Legislature Gears up for Tough Budget Season

Legislature Gears up for Tough Budget Season

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SALT LAKE CITY (AP) -- The Utah Legislature faces its toughest budget session since the recession of the mid-1980s when it reconvenes on Monday, the governor's office says.

State revenue is down $420 million from projections of a year ago, but that may not be the worst of it. Lawmakers already have raided many of the state's cash and restricted accounts, grabbing the money to shore up the budget during hard times.

To keep the budget balanced, they even tapped the beer tax, which was supposed to be set aside for fighting drunken driving.

And earlier this month, the state upset some conservatives when it eliminated the job of porn czar from the attorney general's office.

With the surplus accounts almost bare, lawmakers will be forced to make some hard choices while trying to find extra money to keep up with the growth in public schools and Medicaid.

"There's not much left," state Treasurer Edward Alter said of cash accounts under his watch:

--Lawmakers tapped the $126 million rainy day fund, leaving $20 million that "isn't going to be enough to fill the next hole," he said.

--They raided all but a few million of the $45.5 million that accumulated in the tobacco settlement fund, which is only slowly recovering. "It made me absolutely livid when they took that and spent it willy-nilly. It was supposed to be a permanent fund," Alter said.

--Lawmakers took cash from road and building funds, financing projects including a pair of Capitol wings with borrowed money instead. They also took some money from a municipal water development fund, even as they protest Gov. Mike Leavitt's plan to take more.

The state's long-term debt has climbed to $1.4 billion from $400 million five years ago, Alter said, making for the highest debt load per capita among states sharing a Triple-A bond rating.

"Some day there's going to be nothing left to eat, and they'll have to live within their means, " Alter said. "You can't live forever on one-time money. You need structural balance."

House budget leader Ron Bigelow, R-West Valley City, conceded the point, saying building funds have been tapped and legislators don't want to take any more money from the municipal water projects.

The next reliable tax revenue forecasts are due out Feb. 15, when lawmakers will go to work in earnest on the budget. They'll adopt a spending plan by March for the fiscal year starting July 1.

Lawmakers most recently cut the budget by $66 million in December, but found some spare cash to restore $38 million of that funding. The full effect of $66 million in cuts was delayed for the next budget year.

"At least we're not in a hole," said former House budget leader Jeff Alexander, R-Lindon, now majority whip.

That's the good news.

The bad?

"I don't see any large sums of money that we're just going to find all of a sudden," he said.

The Legislature will have to make cuts somewhere just to meet its most basic obligations, protect public education and keep overall spending in line, Bigelow said.

Public schools are "growing all the time," Utah Education Association President Pat Rusk said. "So to keep funding at the same level is a cut. We'll start the next budget year with a lower funding base to begin with."

To meet that need, Bigelow said state workers probably won't get a raise, the state won't add building projects and discretionary Medicaid spending will be cut.

Medicaid is the federal-state health insurance program for the working poor and the fastest rising portion of state budgets. When the economy is down, demands on Medicaid rise.

To make matters worse, Bigelow said the Legislature may be forced to bail out the state retirement fund. The fund, invested broadly in the market, has suffered along with the economy.

"We just have to survive for the next year or two until the economy turns around," Bigelow said.

Leavitt's $7.45 billion budget plan calls for delaying road projects and raiding the municipal water fund. Legislators don't want to take either step, Bigelow said.

House and Senate leaders called last week for Leavitt to look deeper inside his agencies for cuts, but the agencies have cut 500 jobs over the past 18 months, leaving the equivalent of about 20,000 full-time employees, Leavitt budget director Lynne Ward said.

"The easy options are gone," Ward said. "We cleaned out a lot of restricted accounts. This will be the most challenging problem the state has faced since the mid-1980s."

Legislators may have an eye on the tobacco fund, which is supposed to rake in nearly $1 billion over 25 years. But that never was certain and projections are being eroded as the major cigarette makers lose market share, sales and profits -- all factors that lower payments to states.

The tobacco fund should recover to $15 million by April, said Alter, who wasn't eager to let lawmakers know that.

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

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