House votes to spend now, save later
The Utah House decided Monday not to start saving for the future now Â and instead wait until it absolutely must do so in 2017, as ordered by voters last year in a new constitutional amendment.
It voted 35-38 against HB63 by Rep. Jim Nielson, R-Bountiful, to start right away setting aside smaller amounts of severance tax on mining, oil and gas than will be required when the amendment takes effect in 2017. He said such a phase-in would help find cuts and adjust spending over time and avoid huge cuts all at once later.
"We can choose to face our own version of a fiscal cliff. We can kick the can down the road, if you will, to deal with that later and not today. Or we can face it and work our way up to it," Nielson said.
The House chose to kick the can down the road.
When Constitutional Amendment A takes effect, it will require putting into trust funds 25 percent of the first $50 million of annual severance tax; 50 percent of the next $50 million; and 75 percent of all revenue beyond that.
Nielson said that if that were in effect now for the 2014 budget that lawmakers are preparing, it would require setting aside $33 million. His phase-in bill had formulas that instead would set aside $8.25 million for 2014, $16.5 million in 2015 and $24.75 million in 2016.
"This is an orderly transition," Nielson said, adding lawmakers told voters they intended to have such a transition period when they sent them the amendment for consideration.
Nielson wrote that amendment last year because some other western states have created huge trust funds by saving their severance taxes, which generate millions of dollars in interest each year for use in schools. He said Utah has a relatively tiny trust fund because it uses most of its severance tax every year instead of saving it.
Rep. Joel Briscoe, D-Salt Lake City, said the problem in starting the saving this year is that budgets are tight Â and the state faces uncertainty over how much federal funding it may have because of arguments in Congress. He said all lawmakers are looking "for $500,000 here or another $1 million there" for high priorities.
Rep. Eric Hutchings, R-Kearns, who is a personal finance adviser, unsuccessfully urged lawmakers to start saving now. "There is never the perfect time when you have too much money," he said. "There will always be unfunded needs." But he said in personal terms, it is like asking, "How long do you wait to put aside something for your retirement?"