Utah lawmakers have $1.5 billion in extra money, new revenue projections show

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SALT LAKE CITY — Utah lawmakers have even more money on hand to spend this year, according to new revenue estimates announced Friday.

One-time revenue is up by $315 million and ongoing money is up by $112 million, meaning there's now over $1.5 billion for lawmakers to appropriate during the final two weeks of the legislative session. That includes about $1.3 billion one-time and $205 million ongoing, according to the new estimates released by Gov. Spencer Cox's office, the House and Senate on Friday.

"All and all, it's a very good year for us," House Budget Chairman Brad Last, R-Hurricane, told his fellow lawmakers on the House floor.

But Last noted most of that money is a one-time boost.

"The challenge we will have is trying to make do with the ongoing money that we have," he said.

House Speaker Brad Wilson, R-Kaysville, said the new revenue estimates put Utah in an even better than expected position despite the pandemic — a position for which he said "a lot of states would be really happy to trade spots with us."

"It's important to pause at times like this and be grateful that you're in Utah," Wilson said, adding that legislators' past efforts "to prepare us for these difficult times ... are shining right now."

But lawmakers are facing a horde of requests that far outweigh available money, even with the more generous revenue estimates. Currently, lawmakers' requests total nearly $2 billion for one-time projects and $400 million for ongoing proposals. Infrastructure requests alone total more than a staggering $1 billion, with legislative leaders considering bonding to help pay for some big-ticket items.

"We probably have less than half than what we're being asked for," Senate Budget Chairman Jerry Stevenson, R-Layton, told reporters Friday.

"What it means for the budget is we really have a lot of work cut out for us in the next two weeks," Stevenson said.

New revenue projections for the general fund, which are generated from sales tax, are boosted $32 million for ongoing revenue and $80 million for one-time revenue, according to state officials. In the education fund revenue projections, which are generated primarily from income tax and dedicated to education and people with disabilities, $80 million is newly available for ongoing needs and $235 million for one-time revenue.

Wilson said even though some might think more money would make the process easier for lawmakers, "it actually makes it harder" because it heightens expectations and lawmakers end up having to say no to more people.

"This is my ninth year in House leadership (dealing with the budget)," Wilson said. "And without a doubt, I have not seen a year that's going to be as tricky as this one."

So legislative leaders aren't making big promises — though they have committed to some sort of tax relief this year while indicating an across-the-board income tax cut isn't likely.

Rather, lawmakers have been honing in on three bills with price tags totaling over $100 million — more than the $80 million lawmakers have set aside this year for tax relief. Those bills focus on targeted tax cuts for senior citizens on Social Security, retired veterans and families with dependents who saw a tax increase with federal tax reform several years ago.

The worst thing we could do is take one-time money, give a tax cut with it, and then have to come back next year and say, 'That money doesn't exist anymore, we can't give you that tax cut anymore, and we have to raise your taxes.'

–Brad Wilson, Utah House Speaker

As of Friday, the new revenue estimates hadn't changed those plans, Wilson said, though he did say lawmakers will be "talking next week a little more about tax relief."

Asked about the potential for a larger tax cut package, Wilson pointed to the still more limited stash of ongoing money and said it wouldn't be fiscally responsible to fund a tax relief with one-time money.

"The worst thing we could do is take one-time money, give a tax cut with it, and then have to come back next year and say, 'That money doesn't exist anymore, we can't give you that tax cut anymore, and we have to raise your taxes,'" Wilson said. "That would be bad news."

One big item lawmakers might see as a necessity for ongoing money is about $55 million to fill a gap for Medicaid expansion. Wilson said the voter-approved Medicaid expansion "seems to not be paying for itself" with costs outpacing revenues, so he said lawmakers may have to use about 25% of ongoing revenue toward that.

"That would be a choice we can make," he said. "It's probably a very prudent financial choice to make a significant dent in that."

Infrastructure is also on legislative leaders' radar as a big priority — a budget item that is more easily funded with one-time money. Much of that money could go to transportation and recreation projects, perhaps $350 million for double-tracking FrontRunner or maybe $50 million toward a gondola up Little Cottonwood Canyon.

"If anyone tries to travel around in rural Utah or along the Wasatch Front, you realize there is a lot of infrastructure investment that needs to be made," Wilson said. "Hopefully a large portion of this one-time money can be invested in infrastructure to help (increase Utahns') quality of life."

Lawmakers already made what they called "historic" early commitments toward education when they included a 6% weighted-pupil unit increase and $121 million for $1,500 teacher bonuses in the base budgets passed in the early days of the 2021 session. Those boosts to education totaled about $400 million.

Also included in those base budgets was a 3% raise to all state employees. The raise was cut last year amid fears of economic impacts from the COVID-19 pandemic.

While certain industries continue to struggle, including the convention and hotel industry, and restaurants, Last said "overall the state is doing extremely well" and has bounced back from an unprecedented and rapid recession from the early months of COVID-19.

Cox, in a gathering with media later Friday, said he was cautiously optimistic about Utah's economic position.

"There could still be some headwinds coming," the governor warned, "but we feel really good about where Utah is right now."

Cox also said he understands if not all items in his budget proposal get funded, noting that some of his ideas maybe were "a little half-baked" because he faced a "truncated" time to put together his first budget proposal.

"You know what, there are 104 (legislators), and some of them have better ideas than I do," Cox said. "So there are definitely going to be some things in my budget that don't get through, there will be some that we fight for and fight with and we will get through, but we'll judge that the last night of the session when that final budget bill is done."

Contributing: Hannah Petersen, Deseret News