SALT LAKE CITY — Gov. Gary Herbert said he struck the right balance between spending and saving new revenues by emphasizing education in his proposed $11.9 billion state budget released Friday.
"It's hard to wipe the smile off my face," the governor said about the $215 million in revenue growth forecast in his spending plan for the budget year that begins July 1, 2010.
The signs of economic recovery show "what we've done in the past is working today," he said. "We kept government off your back and out of your wallets and the result is clear."
Herbert wants to use some of the new revenue to boost spending on public schools by more than $70 million to help fund enrollment growth and all-day kindergarten in the budget year that begins July 1, 2011.
Higher education and other state agencies, however, wouldn't see increases. While agencies were told last year they had to do more with less, the governor said the new watch-phrase is "do more with the same."
For state employees that means not only no pay increase for the third year in a row, but also a 5 percent increase in their health insurance costs.
The governor also proposes plugging $100 million of the $313 million gap left as a result of the state's use of one-time monies, especially federal stimulus funds, during the toughest economic times.
He would dip into the state's Rainy Day fund to close about one-third of the so-called "structural imbalance" in the budget, leaving $110 million in the emergency fund that once totaled nearly $420 million.
"My belief is we've picked the right balance point," the governor said. "You could put more money into the structural imbalance and put no money in education, but that would throttle our ability to have economic expansion."
He is counting on continued increases in state revenues to eliminate the rest of the budget gap in the next couple of years. But it's up to the 2011 Legislature, set to start in mid-January, to decide the budget and the Republican majority may not be willing to wait.
Senate President Michael Waddoups, R-Taylorsville, said the Senate's GOP want to see a bigger chunk of the budget gap closed next session, likely by cutting or even eliminating some government programs.
"I think this is a time when we need to reprioritize and look at what the role of the government is again," Waddoups said. But unlike the past tough budget years, he said there's no need for across the board budget cuts.
House Speaker-elect Becky Lockhart, R-Provo, said she, too, has concerns about the budget gap. "Are we really coming out of the recession," she asked. We need to be very careful and very methodical."
Lockhart said the House Republican majority will "heavily debate" what do to about the budget gap at their all-day caucus Monday. She said they're also divided over the need for all-day kindergarten.
Herbert is recommending $7.5 million to continue all-day kindergarten, a program started under his predecessor, former Gov. Jon Huntsman Jr. There is also another $5.5 million for programs endorsed by the Governor's Education Excellence Commission.
His biggest expenditure for public schools would be $50 million to help pay for the 14,700 new students expected in the coming budget year, about $6 million short of the actual cost.
There are also increases in the governor's budget in Medicaid; the Children's Health Insurance Program known as CHIP; and programs that serve the disabled and the mentally ill to help pay for increased caseloads.
The governor would set aside more than $350,000, most of it in one-time money, for the state's multi-agency strike force that deals with felonies associated with illegal immigration and human trafficking.
There are no tax increases in his proposed budget. But the governor is recommending again this year that self-employed Utahns remit their income taxes quarterly rather than annually.
That change, rejected by lawmakers last session in Herbert's first budget as governor, would accelerate the tax collections, resulting in an extra $130 million this budget year.
He is also recommending no new road or building projects for the state, and no additional bonding. Projects already underway, including the massive I-15 reconstruction through Utah Count, would continue.
Both Republican and Democratic lawmakers are questioning whether the state should avoid taking on additional projects at a time when the jobs are needed and the cost of borrowing money is low.
"Not doing any road or building construction may be a little bit of a wet blanket on our economy," Waddoups said.
The governor's proposal was praised by a variety of organizations, including the Utah Education Association, the Salt Lake Chamber of Commerce and the Utah Health Policy Project.
“We appreciate Governor Herbert’s commitment to our public schools," UEA President Sharon Gallagher-Fishbaugh said. “We know that the governor has to strike a balance between the needs of public education and other ongoing funding requirements. He has done just that in this budget proposal.”
Herbert, who was elected in November to fill the remaining two years of Huntsman's term, also announced a new website to track the progress of recommendations from his commission on optimizing state government.