Big surplus may fuel tax cut
State government just keeps on raking in the money as Utah's economy continues churning.
And pressures to spend a bunch of that money and give tax cuts with a bunch of it also has been increasing as the Tax Commission's cash register rings on.
Through only the first four months of the fiscal year, which started July 1, the state has $84.19 million extra in its two main funds — the general and uniform school funds. It has an additional $6.95 million in the transportation fund.
All told, that's $91.14 million in unincumbered tax revenues, up more than $30 million in just one month. If this keeps up over the next nine months, the state will have around $275 million extra.
The growth in jobs, construction and "new revenue data indicate Utah is in a major economic expansion," said Doug Macdonald, chief economist for the Utah State Tax Commission, which compiles the monthly revenue updates.
Does the growing surplus ensure some kind of tax cut next year?
"I believe it does," said House Speaker Greg Curtis, R-Sandy. "When the economy is growing at such an unexpected rate, and government revenues are substantially more than anticipated, we must look at returning them."
Huntsman spokesman Mike Mower said, "Tax reform may result in some lower sales tax on food and a lower income tax. But it is still early in fiscal year 2006 (to assume huge revenue surpluses this year). Still, we are pleased with the direction and trend of Utah's economy as indicated by these numbers."
Curtis has proposed removing the state and local sales tax from food and raising the sales tax rates slightly on non-food items to make up most of the lost revenue. His plan would give about a $37 million sales tax cut overall.
Valentine wants to remove the food tax completely and cut state programs by $166 million (the state's portion of the tax) as need be. Curtis and legislative Democrats have said there are too many needs to just take all of the tax off at one time.
But Monday, Curtis said if the revenues keep coming in like this "and we end up with around $300 million in surplus, (the Valentine plan) is doable."
You can be the first to comment on this story.