Utah could lose as much as $80 million in revenue over the next five years as a result of the budget deficit reduction proposal pending before Congress, Gov. Norm Bangerter was told.
The governor, who was briefed on the effect the compromise package would have on the state budget Wednesday, said he doesn't like it because it wouldn't balance the federal budget for at least four years."I'll live with any of the hits and I'll live with any of the budget problems, but I'd like to see it do something," Bangerter said. "To me, it's not hard enough. They're not doing their job."
State Budget Director Dale Hatch told the governor the higher gasoline, tobacco and liquor taxes called for in the proposal will probably result in a drop in consumption.
A decrease in sales of those products would mean a decrease in the amount of taxes the state collects. The biggest reduction would be in state gas tax revenues, about $6 million a year for the next five years.
Tobacco and liquor tax revenues are expected to fall by $1 million annually, due to a projected 2 percent decrease in consumption. Tobacco tax goes to the state's general fund while liquor tax funds school lunch programs.
Utah would also have to pick up a bigger share of Medicare costs for the state's needy residents. Hatch said the additional cost would amount to $10 million over the next five years.
The federal budget proposal also calls for $3 billion in additional cuts yet to be specified. Hatch said lawmakers are looking at changes in foster-care administration that could cost the state a total of $18 million.Airport trust fund excise taxes - which apply to airline tickets, airplane fuel and air cargo charges - are set to go up 25 percent. That would mean an increase in the tax on airline tickets from 8 percent to 10 percent.
Fred Rollins, spokesman for Delta Airlines, said the increase will hurt an industry already suffering from increases in fuel costs that resulted from the crisis in the Persian Gulf.
"There's only so much you can pass along to the consumer or the planes will be empty," Rollins said. "We think it's the wrong time to tax the consumer more."
Utahns who need assistance from the state to afford their first home could be affected.
Caught in middle
With the House preparing to vote Thursday afternoon on the deficit reduction package, Utah's congressmen appear to be caught between their own leaders and angry voters unhappy with the proposed spending cuts and tax increases. A spokesman for Rep. Wayne Owens, D-Utah, said calls to Owen's Salt Lake office were running 50 to one against the plan.