State budget shortfall more than $272 million

The size of the state's budget shortfall is slightly more than $272 million, about one-third higher than initially estimated, Gov. Jon Huntsman Jr.'s office announced late Monday.

As expected, the governor also called a special session of the Legislature that will begin Thursday to cut the state's $13 billion budget. His plan calls for state agencies to reduce spending by 3 percent while bonding for $150 million in road and building projects.

Huntsman said the state "is seeing the impact of the national economy" but is taking a "proactive approach to dealing with Utah's budget. It's critical to realize our state is still performing."

Last week, the governor's budget office estimated the shortfall at $200 million. But after economic experts from both the executive and legislative branches took a closer look, they agreed revenues would fall $272.4 million short of projections.

That's nearly half of the anticipated growth in revenues in the budget year that began July 1. Huntsman spokeswoman Lisa Roskelley said the shortfall is "across many sectors," including income and sales tax collections.

House and Senate majority GOP members agreed last week in party caucuses that a special session was needed. There has already been some talk among lawmakers of cutting state agencies more and bonding for less.

The governor and legislative leaders have agreed, however, to hold public schools harmless. That pledge does not include the state Office of Education but does call for using leftover funds to restore other cuts in school funding.

State agencies were put on notice early this summer that they could face cutbacks. The governor's office asked state agencies then to come up with proposals for cutting 1 percent, 3 percent and 5 percent from their budgets.

Lawmakers, who had started their last session with the hopes of giving Utahns a tax break, ended up setting aside extra money in anticipation of a shortfall. Besides socking away $100 million specifically for public schools, they also boosted the state's Rainy Day Fund.

That fund wouldn't have to be tapped under the governor's plan, Roskelley said. The special session agenda, set by Huntsman, including considering issuing new general obligation bonds for roads and buildings that were to be paid for with cash.

The agenda also calls for fixing legislation passed last session dealing with a tax exemption on aircraft parts and allowing school district and charter schools to opt out of the Utah Performance Assessment System for Students in favor of a new pilot testing program.