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In our opinion: Keep budgeting cautiously

Published: Monday, Dec. 13 2010 12:00 a.m. MST

Gov. Gary Herbert

Keith Johnson, Deseret News

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For the past two years, the state's Rainy Day Fund has been dwindling slowly as Utah struggled to make ends meet through the Great Recession. Federal stimulus checks lessened the blow, as did a strong dose of fiscal restraint on the part of political leaders.

Now the federal money has dried up, and with recent elections sending a strong anti-stimulus sentiment to Washington, there isn't likely to be more of it any time soon. But the good news is Utah appears to have weathered the storm, with revenues beginning to inch upward again. And so when Gov. Gary Herbert late last week proposed spending an additional $100 million of rainy-day money to balance the books next year, it didn't sound like a radical idea. Even with that payment, the Rainy Day Fund still would contain $110 million.

And yet the state may want to proceed more cautiously with one-time money. Just because revenues appear to have bottomed out, that doesn't mean they are going to come roaring back any time soon.

The governor also proposed requiring businesses that don't withhold Utah income tax to begin making payments quarterly, rather than annually. This, too, would result in a one-time bonus to the state. Businesses wouldn't have to pay more, they would just pay earlier, meaning the state wouldn't have to wait as long to get the money. That would provide an estimated $130 million to Utah's Education Fund. But this can be done only once, making it a precious piece of fiscal ammunition against tough times.

The state faces a $313 million structural imbalance because of the end of federal stimulus money. With revenues beginning to grow once again, one-time funds need to resume their role as tools to fund something other than ongoing programs.

Utah governors generally unveil their budget proposals in December, about a month ahead of the start of the legislative session. It's difficult to project so early what state revenues will look like in February, when lawmakers get up-to-date figures to help them craft the final budget. Herbert is forecasting a revenue growth of $215.6 million in a budget of $11.9 billion.

Governor Herbert has presented a responsible spending plan — one that makes public education a priority, funding nearly all of what schools will need to deal with a projected enrollment growth of 14,700 students and to continue voluntary all-day kindergarten. His mantra for state agencies is that they should "do more with the same," which should, for them, sound like marked improvement over being asked to do more with less. He also commendably holds the line on taxes and fees.

Governing has not been easy during recent hard times. It must be noted that Utah's economic picture is rosier than that of nearly every other state. In large part, this is due to the austerity of political leaders such as Herbert and several state lawmakers. It's also due to people such as State Budget Director John Nixon, who was just hired away by the governor of Michigan, a state with real fiscal problems.

Utahns can hope that modest growth will soon grow into something more robust, but they can be sure that the state is better positioned than most to rebound once good times return.

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