Legislative leaders are eyeing more than $400 million in tax cuts and another $1.2 billion to pay for infrastructure projects, including water development and transportation, next year in Utah.
On Tuesday afternoon, the legislature’s top budgeting committee set some spending priorities for lawmakers in the coming year. The state has nearly $2 billion in surplus revenue from this fiscal year and more than $2 billion in additional earnings to earmark for fiscal year 2024, which begins next July.
The Legislature is legally required to cover the cost of any enrollment growth and inflation-induced costs in Utah’s public schools. The Executive Appropriations Committee set aside the statutorily required minimum of $135 million, a 3.4% increase in Utah’s per-pupil funding for public schools.
That set-aside is $65 million less than Gov. Spencer Cox proposed in his 2024 budget, which would boost per-pupil funding by 5%.
Also missing from the spending priorities is the $200 million Cox proposed spending to give teachers a $6,000 compensation boost.
Utah Senate President Stuart Adams, R-Layton, was noncommittal when asked if Cox’s education spending proposals were still on the table.
Additionally, the committee voted to put $193 million in a public education rainy day fund that they can tap into in an economic downturn.
“There’s not money set aside, but we have a commitment to fund education in a meaningful way,” Adams said.
The extra cash for Utah’s budget comes from higher-than-expected income tax collections. Under Utah’s Constitution, that money can only fund public or higher education and some social programs. Any income tax reduction is paid out of money that could otherwise go toward schools. Utah’s per-pupil funding is consistently at or near the bottom of all 50 states.
Those tax cuts could take any number of forms next year, including a reduction in the income tax rate, property tax relief or cutting taxes on social security benefits.
During his rollout last week, Cox proposed a one-time rebate check for Utah taxpayers. The $400 million for that proposal was not included among the budget set-asides approved on Tuesday.
“I think one thing that is certain is there’s going to be a tax cut. We just have to decide the magnitude of it and what form it takes,” said Utah House Speaker Brad Wilson, R-Kaysville.
In addition to the zeal for cutting taxes, lawmakers took steps to insulate Utah against an economic downturn, setting aside $800 million in one-time cash to help pay down Utah’s debt and another $600 million to cover rising inflation in the current year’s budget. Another $900 million in so-called “high risk” revenue, the most likely to evaporate if the economy sours, will remain unspent.
Some smaller budget items were included in Tuesday’s decisions. The committee approved $25 million to replace the plaza on the north side of the Capitol building.
Some of the other budget adjustments approved by the committee on Tuesday include $350,000 for the Utah Shakespeare Festival, $45,000 for the Larry H. Miller Summer Games and $200,000 for the Days of 47 Rodeo and $100,000 for America’s Freedom Festival in Provo.
Tuesday’s decisions took a big chunk out of the available revenue for lawmakers to spend on other items when the 2023 legislative session gets underway in January. Estimates show there will be about $800 million in one-time money and $422 million in ongoing funds for legislators to spend.