally.

Lawmakers typically approve a base budget early in the session and then add spending as the revenue picture becomes clearer. A final revenue estimate for the budget year that begins July 1, 2016, is expected in late February.

Hillyard, R-Logan, noted the state had more new money to spend last year and there are "lots of demands out there" again this year.

"I hope the revenues go up, but they could go down," he said.

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Dennis Romboy


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