Shrinking revenues mean lawmakers must downsize spending plans

This is an archived article that was published on sltrib.com in 2008, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

The state Legislature will have about $340 million less to work with this year than leaders previously thought. Now they must decide what not to fund or which hoped-for tax cut to junk.

New revenue estimates show the slowing national economy has caught up with Utah.

"Expectations have been so high, there will be some disappointment, but there's still plenty of money," said Sen. Lyle Hillyard, Senate chairman of the executive appropriations committee.

But legislative leaders are hedging about what they'll cut, be it programs or raises for state employees or tax cuts.

"Basically nothing's off the table," said House Speaker Greg Curtis through a spokeswoman. "We will still have to look at all our options and decide accordingly. Everything is still open for discussion and I won't rule anything out at this point."

Senate President John Valentine agreed, saying he will look at all the items in the budget before making a decision.

Senate Majority Whip Dan Eastman said he wasn't "as optimistic as everyone."

"I am concerned going forward as I look at the downturn in the construction industry; the auto business is way off compared to last year, and this consumer confidence issue is a big problem," he said. "We are in a downturn and it depends on this political season how we go."

Before the session began, leaders set aside $116 million in anticipation of economic slowing, but that was not large enough to offset the declining revenue estimates. However, there is still $613 million to spend by the March 5 close of the lawmaking session.

Earlier in the session, lawmakers passed basic budget bills making up more than $10 billion of the $11 billion-plus budget.

Besides the economic downturn, three other factors helped drive the new revenue estimates down, Hillyard said.

The federal economic stimulus package caused a $65 million drop in revenues; the Utah Tax Commission will delay some money for a year due to a tax withholding table change, and the federal interest rate cut also hurt revenues.

Rep. Ron Bigelow, House chairman of the executive appropriations committee, said that not all requests will be funded this year.

That's true most years, but this year well more than half the $1.1 billion in additional funding requests will go begging.

"Funding for the lower priorities will not be available, but many of the big needs within the state of Utah [will be funded]," Bigelow said.

Last week, Bigelow said there "was no question" that decreased revenues would likely erode the Legislature's ability to provide a tax cut. But Monday neither he nor Hillyard would say which programs will be funded or if a tax cut is still possible.

Senate Minority Leader Mike Dmitrich, though, had no problem voicing his opinion on the matter. He said he "hopes that these numbers do away with tax relief."

"This is not the time for tax cuts," said the Price Democrat. "We have so many needs in social services and human services that need funding."

smcfarland@sltrib.com

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* CATHY McKITRICK and ROBERT GEHRKE contributed to this article.

* in millions