Lawmaker warns of budget shortfall

A leading Utah state senator worries the state's growing budget shortfall could hit $1 billion by February.

"Things look pretty bleak," says Sen. Lyle Hillyard, R-Logan, the Senate's budget chairman and a 30-year veteran of the Legislature.

New tax-revenue estimates will come with Gov. Gary Herbert's mid-December recommended budget for 2009-10, which starts July 1.

Utah's 104 part-time legislators must adopt a balanced budget for next fiscal year — likely in the range of $11 billion — before their general session ends in mid-March.

Last summer, legislative leaders believed the state could be short up to $700 million next year. That number grew to $850 million a month ago.

Now things are turning even worse, Hillyard believes.

Jonathan Ball, the head budget officer for the Legislature, declined Monday to put a number to the upcoming deficit.

But Ball said his office doesn't see a turnaround in Utah's economy — which drives tax collections — for at least three more fiscal quarters.

Perhaps, Hillyard said, his look at Utah's immediate budget future "is an ill-educated guess."

Still, the long-time lawmaker says he now puts the anticipated budget shortfall at between $900 million and $1 billion after he adds in new cutbacks to several "important" federally funded programs, like the loss of $26 million in Youth Corrections.

If state tax revenues continue to drop, that is more pressure for lawmakers to increase taxes next year, which is also an election year for all 75 House members and half of the 29-member Senate.

GOP leaders are already looking at raising the state's tobacco and alcohol taxes. But combined those would bring in less than $100 million.

Others, including Hillyard, are talking about restoring the full state sales tax (4.7 percent) on unprepared food — and giving a targeted personal income-tax credit to lower-income Utahns who would most feel the increased tax.

That could provide around $116 million in new revenue because even in hard economic times people still buy unprepared food.

Last week, the state Board of Regents, which oversees Utah's public colleges and universities, said higher education institutions can't take another 8 percent or 9 percent budget cut, as they did in the current year, without seriously harming the state's economic and academic future.