State's surplus just gets bigger
Having even more money no doubt will make it easier for lawmakers to solve a number of political problems in the two weeks left in the 2007 general session — especially how much of a tax cut to give Utahns.
Capitol Hill sources said Monday that new revenue estimates for this year and next show that the state will have an extra $149 million. That's on top of $1.6 billion that lawmakers have between one-time surpluses this year and estimated tax revenue growth next year.
There are already questions, though, about whether the new money should spark larger tax cuts because it is coming from two particularly volatile sources, investment income and corporate income taxes.
Just more than $77 million of the new revenue is from ongoing sources. The rest, just more than $72 million, is coming from the current budget year, what lawmakers call one-time money. That matters because only ongoing revenue can be used for permanent tax cuts.
"We're pleased that the economy is still vibrant and going very strong," said John Nixon, Gov. Jon Huntsman Jr.'s budget director. "But we need to be cautious because in the event of a downturn, these two sources would be the first to go."
But the governor and legislative leaders have said they may be willing to compromise at $210 million in tax cuts. That proposal has yet to be debated in either the House or the Senate GOP caucuses, however.
Majority Republicans have been waiting for the new revenue estimates, which are put together at this time every year by both the governor's and the Legislature's budget experts. Minority Democrats offered their own spending plan Monday.
Last week, Senate President John Valentine, R-Orem, said he hoped for higher revenue estimates this week. "It would help us close the gap," he said, between where senators want to give tax cuts and some ongoing state budget needs in education and human services.
Several House GOP leaders complained Monday, before hearing the new revenue estimates, that with just over two weeks to go before the Feb. 28 midnight adjournment, there hasn't been enough progress toward a compromise on spending the huge surpluses.
"We've been studying tax reform for two years, but we still don't have an agreement with the Senate," said one House leader.
Senators and Huntsman like SB223, a bill that would trim around $102 million from the new flat-rate income tax.
But House Republicans have openly, and harshly, criticized the bill, saying it doesn't do enough for "the guy busting his butt to make $80,000 a year, pay a high mortgage and make charitable contributions; his wife stays at home to take care of their two young kids" — as one House leader put it Monday.
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