State budget is $50M short of projection

SALT LAKE CITY — State revenues fell nearly $50 million short of projections in the recently ended budget year, but Gov. Gary Herbert said that's good news.

That's because his office said the actual deficit adds up to only about $28 million, because Herbert ordered state agencies to hold back on spending for much of the budget year and income tax collections are bouncing back.

"This is good news, and shows that Utah continues to lead the nation in prudent fiscal management, careful budgeting and positive response from the private sector," the governor said.

Previously, the shortfall in income, sales and other tax collections by the state had been estimated at between $50 million and $150 million, on top of the $700 million in budget cuts already during the past session of the Utah Legislature.

"While a $28 million shortfall certainly isn't where we want to be, it shows that our efforts have positioned us much better than we anticipated even a few months ago," Herbert said.

Still, lawmakers will have to make up that $28 million when the 2011 Legislature meets in January. Plus, Herbert's executive order mandating agency spending cuts ended with the start of the new budget year July 1.

And it's too soon to say how far off tax collections will be in the current budget, according to Herbert's budget director, John Nixon. A projected shortfall isn't expected until November, he said.

Herbert's first budget as governor predicted state revenues would grow $12 million through June 30, 2011. Lawmakers, however, didn't share his optimism and cut revenue projection by $50 million in the budget passed last session.

Now lawmakers are counting on another shortfall this budget year, of at least a $50 million. A recent letter sent to school districts by legislative leaders warned most of that shortfall would be in income taxes, used to fund education.

Nixon said he's optimistic the economy is doing better because both corporate income taxes and individual income taxes withheld are gaining strength.

"These are positive signs the economy is moving forward," he said.

Herbert, who is running in November's special election for the remainder of former Gov. Jon Huntsman Jr.'s term, said "these latest numbers are yet one more sign that Utah's economy is turning the corner."

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