Issue of day: cutting taxes or raising teacher pay

A political tussle is brewing between Gov. Jon Huntsman Jr. and GOP legislative leaders over tax cuts and pay raises for teachers.

There is still time to settle the matter before lawmakers adjourn March 5, and there is little doubt that accommodations will be made. But both sides are looking at their re-elections this year and neither wants to be cast as a villain for not providing affordable heath care or raising teachers' salaries.

House Speaker Greg Curtis, R-Sandy, told the Deseret Morning News that the tax revenue projections released Monday showed less cash will be coming into state coffers than previous estimated — and some tough choices must be made.

House Republicans voted in caucus for a $100 million tax cut this year after December's rosy tax projections. Senate Republicans said they wanted a tax cut, also, and said they preferred an as-yet-unspecified property tax cut.

But Curtis now says lawmakers may well adjourn with only $18 million in tax cuts — and those going to self-employed Utahns via their income taxes. A $13 million property tax reduction is also possible, but likely not both.

And it may be that the governor can't get all of the 7 percent increase in funding for public schools he wants, Curtis said, or lawmakers may not be able to give teachers all of the $2,500 salary hike they plannedas the give-and-take unfolds.

Huntsman spokeswoman Lisa Roskelley said Huntsman also realizes the new tax revenue estimates may mean a different approach. But, she added, "The governor is committed to both health care reform and teacher pay hikes. He is willing to work with legislative leadership on these issues."

Already, the GOP House caucus was presented with a $1,500 teacher-pay alternative on Tuesday.

"If we give a 7 percent WPU (weighted pupil unit) increase in public education, we'll have $3 million left in the Education Fund" for the 2008-2009 fiscal year, Curtis said. That $3 million clearly can't fund the $13 million property tax cut that has already passed the House or an $18 million tax break to let self-employed Utahns pay their health insurance premiums from pre-taxed dollars, which would put them on equal footing tax-wise as workers employed by a company. The self-employed health-insurance tax break, which is part of a health reform insurance bill supported by Huntsman, would come out of the education budget that is funded by income tax revenues.

The Utah Education Association thought it might be a budgetary stretch to fund a full 7 percent increase in the WPU — which would cost around $178.5 million — plus a $2,500 raise, which costs around $86 million. Each 1 percent boost in the WPU costs $25.5 million, according to the Legislative Fiscal Analyst.