Utah’s Byzantine budgeting process can be a bit confusing. The state constitution mandates that corporate and individual income taxes fund public and higher education. Some social services were added to the constitutional earmark in 2020. The remainder of Utah’s tax revenue supports everything else in the state budget.
Put simply, the “Education Fund” is for educational purposes, and the “General Fund” is for everything else.
Sen Jerry Stevenson, R-Layton, is proposing SB211 to rename the Education Fund as the “Income Tax Fund.” He explains the name change is needed to explain better how state government is funded.
”With the recent changes permitting income tax to fund children and individuals with disabilities, while still protecting, growing and stabilizing public education funding, we felt it necessary to update the name to accurately reflect the changes,” Stevenson said in a text message.
Shifting the name of the fund to reflect where the money comes from rather than what lawmakers are obligated to spend it on could make some budget decisions a little easier.
Most of the money in Utah’s recent budget surpluses have come from the Education Fund. Those excess funds are driven by higher than projected income tax collections. Having large amounts of money in an account labeled for education and spending it on things other than education could lead to some difficult questions for lawmakers.
For example, lawmakers quickly passed a $200 million income tax cut, paying for the tax reduction out of money earmarked for public and higher education. That $200 million is the equivalent of a 5% boost in per-pupil funding. That can be difficult to justify when the state is at or near the bottom of how much states spend on education. A tax cut from the Income Tax Fund is a lot easier to sell to the public.