It will still be several weeks until lawmakers get down to the business of crafting the budget for next year. They’ve already zeroed in on a handful of areas in need of extra funding, but they know they won’t be able to meet every demand. That’s despite more than $1 billion in extra revenue this year. Plus, they’re determined to deliver a tax cut next year.
Sen. Jerry Stevenson, R-Layton, said compensation for state employees, public education and infrastructure are all areas of need. Public schools are already set for an extra $335 million in new spending next year, which covers enrollment growth, inflation, programs for at-risk children and provides a boost in per-pupil funding.
Legislative leaders also set aside $125 million for cost-of-living increases for state employees and another $20 million to boost law enforcement compensation. Stevenson acknowledged that rising inflation would dampen those planned increases.
“We know there are some things we have not adequately funded,” Stevenson said. “We set aside a block for employee compensation, but it’s probably not enough with what’s going on in society right now.”
Of the excess revenue available to spend, only $290 million is ongoing money. The remaining $1 billion is one-time funding, which usually goes toward infrastructure or capital projects.
The infrastructure piece of the budget puzzle remains a bit of a puzzle right now. Stevenson says lawmakers are trying to determine how and where they can spend the state’s share of federal infrastructure money, which will be somewhere between $600 million and $800 million. Water projects will likely see a significant amount of funding.
“We really don’t believe there is a lot of new water in the state of Utah, so we need to be funding conservation. Metering will be a big piece of what we’re doing. We could actually spend several times than what we’re going to put aside for that,” Stevenson said.
Tax cuts are still high on the spending menu. Legislative leaders have already set aside $160 million in ongoing money for an income-tax cut. A yet-to-be adopted version of SB59 drops Utah’s income tax rate from 4.95% to 4.85%. That reduction carries an annual price tag of $163 million.
Senate Majority Leader Evan Vickers, R-Cedar City, says the income tax reduction will be part of a tax-cut package currently under negotiation with leadership in the Utah House.
“There are some other things that could potentially go into that bill. We’re still working on a couple of other pieces,” Vickers said.
Gov. Spencer Cox’s idea to spend that $160 million to give a food tax credit to Utahns probably won’t go anywhere this year. Vickers says there’s a chance that could be part of the final tax reduction package, but the priority for legislative leaders is an income tax reduction.
The tax cut proposal will likely get a first public hearing on Wednesday in the Senate Revenue and Taxation Committee.