The Utah Legislature recently received updated budget projections that give policymakers hundreds of millions in new state taxpayer dollars to allocate. The governor’s office subsequently recommended a $14.3 billion budget, which reportedly encourages legislators to spend almost all of this new revenue. With that as background, we can now expect special interests to begin lining up to pressure lawmakers to give them every taxpayer dollar possible.
Fortunately for Utahns and their families, the Legislature has established a process for budgeting that takes a more cautious approach than “spend it all now.”
Last year, the Legislature passed bills that created a process to determine the proportion of new tax dollars technically considered “ongoing” that can actually be expected to be ongoing in reality. This is necessary because historical revenue information shows that some technically “ongoing” tax revenue actually vanishes during a recession. The Legislature tasked its budget staff to examine historical trends and estimate how much new “ongoing” tax revenue (on paper) is likely to be temporary in fact because it is above historical revenue growth trends. Based on that analysis, the amount of that “above trend” revenue is about one-third of the projected ongoing new tax revenue.
Because this money is likely to disappear during hard economic times, it can be quite risky to spend it on programs that require sustained taxpayer funding (e.g. public school operations, transportation administration or prison operations). When a recession hits and the supposedly “ongoing” tax revenue goes away, unless there has been sufficient financial contingency planning in good economic years, then policymakers will be left with the unappealing options of either cutting important government programs and services or increasing taxes – both of which harm and disrupt the lives of Utahns. Read more