Gov. Gary Herbert says he feels good about where the Legislature is ending up when it comes to the state budget, particularly when it comes to public education.

"The end product has been pretty darn good. We're not considered one of the best-managed states just by chance," Herbert said Thursday.

Herbert had criticized the Legislature earlier in the session for a budget process he called "convoluted" and said it gave the body "a black eye." On Thursday, he said that, while the process has been difficult, he thinks most of his priorities are going to be met.

"Education has clearly been my number-one priority — and funding the growth in education — so that's something that I'm working very closely with the Legislature on," he said.

In December, Herbert recommended a hike of about $70 million in the education budget to pay for 14,700 students expected to enroll in public schools next year as well as to fund other programs.

"We will fund public education at the levels requested by the governor," said Sen. Lyle Hillyard, R-Logan, the Senate's budget chairman, on Thursday. "That includes growth. … It's a little bit different how the money is allocated, but the [bottom line] dollar figures are all the same."

For example, the governor had requested funding for all-day kindergarten, but the Legislature is looking to provide districts with the flexibility to use computer-assisted teaching instead.

There may be "some re-arranging of priorities, as part of the education budget, that is part of the process," Herbert said.

Hillyard said lawmakers are about 95 percent done with the budget. Now they are going back through the budget with the Governor's Office to try to find ways to restore funding to programs that each wanted.

A scheduled meeting of the Legislature's Budget Committee was canceled Thursday, however, after House Republicans had concerns about some spending priorities and House and Senate leaders were unable to reach an agreement. They planned to meet Friday evening.

Hillyard said two areas of the budget still need to be addressed — how much money to put toward implementing new laws and new programs, and how much to spend on buildings.

He said that if the Legislature decides to put money into buildings, rebuilding Utah State Hospital, a project estimated at $25 million, would be the top priority. He said it is unclear if the state would pay for it by issuing bonds.

Or, Hillyard said, they could take another look at a proposal from the governor to change the way self-employed individuals file their taxes.

Herbert had proposed making those individuals file their state income taxes quarterly, as they now have to file their federal taxes. Utah and Idaho are the only states that don't require quarterly filings. Accelerating the payments would generate an estimated $130 million in the first budget year.

House Republicans have previously opposed the idea because it would cost businesses $10 million to prepare the returns.

Hillyard said the state attorney general is concerned about cuts made to his office, combined with additional demands that he pursue public-lands litigation.

"I think we need to address it and see if there's some way we can help them out," Hillyard said.

Liquor stores appear unlikely to get a reprieve from the chopping block. Under the current budget, five would have to close their doors. While the stores are moneymakers, Hillyard said closing them will likely shift the income, rather than eliminate it.

"While some people won't go the two or three blocks to another store, most will," Hillyard said.

The Legislature is also going to tap about $6 million of the Rainy Day Fund to pay two legal settlements — one for a Navajo trust fund settlement approved last year and the other to settle a lawsuit against the state over its practice of taking a portion of personal-injury settlements to offset Medicaid expenses. ­—

Corrections woes

Cuts in this area could lead to early release of prisoners. See the story on B5.