Study indicates states still face more economic woes

SALT LAKE CITY — "There's light at the end of the tunnel," said Utah Gov. Gary Herbert when he recommended his 2010-11 budget last week.

But it's light that the National Conference of State Legislatures doesn't see.

Every state's financial woes are, of course, unique. And Utah, as residents have been told time and again, is better managed than most. (Another nationwide study recently showed that only three states are better off financially than Utah.)

But questions have already been raised that Herbert and GOP legislative leaders are being too optimistic about Utah's economy recovering next year.

The updated NCSL study released Monday does reflect nationwide what Herbert and GOP leaders see here — there will be a larger budget gap in the current fiscal year (which ends June 30) than anticipated.

A number of states are seeing that, the report says.

However, Utah state economists predict Utah's tax revenue will actually rebound in fiscal 2011. State revenues should increase by $34 million, the new estimates show.

That is not what many other states are seeing, according to NCSL.

"The longest economic downturn in decades appears to be well entrenched and is manifesting itself in multi-year budget shortfalls. Many states already foresee budget gaps in FY 2011 and FY 2012. It is hard to see when they will end," the report's authors say.

History shows that state budgets show a continued struggle long after a recession ends, the report adds.

In the past, Utah's conservative budgeting — overseen by GOP leaders in the House and Senate — have been more pessimistic than budgets suggested by previous Republican governors and Democratic lawmakers.

But the $11.3 billion budget recommended by Herbert, and highly praised by GOP legislative leaders, seems to buck that trend.

Herbert's budget is only a recommendation. In mid-February lawmakers will get updated revenue collections for this fiscal year and new estimates for tax collections for the new budget year beginning July 1, 2010.

They will use those numbers to decide how to balance out the 2009-10 budget (it's down an estimated $183 million, and Herbert recommends another 3 percent cut in state spending over the next six months) and determine budget cuts for next fiscal year.