State lawmakers and the governor have a few months left until they have to get serious about writing a new state budget. They won't know for sure how bad or good things really are until new revenue estimates are released in February.
Until then, however, it makes sense to plan for the worst. That's what conservative budgeters do, and it's why Utah has been touted as one of the nation's best-managed states.
Gov. Gary Herbert's proposed budget, released last week, relies instead on sunny projections that have state revenues actually expanding again in 2011. That doesn't jibe with the projections of many, including the National Conference of State Legislatures, which predicts flat revenues at best and revenue deficits in many states at least through fiscal 2012.
State GOP lawmakers, who held a five-hour meeting this week to discuss such things, have a better approach. They took Herbert's projections and lopped off $100 million as a starting point. If February's estimates bring good news, it's always easier to add to budgets than to cut further.
Herbert did strike the right note with his decision not to include tax hikes or fee increases in the budget. That ought to be a guiding principle for lawmakers as they wrestle to close the gap between needs and revenues.
Along those lines, however, Herbert's plan to repeal a 1.31 percent discount on sales taxes for larger businesses — a discount meant to reimburse them for the cost of collecting sales taxes — should be rejected. This would pull an estimated $20 million per year out of the economy, which would discourage these companies, including auto dealers, restaurants and retailers, from expanding.7 comments on this story
A much better choice would be to raise cigarette taxes. Utah's current tax of 69.5 cents per pack is among the lowest in the nation. A hefty hike in this tax could raise $30 million or more. And while some could argue this also is money removed from the economy, it would hurt out-of-state tobacco companies to a large extent, and the increased cost of cigarettes would discourage new underage smokers, which ultimately benefits taxpayers. The state should not favor tobacco interests over legitimate businesses, especially given the health problems associated with cigarettes.
Beyond that, the state may need to consider salary cuts, furloughs or other measures to keep budgets in line until real expansion begins again, and the state's rainy day funds should be liberally depleted.
There will be no easy answers, but Utah's lawmakers can take legitimate pride in the fact that the state is not as bad off as most. That's due to conservative budgeting — something the state should not abandon now.