Concerned about the economy, Utah lawmakers begin budgeting for rainy days

Lawmakers committed $135 million to increase funding for public education, millions of which were not. Gov. Spencer Cox wanted to give public teachers a pay boost.

(Rachel Rydalch | The Salt Lake Tribune) House Speaker Brad Wilson R-Kaysville addresses the House of Representatives as the start of the 2022 legislative session begins Tuesday, January 18, 2022, at the Utah Capitol in Salt Lake City. The state Executive Appropriations Committee began determining its fiscal 2024 budget priorities on December 13, 2022.

Legislative leaders plan more than $400 million in tax cuts and another $1.2 billion in infrastructure projects, including water development and transportation, next year in Utah.

On Tuesday afternoon, the legislature’s top budget committee set some spending priorities for the legislature in the coming year. The state has nearly $2 billion in revenue from this fiscal year and more than $2 billion in additional revenue for fiscal 2024, which begins next July.

The legislature has a legal obligation to bear the cost of any enrollment growth and inflation-related costs in Utah public schools. The Executive Appropriations Committee provided the legal minimum of $135 million, an increase of 3.4% in Utah public school appropriations per student.

That provision is $65 million less than Gov. Spencer Cox proposed in his 2024 budget, which would increase funding per student by 5%.

The spending priorities also miss Cox’s proposed $200 million spending to give teachers a $6,000 pay increase.

Utah Senate President Stuart Adams, R-Layton, was noncommittal when asked if Cox’s proposals for spending on education were still on the table.

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In addition, the committee voted to put $193 million into a government rainy-day education fund to draw on in an economic downturn.

“We have not set aside any money, but we are committed to funding education in a meaningful way,” Adams said.

The extra money for Utah’s budget comes from higher-than-expected income tax receipts. Under the Utah Constitution, this money can only fund public or higher education and some social programs. Any income tax reduction is paid from funds that could otherwise go to the schools. Utah’s per-student funding is consistently at or near the low end of all 50 states.

These tax cuts could take any number of forms over the next year, including a cut in the income tax rate, property tax relief, or a reduction in taxes on Social Security benefits.

During his launch last week, Cox proposed a one-time rebate check for Utah taxpayers. The $400 million for that proposal was not included in the budget reserves approved Tuesday.

“I think one thing is for sure, there will be a tax cut. We just have to decide the scale and shape,” said Utah House Speaker Brad Wilson, R-Kaysville.

In addition to the zeal to cut taxes, lawmakers took steps to protect Utah against an economic downturn by setting aside $800 million in one-time cash funds to pay off Utah’s debt and an additional $600 million to to cover rising inflation in the budget for the current year. Another $900 million in so-called “high-risk” revenue, which is most likely to evaporate when the economy turns sour, is going unspent.

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Some minor budget items were included in Tuesday’s decisions. The committee approved $25 million to replace the space on the north side of the Capitol.

Some of the other budget adjustments approved by the committee Tuesday include $350,000 for the Utah Shakespeare Festival, $45,000 for the Larry H. Miller Summer Games, $200,000 for the Days of 47 Rodeo and $100,000 for the America’s Freedom Festival in Provo.

Tuesday’s decisions took a large chunk of available revenue for lawmakers to spend on other things when the 2023 legislative session begins in January. It is estimated that lawmakers will have about $800 million in one-time funds and $422 million in ongoing funds at their disposal.

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