Even after Huntsman and Republican legislative leaders decided to give taxpayers at least a $160 million tax cut this coming year, state leaders approved a 2006-07 General Fund and Uniform School Fund budget that grew by more than 17 percent.

That's a large increase in spending that legislative conservatives say can't be maintained as Utah's hot economy cools over the next several years.

"I don't think we should even call what we're seeing now as tax surpluses. The real name should be that taxpayers overpaid," Hughes said.

In other words, the surplus is not the state's money but Utahns' money.

Hughes said House conservatives realize there are real needs coming in public education and transportation. That's why when he rewrote the state's spending limitation law in the early 2000s, he exempted those areas from spending caps.

"We have around 20 percent more students coming into public education over the next 10 years. But even so, we must be able to sustain increases (year in and year out) to public education.

"Otherwise, we just get into the cycle of spending much more in good years — like we're seeing now — and cutting programs or raising taxes in bad economic years," Hughes said.

That is very poor planning, and Utahns deserve better from their elected state officials, he said.

"We need to get real reform in our state income taxes. And these surpluses will allow us to do that. I'm not looking at a specific number" in income tax cuts. "We need to pick the best reform, and go with that number" in tax cuts, he said.

"But, as you know, I prefer a higher (tax cut) than a lower one," said Hughes, one of the main advocates over the past two years of a true flat-rate income tax for the state.

Surpluses aplenty

Utah is not alone in seeing healthy tax collections. The National Conference of State Legislatures reports 44 states had budget surpluses last year. Six of those states had tax collections 10 percent above budgets.

Utah's $351 million surplus last year is more than 8 percent above last year's general government and school budgets. State economists guessed fiscal 2006 taxes would grow by 9.4 percent from the year before — and legislators appropriated most of that. But revenues actually grew by nearly 18 percent, producing the large tax surpluses.

In truth, Utah's state government took even more of residents' taxes than that.

During each January/February general session, legislators open the current year's budget and spend some surplus cash — if they have any.

Since that cash then becomes part of the budget six months later when the fiscal year ends, that midyear spending is not counted as surplus. But if it had not been spent by lawmakers, it would have been part of the surplus.

In the 2006 Legislature, lawmakers re-opened the budget and spent $47 million extra out of the two main funds. If they hadn't done that, the fiscal 2006 surplus would have been nearly $400 million instead of $351 million.

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E-mail: bbjr@desnews.com