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SALT LAKE CITY — Gov. Gary Herbert announced Tuesday he’s recommending close to $4.9 billion for public education in the upcoming budget, saying he expects the 2020 Legislature to provide “robust” funding for schools even though tax reform slashed a key revenue source.
The governor told more than 100 business and political leaders gathered for the Utah Taxpayers Association’s annual pre-legislative session conference that there are misunderstandings about the tax reform lawmakers passed in a special session last month, including the impact on education.
“We’ve increased education funding dramatically over these last 10 years. When I came into office, we were spending about $2.6 billion on education. What we will be proposing here with the upcoming legislative session is going to be probably close to, the total will be around $4.9 billion,” he said.
That’s about a $300 million more than the $4.6 billion being spent in the current budget year that ends June 30 and the largest increase ever requested by Herbert, who is not seeking reelection after more than a decade as governor and will release his final budget recommendations on Wednesday.
But he also said Tuesday that more can be done for schools.
“I’m not saying it’s enough, but we would want to continue that effort, and we will and should. But we’ve been pretty good to education. The results show, and I’ve said this often, it’s not all about the money, it’s some about the money,” he said, adding lawmakers have stepped up to make sure education is funded appropriately.
The tax reform package approved in December reduces incomes taxes that, under the Utah Constitution, must be spent on public and higher education. The package also raised sales taxes on food, gas and some services to adjust what’s seen as a budget imbalance caused by lagging growth in sales tax collections despite budget surpluses.
A referendum effort to repeal the new law is currently underway, something lawmakers may have to grapple with during the 45-day legislative session that begins Jan. 27 if tax reform opponents are able to gather the nearly 116,000 voter signatures needed to put the issue on the November ballot.
Both Senate President Stuart Adams, R-Layton, and House Speaker Brad Wilson, R-Kaysville, stressed the benefits of tax reform at the taxpayers association’s morning long conference. “It’s amazing what we have done,” Adams said, zeroing in on restoring the state sales tax on food from the current 1.75% to the full 4.85% state rate as making the budget more stable since people buy food in good and bad economic times.
The Senate president raised the question of whether the increased food tax was “good moral policy,” then answered by detailing the new income tax breaks for low- and moderate-income families that include an increased dependent exemption and a grocery tax credit of up to $125 per person for a family of four.
Tax reform, Adams said, offers a “ton more help to people in need.”
The House speaker said he believes Utah’s enviable “quality of life we care about so much is constantly threatened,” and cited the budget imbalance as among the biggest threats the state faced — but with tax reform, “we have fixed it.”
Now, Wilson said, lawmakers are able to make “new and significant investments” in education, transportation and other state needs while also putting money back in the hands of taxpayers. A family of four earning $60,000 annually is anticipated to save about $300 a year in state taxes.
The governor, who had advocated for expanding sales taxes to more services while cutting the state sales tax rate in his previous year’s budget recommendations, said what lawmakers ended up with is “not where I thought it was going to be or wanted it to be, but this is a first step.”
A bill last session that would have imposed new sales taxes on a wide range of services was pulled amid opposition from the business community, and a legislative task force was created that came up with the package giving an overall $160 million tax cut annually.
Herbert praised the Legislature’s efforts, saying the task force “spent time to get it right,” holding public hearings throughout the state over the summer before meeting. The work lawmakers did on tax reform, he said, was “not easy. It’s hard to do. But I appreciate the fact we have broadened the base and lowered the rate.”
After his presentation, the governor told KSL that his budget recommendation, coming later than usual because of tax reform, “is going to be a significant, again, increase in funding. ... In this particular instance, we’ve, in fact, delivered the money.”
Herbert pointed out education is getting more money than what was sought by Our Schools Now, a group led by Utah Jazz owner Gail Miller that initially wanted to increase income and sales taxes for schools through a citizens initiative before reaching a compromise for a failed ballot question that would have raised gas taxes.
“Our Schools Now, for example, wanted to have $850 million in a five-year period of time. That was their request. And what we’ve done is a billion dollars in four years,” he said, referring to new money being spent on public education.
“So people should have a good, smiley grin on their face,” the governor told KSL. “If you care about education funding, I expect after the rollout of the budget tomorrow, they’ll have even a wider grin.”