Bob Bernick, Utah Policy Contributing Editor
Utah State Government could end the current fiscal year in two weeks with nearly a $200 million surplus.
Yes, the good times continue to roll for state officials, a committee of legislative leaders was told Tuesday.
Legislative chief economist Andrea Wilko told the Executive Appropriations Committee that fiscal 2012-2013, which ends June 30, could see surpluses of between $135 million and $195 million in the state’s two main funds – the General Fund and the Education Fund.
In addition, the state’s Transportation Fund could see either a $5 million deficit, or a $5 million surplus.
Take the top ends of both those estimates, and it’s $200 million extra above the “targets” the Legislative Fiscal Analysts Office set in May.
But while that is all good news, special interests that want more money for public education, colleges or human services, shouldn’t start lining up.
By law if there is any surplus in the general and education funds, half must go into the state’s Rainy Day Fund – a surplus account that can build into hundreds of millions of dollars and is used when state revenues fall below budgets.
In addition, June-end surpluses are what is called “one-time money.” It is a cash surplus. And lawmakers are loath to put that money into ongoing programs, like public education.
Such one-time funds are usually divided up in the following general session for projects like buildings, roads, maintenance, schoolbooks or other one-time purchases.
While legislators could return surpluses to taxpayers via a check-back program, that has only been done once in the last 40 years. That’s because broken out to, say, all state personal income taxpayers the checks would be small, barely worth the cost of printing and distribution.
While many of the states’ economies are still struggling to make up for job and revenues losses seen in the Great Recession of a few years ago, Utah’s economy is going strong.
Wilko said Utah has already made up for job losses and next year hopes to create 42,000 new jobs.
The state economy should grow by 3.4 percent in calendar year 2013 and 3.6 percent in 2014, she said.
The strongest tax growth is coming in personal income taxes. That’s partly because wealthier Utahns sold off capital gains the end of 2012 to avoid paying the new, higher federal income rate on income over $450,000.
Even though oil and natural gas development is booming in the state, because of lower production and lower prices the severance tax has gone down nearly 20 percent, she noted.
The severance tax is based on the price of oil and gas and its production levels.
Wages are growing in Utah, also, up 6 percent in 2013 and up 6.7 percent next year.
The big “if” in all of this, of course, is federal spending.
Sequestration hurt in some areas of Utah’s economy. But the real hits could still be coming, as cuts are made to defense (which could hurt Hill Air Force Base) and in various state programs that count on federal money.
About a third of Utah’s $13 billion state budget now comes from federal sources.
Utah has been praised for a legislative program forcing state agencies to plan for 5 percent cutbacks
in federal spending and 15 percent federal cutbacks, so while it would certainly be painful to lose federal dollars, state officials should be prepared in deciding what programs would be trimmed back and how to do it.