SALT LAKE CITY — With just three days left in the legislative session, House and Senate Republican leaders remain divided over a House plan to withhold $400 million in spending until tax reform is approved in a special session.
"We will not be driven by a date. We will be driven by a good solution," House Speaker Brad Wilson, R-Kaysville, told members of the House Democratic caucus Monday, warning the session could end with only a minimal budget in place.
Senate Republicans, meanwhile, took a caucus position to support the full $19 billion budget approved by joint GOP leadership last week, just before the House tax reform plan was scrapped because time was running out for complicated fixes.
"We're trying to avoid turmoil," said Senate Majority Leader Evan Vickers, R-Cedar City. "The House, hey, they're pretty traumatized. You have to admit that their House members went through a lot of severe pressure."
Vickers said he does not expect the session to end without action on the budget.
Gov. Gary Herbert's deputy chief of staff, Paul Edwards, weighed in on the split.
"We support the process to pass a modest budget that meets the needs for core services while leaving room for a sizable tax cut when we reconvene to modernize our tax system," Edwards said.
The governor had called for a $200 million reduction in the state sales tax rate in his proposed budget last December. But what had been a $1.3 billion surplus dropped by $200 million last month when revenue estimates were revised.
For now, the impasse means that when the new fiscal year begins July 1, state agencies could end up with only what's known as base budgets that were passed earlier in the session and do not include new funding.
Wilson said the base budgets add up to about 85 percent of the $19 billion spending plan already agreed to, while the House Republicans' so-called "skinny budget" represents about 92 percent.
The difference between what are now House and Senate budgets is that the House budget removes about $400 million in the Senate budget for everything from air quality projects, arts programs, higher education buildings and public safety.
Both budgets include money for an increase in per-pupil funding and a pay raise for state employees, Wilson said, and cover the cost of the partial Medicaid expansion approved earlier in the session.
But a long list of bills that carry a fiscal note — meaning they'll cost taxpayers to implement — that have yet to clear both the House and Senate may be doomed this session, the speaker said.
Wilson said he and other House Republican leaders negotiated the budget with their Senate counterparts based on fixing a financial situation "that turns into a pumpkin in July" as growth in income tax revenues far outpace sales tax collections.
The speaker said he understands that the public struggles with cutting back spending at the same time lawmakers have a $1.1 billion budget surplus because they see "record revenue, all this money, then we can't pay our bills."
For now, both the House and Senate are moving forward with their versions of the budget. An early morning Executive Appropriations Committee meeting Tuesday to finalize spending was cancelled.
Bills reflecting the different budgets passed the House and Senate Monday night.
House and Senate GOP leaders worked throughout Saturday and from afternoon until late in the evening Sunday on possible fast fixes to the budget situation that could be made this session, including raising the sales tax rate.
One solution that would require the approval of voters is to amend the Utah Constitution so that income tax collections could be spent on more than public schools and higher education.
Monday, Sen. Dan McCay, R-Riverton, substituted language allowing income taxes to be used for "providing services for the poor, disabled and elderly," into an unrelated resolution amending the constitution, SJR3.
Senate President Stuart Adams, R-Layton, said the Senate GOP "is 100 percent supportive of whatever measures are needed," but told reporters Monday night that's "probably not now."
House Majority Leader Francis Gibson, R-Mapleton, said the House GOP was told during an evening caucus "that we're still in the same place." He said he "preferred everyone being realistic and looking at the problem."
Gibson questioned how the House budget is being described.
"Is it withholding money? We're funding all of the essential services that need to be funded," the majority leader said. "Seventy-five percent of those fiscal-note bills are either an expansion of government … or expanding a current program."
He dismissed the solutions talked about over the weekend, saying there were complaints that there wasn't enough time to handle tax reform this session so "now you're going to try to do it in three days?"
Last Thursday, GOP legislative leaders and the governor pulled the plug on a House bill that would have expanded the state's sales tax rate to include a wide variety of services while lowering both the sales and income tax rates.
HB441, which did not surface until late in the session, had passed a House committee but was generating increased opposition from businesses as well as groups across the political spectrum.
The legislation, intended to address the state's shrinking sales tax base, is expected to now be considered in a special session this summer, called either by the governor or, thanks to a constitutional change, by lawmakers themselves.
On Friday, House Republicans agreed to back Wilson's plan to set aside a portion of the budget surplus until tax reform is passed. The move caught the Senate off guard, but Vickers said the situation is not being seen "as a showdown at all."
House Budget Chairman Brad Last, R-Hurricane, said the priority for the House is figuring out a way to deal with the structural imbalance in the budget sooner rather than later.
“All I want to say is we’re really not crazy. We are sincere in wanting to try and resolve our structural problem," Last said. "And that’s been the whole foundation of our conversation from even before the session started."
Contributing: Katie McKellar
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