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State expects $280 million revenue growth next budget year

Published: Monday, Nov. 28 2011 5:28 p.m. MST

SALT LAKE CITY — New estimates released Monday by Gov. Gary Herbert anticipate a $280 million increase in state revenues in the 2013 budget year but officials caution that much of that money is already committed.

"It looks good, but it's not that good because we have all these mandated things," Senate President Michael Waddoups, R-Taylorsville, said, citing the need to cover the costs of additional public school students and rising Medicaid costs. 

There likely won't be enough cash left, he said, for new buildings, state employee pay raises or an overall boost to public education funding, let alone new government initiatives.

House Speaker Becky Lockhart, R-Provo, said some $52 million also needs to go toward paying off the so-called structural balance in the current budget, left because lawmakers used money from the state's Rainy Day fund and other one-time sources.

"That's a chunk. But that's just good budgeting. You don't want one-time money paying for ongoing programs," Lockhart said. "Remember, we've been through many years of budget cuts and being very frugal."

She's hoping the new numbers mean lawmakers will be able to avoid having to make further budget cuts in the upcoming legislative session but noted, "these are projections. We still have three-plus months to see how things are going in the economy."

Waddoups, too, was cautious about the revenue estimates made public Monday, consensus figures that have been agreed to by analysts for both the governor and the Legislature.

"I think they may be a little optimistic in their growth," the Senate president said. "The big worry I have right now is what the federal government might do at Hill Air Force Base," where some budget cuts are already being made.  

The estimates, which also predict revenues will increase $128 million more than expected in the current budget year that ends June 30, 2012, come as the governor is finalizing his 2013 budget.

Herbert, who faces a challenge from a fellow Republican, state Rep. Ken Sumsion of American Fork, in next year's election, clearly was pleased with the figures.

"When you consider what is happening nationally or in other states, the steady drum beat of positive economic news in Utah is certainly encouraging," the governor said in a statement.

His budget director, Ron Bigelow, said the growth in revenues "does allow a little bit of flexibility." But he, too, said there's already plenty of places to put the extra cash.

"The growth in public education and Medicaid, those are issues that will require significant amounts of this growth. So we are still facing significant challenges," Bigelow said. "We're certainly not at the point where we can do a lot of major initiatives."

Last year was the first since the 2007 budget year that analysts predicted revenue growth.

"It's nice to come in with some good news," the governor's chief economist Juliette Tennert said. "It's steady growth. It's not robust growth, it's measured growth."

Tennert said more jobs, better wages and additional consumer spending all contributed toward this year's positive forecast.

"What drives state revenues is mostly comprised of income taxes and sales taxes," Tennert said. "We've been consistently adding jobs," some 30,000 in the past 12 months alone. "People have more money and they are buying things."

E-mail: lisa@desnews.com

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