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Walker Stresses Unexpected Tax Revenues in Budget Pitch

Walker Stresses Unexpected Tax Revenues in Budget Pitch

Posted - Dec. 19, 2003 at 9:07 a.m.



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SALT LAKE CITY (AP) -- Gov. Olene Walker says legislators could have millions of dollars more to spend than they have let on -- perhaps $60 million or more above the budget projections announced this week.

Both the governor's office and legislative fiscal analysts released budget projections this week, and both budgets identified a $38 million budget deficit in the current budget year, which ends June 30.

However, the Utah Tax Commission released a report on Monday showing that tax collections were $23 million higher than expected, meaning the state, barring another recession, is on its way to a healthy budget surplus, not a deficit.

Walker, who first announced the higher-than-expected tax collections publicly at a news conference on Monday, said the Tax Commission report, called a TC-23 report, is "a ray of sunshine," and there is optimism the state's rebound from the recession will hold throughout the Christmas season.

If that happens, the state could be left with a big pot of cash to balance out the current budget, and there might be leftovers for the cash-strapped 2004-05 budget year.

Walker added that her budget was crafted without the benefit of the latest data from the TC-23 report, which logged tax collections through the first five months of the fiscal year. The projected deficit, she said, was based on early information that might be outdated given the state's current tax collections.

Doug Macdonald, chief economist for the Tax Commission, said he is not certain how the fiscal analysts with the governor and Legislature came up with a $38 million deficit number. But he is certain tax collections are at least $23 million above projections through the end of November.

Lawmakers will receive an economic report in late February in the days just prior to adjournment, and those revenue projections will provide the basis for next year's budget.

"I hope the Legislature has the luxury of seeing higher revenue projections," Walker said.

The strategy of not revealing all the tax revenue that is available is a time-honored tradition on Capitol Hill. It allows lawmakers to hold budget hearings without any promise of new revenues, and that cuts down on the clamoring by special interests for more and more money. And when money comes available late in the session, the decisions on how and where it will be spent usually fall to the Executive Appropriations Committee, consisting primarily of leadership.

Until that next round of revenue projections in late February, Walker and the Legislature will continue to plan on a lean budget year. The Legislature is even more cautious than the governor, predicting the amount of new revenue growth next year will be about $22 million less than the $104 million in new revenue that Walker's analysts are predicting.

"When we come out of a recession, we tend to underestimate revenues," Walker said.

Legislators are at odds with Walker over many parts of her budget, particularly in the area of shifting funds out of highway projects and water development to better fund education.

Walker said Thursday that legislative opposition "isn't a blow," but rather part of the budgeting process.

As a former lawmaker herself, she said she understands it is their job to tear the budget apart and perhaps even find a better way to fund the state's obligations and plan for the problems of the next 10 years.

"If they can come up with a better solution, I say fine," she said.

She also defended her plans to shift the money to education, noting the state is facing a crisis in education funding that is going to get worse over the next decade. And she disputed lawmakers' claim that her budget would leave the state unable to make its bond payments in 2006.

"I can guarantee you we can meet our bonding obligation," she said.

That could mean deferring highway projects, she said. It might also mean depending on a much greater economic rebound with enhanced tax collections, and it could mean a gas tax increase -- something, she said, the state might have to do no matter what happens to the economy.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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