Utah’s $1 billion surplus survives latest revenue estimates

(Rick Egan | Tribune file photo) New House Speaker Brad Wilson conducts business in the House of Representatives, on the first day of the 2019 Utah Legislative session, Monday, Jan. 28, 2019.

Days after warning of drooping tax collections and a slump in state revenues, legislative leaders announced Friday that Utah maintains a $1 billion surplus going into the final weeks of the 2019 session.

The pool of money available for state spending decreased by roughly $120 million compared to December estimates, which Rep. Brad Last, R-Hurricane, described as a “hiccup” related to recent federal tax changes as the state’s economy continues to perform.

“The revenue is actually better than we had anticipated,” Last said, later adding that 2019 “is the best year that we’ve had since the Great Recession."

The new estimates show growth of $529 million in one-time funding and $570 in ongoing funding, for a combined surplus of just less than $1.1 billion. The bulk of that money is generated by the income tax, which Utah’s constitution earmarks for education spending, and the new figures do not account for more than $200 million in sales tax revenue appropriated for the construction of a new state prison in December.

“As you can see the Education Fund continues to grow substantially faster than the General Fund,” Last told members of the Utah House, “which is putting pressure on us.”

The disparity between income tax and sales tax collections has prompted ongoing closed-door talks about potential reforms to the state’s tax code. A bill on that issue is expected to be made public as early as next week, which would lower the state’s sales tax rate while applying the tax to a broader pool of service-based businesses and other financial transactions.

Sen. Jerry Stevenson, R-Layton, said that even though the revenue projections remain strong, the state is hardly rolling in money as lawmakers begin to sort through funding requests.

“There’s a lot of asks out there,” he said, “and a lot of them are very legitimate.”

Recent federal tax reforms have changed when Utahns are filing their returns, Stevenson added, and that could explain some of the downward revenue adjustments.

“In other words, this is just a behavior caused by a reaction to a one-time deal," he said, “rather than a trend.”