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Lawmakers warn new tax collection numbers may be misleading

Published: Tuesday, Feb. 19 2013 4:10 p.m. MST

This Friday, Feb. 15, 2013 photo shows representatives on the floor of the Utah House of Representatives at the Utah State Capitol in Salt Lake City.

Rick Bowmer, Associated Press

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SALT LAKE CITY — New revenue numbers released Tuesday suggest the state may be doing better economically than expected, but legislative leaders warned that the good news is misleading.

"Probably anyone who looks at it will say things are booming," House Budget Chairman Mel Brown, R-Coalville, said of the new Utah State Tax Commission report showing big jumps in sales and income tax collections through Feb. 7.

But Brown told members of the House GOP caucus those revenue increases aren't likely to hold through the new budget year that begins July 1, especially when it comes to sales tax growth. 

"Don't be misled by the number," Brown said of the 5.5 percent annual growth in sales collections on the new report, well ahead of the 3.1 percent projection. "That number is large."

But the number doesn't reflect an expected slowdown in purchases resulting from Congress' decision not to extend a payroll tax cut, the budget chairman said, or financial decisions made at the end of the year to avoid higher tax rates.

Senate Budget Chairman Lyle Hillyard, R-Logan, had a similiar reaction.

"When you start seeing those figures, don't go out and celebrate and say, 'We have tons of money,'" Hillyard said.

He said the increase in income tax collections shown on the report, up nearly 14 percent compared with the previously projected 7 percent growth, is a result of tax forms going out late and the state being behind on issuing refunds.

House Speaker Becky Lockhart, R-Provo, said the report does not take into account that or any other impact from the fiscal cliff deal passed in Congress on New Year's Day or the looming possibility of automatic federal spending cuts known as sequestration.

"It's misleading," she said, adding that even so, she is "cautiously optimistic" about revenue growth.

Lawmakers and Gov. Gary Herbert are expected to agree on final revenue projections for the new budget year by Monday. Those projections will be used to finalize the budget before the 2013 Legislture ends in mid-March.

Last November, they had agreed there should be $300 million in new revenue in the upcoming budget year. But that estimate is expected to drop around $100 million because of the tax increase on wealthier Americans approved by Congress.

The governor said he had not seen the latest revenue report, but remained upbeat about Utah's economic growth.

"There's a lot to be optimistic about. I think our future is bright indeed. That being said, we don't want to have a rush here and think everything is perfect," Herbert said, adding that lawmakers are "trying to be cautious, as they should be." 

Contributing: Dennis Romboy

E-mail: lisa@desnews.com, Twitter: dnewspolitics

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