"We're still probably at least $5,000 [per teacher] short of where I think we need to be to meet regional expectations," Huntsman said at his monthly news conference on Wednesday on public TV station KUED. "That's going to be a No. 1 priority for me."

Despite significant raises last year, Utah's teachers still are leaving. The state is short filling 400 teaching slots going into the 2007 school year, Huntsman said, twice as many as last year.

"I would argue it's because we are still discounting our teachers in the form of compensation. And until we hit the regional average, I think we're going to have an outflow of people who are studying to become teachers."

State economists estimated Tuesday that the state could see a surplus of upward of $160 million. Despite a cooling U.S. economy, Utah is still running hot, driven by a strong construction market and growth in population and employment. That bustling economy is pushing tax revenues above the state's budgeted expenses.

Huntsman said with any extra money, his second priority would be getting more Utahns health insurance.

"I would love to see our state with a mandated policy for at least catastrophic coverage, and that means the insurance companies and the providers need to continue meeting, getting together on how we can come up with really affordable policies," he said.

After that the governor would take on Utah's foul urban air. The state had some of the worst air pollution in the nation last winter and ozone alerts have already been issued this summer.

"The air is awful in the metropolitan area," Huntsman said. "We've had recent red [alert] days, we have too many of them. We need to clean up our act."

The money would be appreciated by the state Air Quality Board, which voted earlier this month to support the Utah Physicians for a Healthy Environment's campaign to tighten state air-quality laws. The board will appoint a panel of health and science experts to advise on the adequacy of those laws.

Last legislative session's $1.7 billion surplus provided increased spending for roads and education - with cash left for a record-breaking $220 million tax-cut package that included an overhaul of the state income tax.

But tax cuts now seem to be on the back burner for Huntsman. If any money is left after meeting his priorities, he would be willing to put it toward removing the remainder of the sales tax on groceries.

"I don't know what that would be, maybe $70 million worth," he said.

Huntsman said he has been traveling the state, meeting with parents, teachers, principals and superintendents.

"I walk out of every one of these sessions with a heightened sense of urgency about teacher pay," Huntsman said. "You can cut and paste around the issue, you can come up with clever schemes, but it comes right down to compensation. So that will lead the charge."