On Tuesday morning, Gov. Spencer Cox unveiled a $25 billion state budget proposal he hoped would be a “generational investment” in Utah’s future while addressing the COVID-19 pandemic and climate change.
The governor’s proposal, which will need legislative buy-in this next year, includes nearly a billion dollars for education, an investment in what the Cox administration refers to as the “current and future workforce,” and $400 million to conserve and restore a critical piece of Utah’s infrastructure: water.
While administration officials have said that around 40% of Utah’s future budget is already earmarked, Utah is flush with cash after receiving billions of dollars in federal coronavirus stimulus and from the recently passed INVEST in America Act, a bipartisan federal infrastructure package.
Cox told The Salt Lake Tribune Editorial Board ahead of Tuesday’s announcement that Utah was grateful for the investments made by state leaders of the last century. He believed that Utah had a “really unique opportunity to invest in future generations.”
“First and foremost, it means investing in our people,” the governor added.
Tax credit for families
The budget proposal includes tax cuts worth $160 million in what the administration is calling a “grocery tax credit” to help Utah families with rising food costs. The grocery tax credit, according to Cox, is targeted toward families and low- and moderate-income households and is an equitable alternative to an income tax reduction or slashing sales tax on food.
“Right now, we are seeing rising inflationary pressures, and we believe that a grocery tax credit would do the most for the people who need it the most,” Cox said. Of the $160 million price tag of the tax rebate, $150 million would go towards households earning less than $100,000 a year.
Under his proposed budget, a single parent earning $20,000 a year and raising two children would qualify to receive a grocery tax credit of $240. A family of eight with a household income of $100,000 would potentially be eligible for a $400 credit.
The governor and administration officials said the proposed rebate would be based on tax filings and that the Department of Workforce Service could help identify non-filers who qualify for the refund. They added that the frequency for the rebate could also be multiple times a year.
Educating Utah’s workforce
The Cox administration proposal includes “a record $976 million investment in our current and future workforce,” or simply, nearly a billion dollars in education spending. The plan breaks down the massive amount of money into two categories: $556 million for K-12 and $420 million in higher education funding.
Specifically for K-12, the proposed spending includes the elimination of curricular fees, a $22.8 million increase in spending for full-day kindergarten for the next three years, and a 5% increase in the weighted pupil unit (WPU) — or the per-student unit used in Utah to calculate school funding.
Utah has historically ranked last in the nation in per-student spending and barely climbed ahead of Idaho in 2019 to rise out of the bottom spot.
In the higher education category, the governor would like to add several hundred million for technical institutions and universities to expansion and $3 million for student mental health services.
The drying West
The governor wants to allocate another $400 million in American Rescue Plan Act money, on top of the $100 million lawmakers have already appropriated, for water conservation and restoration projects in Utah, according to the proposal.
The appropriation of ARPA money from the Biden administration’s coronavirus relief package would include $200 million for monitoring non-potable water use, $90 million in drinking water projects, and $25 million to rehabilitate Utah Lake.
The proposal would also set aside $45 million for Great Salt Lake preservation projects.
“These efforts will enhance and direct water flows to the lake, restore and preserve wetlands and upland habitat and integrate the Great Salt Lake into water and land use planning,” according to the proposal.
Upstream water diversions and unrelenting drought have caused the Great Salt Lake to dry to a puddle of its former greatness. The Tribune, working with AccuWeater, have updated their weather maps to depict the lake more accurately, a smaller body of water surrounded by large swathes of exposed lake bed.
Affordable housing and homelessness
As the state’s housing costs continue to soar, Cox’s proposed budget plan includes a $228 million investment in affordable housing.
About $128 million in ARPA funds would support 10 housing projects that accommodate individuals who make less than 40% of the area’s median income. Those housing units will include mental health support and case management services for tenants, according to the budget proposal.
The ARPA money also includes funding for tiny home communities in Salt Lake City. The dense villages of small residential units would provide housing for those struggling with homelessness.
Another $50 million is expected to go towards building 1,100 affordable housing units, with the remaining $50 million to create or rehabilitate rural workforce housing.
Streamline state government and employee pay raises
Lt. Gov. Deirdre Henderson said three changes need to be made to the state government: the reorganization of some departments; major investments in buildings and technology; the recruitment and retention of good state employees.
The Cox administration proposes spending $105 million to increase state employee benefits and pay. The raises include a 3.5% cost of living increase and a targeted pay increase, with some state workers in positions with median salaries currently under market value potentially receiving a 10-15% raise.
“Some of these positions include psychiatric technicians at the state hospital, microbiologists in the Department of Health and of course law enforcement and correctional officers as well,” Henderson said. “We need to make sure that we’re continually improving, innovating and retaining (a) good workforce in order for us to run efficiently as government.”
The proposal also calls for an additional $10 million to be set aside for the ongoing COVID-19 pandemic response effort, as well as $40.6 million to update technology that will assist the state’s response to public health emergencies.
Cox said the administration had spoken with state lawmakers while developing his budget proposal. He said he’d tried to push lawmakers on parts of the proposal.
“There are areas where they’re not where we are,” Cox added, “I’ll let them tell you what those areas are.”
He suspected the proposed tax cut point would be a point of friction in the Legislature, which is ultimately responsible for passing the state budget.
After statutory budget transfers, the state government finished the 2021 fiscal year with a more than $614 million budget surplus, according to the Cox administration. The leftover money was part of two separate budget allocations, with $109,772,000 left in the general fund and $504,720,000 remaining in the education fund.
Utah Division of Finance Director Janica Gines told lawmakers last month that much of the surplus was attributed to “one-time events,” like a near 16% increase in collected sales tax during the past fiscal year, which she credited to federal COVID-19 stimulus spending.