A Utah Senate leader hopes that, despite current economic troubles, state government does nothing that disrupts Utah's business-friendly environment or fully taps out the state's Rainy Day Fund.

Speaking Wednesday at the Utah Technology Council's annual legislative leadership breakfast, Senate Majority Leader Sheldon Killpack, R-Syracuse, said that rash decisions could make matters worse.

For example, he cited California's recently boosting income tax and the state portion of its sales tax to levels at least twice as high as Utah's.

"That is a massive banner saying, 'Businesses in California, Utah is open for business,' " Killpack told a crowd of about 100. "We have to be wise as we go through this and not make the knee-jerk reactions and go and change the environment for business by jacking up the taxes."

He even suggested that Utah could target California companies looking for a lower-tax environment.

Killpack said lawmakers should resist the temptation to exhaust the state's Rainy Day Fund. Since at least September, legislators have heard that the fund should be used rather than making substantial budget cuts, he said.

"We're not sure we've seen the bottom, and when it comes to meeting in June before the end of our fiscal year, if we continue to slide again and you've used up all the resources, you're in trouble," he said.

Bond-rating agencies are pleasantly "astonished" to find the fund intact, and those agencies base their ratings in part on how quickly such funds are tapped, he said.

"It will be utilized at some point. We just don't think we've seen the bottom yet, and we want to have at least some tools in our possession to use, because if you call a special session, one of the last things I want to be doing is hiking a bunch of taxes in a one-day period."

He would prefer to use the fund during an interim period and discuss tax increases during a general legislative session.

Killpack criticized a national "extreme aversion to pain" and a willingness to "throw this burden on future generations." He said the federal stimulus package contains only 20 percent "stuff that stimulates the economy, and the remainder is spending."

"Utah is in a very unique position because even without the spending bill from Washington, we can make it through this. … Now, to say that we can make it through painlessly would not be a true statement," he said, noting likely budget cuts in higher education. "If we will just go through a little bit of pain right now and not build up a lot of debt and throw it on the future generations, we'll be much further ahead."

Both Killpack and House Speaker Dave Clark, R-Santa Clara, spoke in support of the state's efforts to educate more Utahns in engineering and to continue strong funding for the Utah Science, Technology and Research, or USTAR, initiative. Killpack's SB240, which calls for a $10 million appropriation from the general fund for USTAR in the 2009-10 fiscal year, was passed out of the Senate Education Committee on Wednesday.

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