Amid another strong economic year — but also record inflation — the state’s final budget estimates show the Utah Legislature once again has plenty of fresh cash to spend.
As in over $2 billion more.
After new revenue estimates added an additional $432 million in one-time revenue and $384 million in ongoing funds over what was previously forecast, the Utah Legislature has approximately $1.46 billion available this year. dollars in one-time money and $570 million in new funds to be spent.
“I know that sounds like a lot of money. That’s a lot of money,” House Budget Chairman Brad Last, R-Hurricane, told lawmakers in the House last week when the final budget projections were released. But he warned that “it’s not enough” to meet budget requests that exceed $2.4 billion in one-time requests and more than $1 billion in ongoing requests.
As lawmakers worked to prioritize those demands — saying they planned to be careful with spending, concerned about the impact of inflation on the economy — Utahns weighed in on how they would like to see the money spent.
As they have in recent years, most Utahans want this year’s extra revenue to be spent on education. Tax cuts are the second priority.
That’s according to a new Deseret News/Hinckley Institute of Politics poll, which asked Utahns how they would prefer the Legislature to spend this year’s budget surplus. The largest share of residents – 43% – said they would like the money to go to increasing education spending, while 25% want it to fund tax cuts.
A smaller number, 17%, said they would like the money to fund transport and road infrastructure projects, while 6% said it should be used to bolster the Rainy Day Fund of Utah. Nine percent said they didn’t know.
Dan Jones & Associates conducted the poll for the Deseret News and the Hinckley Institute of Politics among 808 registered voters in Utah from Feb. 7-17. It has a margin of error of plus or minus 3.45 percentage points.
The poll results come as lawmakers enter the final week of the 2022 legislative session and put the final touches on the budget. On Friday, the Appropriations Executive Committee is expected to release a final appropriations list and establish the budget.
What are the priorities of legislators?
Senate Budget Chairman Jerry Stevenson, R-Layton, told reporters Thursday to expect big victories for education in the budget.
“Education has been very well taken care of,” Stevenson said, noting that public and higher education will be “very well funded.” He said he expects to see a significant increase in the weighted student unit — the public school funding formula — and dollars for a variety of programs.
But he also added that there will likely be a good amount of money hidden away in the savings.
“This economy is a little scary,” he said, noting that economists are wary of the impact of federal stimulus money and inflation on the state budget.
“I hope our constituents will be very happy with what we have done with education,” he said, “but this is not the year to spend it all because of insecurity.”
House Speaker Brad Wilson, R-Kaysville, told the Deseret News in an interview Thursday that lawmakers will make “additional and significant investments” in public and higher education this year. That’s on top of big infrastructure spending, especially transportation investments and funding to help relieve overcrowded state parks.
“I think both education systems are going to do very well,” Wilson said, although he had the same warnings as Stevenson. “It’s still tricky. We recognize that there is high inflation at this time, and so we try to take care of our teachers and other educators as well as state employees and balance all interests across the state.
Jason Perry, director of the Hinckley Institute of Politics at the University of Utah, said “everything indicates” so far this session that “the intentions of the legislature are aligned with the desires of Utah voters. I expect a lot of that money to go into education.
It is important to note that much of the state money this year has already been set aside for priorities, especially ongoing funds.
In December, before the legislative session even began, the Executive Appropriations Committee set aside approximately $354 million (including $19 million in one-time funds) for public education enrollment growth, inflation and d other public education needs.
As for the tax cuts? Lawmakers have already earmarked $193 million for tax cuts, including $163 million for a comprehensive income tax rate cut for all Utahans, lowering the tax rate on Utah’s income from 4.95% to 4.85%. Lawmakers also approved a $15 million non-refundable income tax credit for low-income Utahns and a $15 million expansion of the state Social Security tax credit.
Senate Speaker Stuart Adams, R-Layton, said this year’s budget will be characterized by “tax cuts and record, if not near-record, spending on education.”
“When you can cut taxes and do big funding at the same time, that means we’re doing something right,” Adams said, adding that the budget will also include a big increase in spending for state employees and infrastructure.
“The budget won’t be perfect, there’s no such thing,” Adams said. “But it’s going to be a damn good budget.”
What about the debate over constitutional education spending?
There is a catch that complicates the state’s relationship with education spending.
Under the Utah Constitution, the legislature is required to spend income tax money on education — but legislative leaders are proposing a future constitutional amendment to effectively eliminate that earmarking. They say a change is needed to give lawmakers more budget flexibility at a time when sales tax revenues are not growing at the same rate as income tax. It’s a problem lawmakers have been voicing for years.
According to tax analysts in the Legislative and Governor’s Office, about 70% of the state’s newly projected permanent disposable income comes from the education fund (supplied by income taxes) and 30% from the general fund (supplied by sales tax).
It would be up to the voters to decide whether or not to change the state constitution. In order to put the issue on the ballot, a joint resolution would have to pass both legislative bodies by a two-thirds majority vote.
Such a resolution has yet to surface in the 2022 session. On Thursday, lawmakers involved in those discussions, House Speaker and Sen. Ann Millner, R-Ogden, said there was only one left. week and that they were unlikely to make it through this year. It’s a conversation that will likely continue beyond this year’s session and into next year, they said.
“When we do this, we want it to be good,” Millner told reporters. “So we’ll work on that after the session… In my mind, I think we kind of put that on hold.”
Adams said the state’s structural funding imbalance “is a problem, and whether it’s resolved this session or the next, we need to bring awareness to those who don’t live, eat, drink, don’t sleep on this budget that this is a significant issue in the state. We’re not going to give up on working on it.”
Wilson said “these big challenges usually take time, and we just wanted to make sure we measured twice on this one, and we didn’t feel like we had time to do that.”
So this year, nothing will change lawmakers’ constitutional constraints on income tax revenue, which means lawmakers will be required to spend most of the surplus on education anyway.
In total, lawmakers have about $617 million in one-time funds and $429 million in permanent funds in the general fund, and an additional $1.68 billion in one-time funds and $1.07 billion ongoing in the fund. for education to spend, according to tax analysts.
The debate over Utah’s constitutional requirements to spend income tax on education does not go far, however. The challenge for lawmakers moving forward will be to frame the constitutional amendment as a solution to correct the state’s structural funding imbalance while sending a message to Utahns they always put education first. .
“Their success will be tied to their ability to convince the public that education is still the Legislature’s top priority as it brings about change,” Perry said. “To the extent that they can ensure that the balance is struck and that those assurances are received and believed, that will determine how successful they are in bringing about change.”