Spending 'cap gap' poses tough challenge for lawmakers

Utah legislators will be struggling this session with the dreaded "cap gap," which would allow the state to spend only about one-tenth of a nearly $1.6 billion surplus on some critical ongoing programs.

GOP House and Senate members discussed complicated budget and spending issues in their respective caucuses Tuesday. Senators couldn't agree on some of the most basic budget items, like how much of a tax cut to give this year.

GOP senators will take the extraordinary step of meeting on a weekend — they'll gather for four hours Saturday at the Little America Hotel (where many out-of-town legislators room during the 45-day general session) to talk further about spending and tax cuts.

"These are big decisions that have to be made, but senators want to be fully informed," Senate President John Valentine, R-Orem, said while standing in front of a complicated flow chart used during Tuesday's closed-door caucus.

"We're looking for some numbers for things like bonding, things like transportation, compensation and tax cuts," Valentine said, using the calculations on the chart to warn that the size of the House's tax cut would limit what can be spent on other needs.

For example, according to the numbers discussed Tuesday, there would only be enough to fund the House's proposed tax cut plus promised boosts in education, transportation and state employee pay.

Saturday, the Senate GOP majority will likely come up with a proposed tax cut somewhere between the $100 million called for by Gov. Jon Huntsman Jr. and what the House wants, according to Valentine.

House Republicans, meanwhile, voted Tuesday to spend $350 million of the surplus on roads and buildings — deciding unanimously not to bond for those big-ticket items. Even before the 2007 session started Monday, they'd endorsed a $300 million tax cut.

Unlike their counterparts in the Senate, House conservatives claim there is more money than ever before in the state's history, they point out — $1.6 billion to spend over two years.

After covering public education needs, Medicaid inflation and putting an extra $45 million in the state's Rainy Day funds, there is $1.4 billion still unspent.

But a 1985 spending-cap law limits spending to $10 million in one-time monies in this year's budget and $177 million in additional spending in next year's budget. Education and roads are specifically exempt from the spending cap, leading some advocates for other programs — like Utah's colleges and universities — scrambling to find ways to spend more without hitting the cap.