State revenues down another $50 million

SALT LAKE CITY — More bad financial news surfaced for Utah legislators Tuesday, with state revenues estimated to be an additional $50 million short in the next fiscal year, which starts July 1.

That means GOP leaders have to find additional money through more budget cuts, tax or fee increases or a combination of both. The budget gap for next year now stands at $700 million, said House Budget Chairman Ron Bigelow, R-West Valley.

The new tax collection numbers for fiscal 2010-11 put greater pressure on finding "some more money," as one GOP House leader put it.

And the new estimate wipes out GOP Gov. Gary Herbert's rosy revenue forecast. When Herbert recommended his 2010-11 budget in early December, he believed state revenue would grow $12 million.

Bigelow announced the new revenue shortfall from the House floor Tuesday morning, saying that while revenue estimates have fallen $50 million, it could have been worse.

Last week, some legislators were worried the added tax shortfall could be $200 million.

Senate Majority Leader Scott Jenkins, R-Plain City, was visibly relieved by the news.

"It's certainly something we can work with," he said, acknowledging the Senate GOP had been pessimistic about state revenues. "This is not bad at all."

There was a bit of good news, however. Economists from the state Tax Commission, Governor's Office of Planning and Budget and the Legislative Fiscal Analyst's Office agree that tax revenues in the current budget year, which ends June 30, won't be any worse.

That means legislators won't have to revisit the 2009-10 budget, which they've already agreed to balance by making more cuts in current spending.

Jenkins said the real news Tuesday was the current budget year revenues were flat, not down further.

"That's the other side of this, that there's no change there," he said. Lawmakers were looking at putting public education on the chopping block, if the current year revenues had dropped again. For the rest of this fiscal year, public education must cut just over $1 million, less than 1 percent of its large spending plan. Other state agencies took upward of 5 percent cuts.

Senate President Michael Waddoups, R-Taylorsville, called it "our good news, bad news report." Later, he told reporters tax increases were still possible this session, even with the better-than-expected revenue projections. "There are a lot of needs out there," Waddoups said. "I wouldn't take them off the table yet."