Panning for gold in state revenues

Revenue Surplus Sets Stage For Budget Talks

davidwicaiBlog, Legislature

State leaders have agreed on the budget numbers that will dictate appropriations during the upcoming legislative session.

This year, the revenue estimates show a $642 million total surplus. More specifically, the state has a $442 million surplus in ongoing funding and a $200 million surplus in one-time funding.

Gov. Gary Herbert and legislative leaders said in a statement the surplus shows the state’s economy remains healthy.

“Our continuing efforts to find efficiencies in state government and the success of our economy have helped produce another year of strong revenues,” Herbert said.

Despite the general optimism, the numbers don’t tell a completely positive story. Nearly all of the combined surplus is from income taxes, which go directly to education. The sales tax revenue that goes into the general fund, in fact, actually has a combined deficit of $9 million.

Compared to last year’s surplus at this time of $1.3 million, the surplus has actually dropped by more than half. So even if the economy remains strong, warning signs exisit.

What does this mean for the department during the next legislative session?

It could impact our budget requests. The ongoing general fund surplus is $42 million, and all of the department requests will come from that pot. That includes $6 million for arts and museums grants.

For comparison, legislators had $167 million in the ongoing surplus last year. That’s nearly four times more than they have this year.

The Business, Economic Development, and Labor Appropriations Subcommittee, however, only had $18 million in ongoing requests last year, including the $6 million for grants. Of those requests, $2.5 million or so was shifted to one-time funding, with the intent that those organizations would start seeking grants from Arts & Museums instead of appropriations from legislators.

Additionally, legislative leaders seem generally supportive of the increased grants funding because it would eliminate many of the individual requests from cultural organizations. So the limited ongoing funds may actually make the argument for increased grants funding more compelling.

Can these numbers change?

Absolutely. These projections get updated monthly and the surplus will likely continue to grow, potentially freeing up additional money at the end of the session. But for the purposes of putting together budget proposals, the current numbers will be used by the governor’s office and legislators.

Another factor specific for this year: tax reform. The proposed $160 million tax cut would primarily reduce income taxes and could reduce the overall surplus projections. The impact on the general fund would likely be minimal.