In the $10 billion budget proposal, the governor is expected to lead with a call for an increased state commitment to public education, including an all-day kindergarten initiative that he failed to get through the Legislature last year.

Huntsman and his allies in the Legislature also hope to expand the state's new dual-track personal income tax by enticing more Utahns to take the flat tax option that is, so far, little more than a token reform.

The governor's proposal will count on Utah's robust economy to again deliver an excess of tax revenues. So far, the forecast is bright. The state ended the 2006 fiscal year with $380 million in tax collections beyond what was budgeted. And observers are predicting the state will double that figure and more with excess tax revenue in the current fiscal year.

Because so-called budget "surpluses" could turn into wrenching deficits with an economic downturn, legislative leaders fear the spending "intoxication" that comes with excess cash.

Last year, the Legislature began with a record $1 billion surplus. But legislators soon learned that budgeting with a mountain of extra money is anything but painless. Rising expectations set in with a vengeance. Now, lawmakers complain that despite increases in nearly every program, a $70 million reduction in the state grocery tax and a $78 million income tax cut, no one seems satisfied.

"I could make a case that the larger the surplus, the uglier budgeting will be," says Sen. Curt Bramble, a former chairman of the Revenue and Taxation Committee, now incoming Senate majority leader.

Conservative Caucus chairman Rep. Greg Hughes, R-Draper, says his group is counting on spending caps that were passed a few years ago to rein in excessive government growth. But that protection is questionable because the most significant state spending areas - public education and highways - are exempt from the caps. Additionally, crucial needs in Corrections, higher education, and health and human service programs could drive lawmakers to try to remove or modify the spending limits.

But Bramble and other leaders say the political cost in the GOP-controlled body makes that unlikely.

"The caps were born in the aftermath of a terrible recession and a revenue shortfall," Hughes says. In a series of special sessions in the early 2000s, desperate lawmakers diverted highway money and drained emergency reserve accounts to meet education needs, he said. "This is the first year the spending caps are going to apply - we will resist any attempt to change them."

The governor's office would not discuss details of his spending blueprint, but Huntsman's chief economist Robert Spendlove recently said the budget staff has been working on ways to expand the flat tax passed earlier this year as part of an innovative dual-track income tax. The 5.35 percent flat tax benefits only about 5 percent of mostly high-income filers, but its supporters would like to extend it to a majority of Utahns.

Bramble, one of the architects of the dual-track tax, said incentives being considered include household and marriage credits and a lower flat-tax rate. "You target what you are willing to absorb in the budget, then you can set the mechanics to accomplish that," Bramble said of further tax reform.

But the real heat of the upcoming session may be generated by Huntsman's education goals, which he has promised will be "the heart and soul of our budget."

Educators fear conservatives, who control the Hill, have other things in mind for much of the surplus. "There are legislators who would rather give the surplus back [in tax cuts] than invest it in public education," says Utah Education Association director of research Courtney White. "That will be the battle."

The clash may run deeper as conservatives vow that any additional education spending must come with concessions to the so-called school choice and voucher movement. "It's going to be a very robust discussion about education appropriations," Bramble says.

"The governor thinks this is going to be a great year for education - with caps or not," says Rep. Brad King, D-Price. "The question is, does the legislative leadership have the same intent?"

gwarchol@sltrib.com

* 1. Governor proposes a budget today.

* 2. The Legislature's main budget committee meets Wednesday to approve a bare-bones spending plan.

* 3. Lawmakers meet Jan. 15 to begin writing the budget.

* 4. The Legislature must approve a budget by midnight Feb. 28, the final day of the session.

* 5. The governor signs the budget into law - or vetoes it.

* 6. If vetoed, the governor calls a special session to produce an acceptable budget.