Utah’s revenue estimates go up, but there’s ‘no booming budget surplus’

As expected, Utah’s projected revenue growth hasn’t changed much.

New numbers released Friday show another $340 million is anticipated to be available to spend at the Utah Legislature, a number that includes another $126 million in ongoing revenues and $214 million in one-time funds.

“It’s fairly flat,” Senate Budget Chairman Jerry Stevenson, R-Layton, told reporters at the Senate’s daily media availability after announcing the final adjustments to projected revenue collections from the Senate floor.

“These are probably the lowest numbers we’ve had this time of year” in nearly a decade, said Stevenson, who had warned Thursday that’s what was coming. The new estimates are on top of the nearly $638 million revenue growth forecast late last year.

Some of the money has already been set aside for a tax cut, pay increases for state workers and other budget items, he said, leaving $284 million, including just $7 million available for ongoing programs.

Even with the additional revenue now being projected, Stevenson said the state isn’t experiencing a “booming budget surplus. There’s a readjustment going on.” Last year at this time, he said there were billions more available to spend.

And some $175 million of the new revenues anticipated are considered “high risk” because of recent actions in Congress that could impact income tax collections in Utah, Stevenson said, meaning it “may not be a great idea to spend it all.”

Stevenson has already been warning of an “underwear and socks” budget year, where state agencies can expect only what they absolutely need rather than a “Christmas tree” ladened with pricey luxuries.

Ten days into the 45-day legislative session that ends March 1, lawmakers passed base budgets adding up to some $28 billion. Now that the estimated tax collections have been updated, those budgets can be supplemented and other spending funded.

That spending is likely to include a fourth year of tax cuts, a top priority for the Legislature’s Republican supermajority. Legislative leaders set aside $160 million to reduce tax rates in December.

The Senate has already passed SB69, which drops the state income tax rate for individuals and corporations from 4.65% to 4.55% for a $160 million reduction, but the bill has yet to be heard in the House.

Senate President Stuart Adams, R-Layton, has said the size of the tax cut could be higher — or lower — depending on how much money lawmakers and Gov. Spencer Cox agree that the state should expect to see.

But Adams said Friday he expects the tax cut to stay at $160 million. Like the Senate president, House Speaker Mike Schultz, R-Hooper, has stressed the importance of “allowing people to keep more of their paychecks.”

Schultz, too, has pledged to take a “slow, measured approach” to cutting taxes.

Both Adams and Schultz said the new numbers show the strength of Utah’s economy. The Legislature and Cox have signed off on the updated revenue estimates, which usually aren’t made public until after the Presidents Day holiday.

Cox, too, touted the state’s economy.

“With steady job growth, low unemployment, increasing consumer confidence and our fiscal prudence, Utah’s economy is well positioned to be as strong as ever,” Cox said in a statement. “We’re encouraged by these revenue numbers, and we will continue to strike the right balance between fiscal responsibility and meeting the needs of Utahns.”  

Lawmakers have been urged to be cautious about budgeting, given that the economy is still transitioning from boom to balance now that the federal funding to deal with the COVID-19 pandemic has ended.

In the budget year that ended June 30, 2023, Utah revenues were nearly $50 million less than expected because income tax collections fell below projections. The shortfall was made up through budget reserves.