Republican legislative leaders are in a box - GOP Gov. Norm Bangerter wants a $19 million tax decrease starting in July, but they don't believe there's room in the budget for the tax cut.
GOP leaders don't yet know which way to jump. Said one: "We're actually more conservative in this matter than the governor. But he wants a tax cut. How do we convince the public that not giving a tax cut is more responsible and more conservative than giving a cut?"Briefly, here is the problem. Bangerter recommended spending $14 million from the state's reserve account. So technically, his $2.9 billion 1989-90 budget doesn't balance.
On top of that, he didn't include a 35 percent rate increase for health care costs in his public education budget, legislative fiscal analysts say. He did include that rate increase in his state budget. Bangerter then suggested a 3 percent pay raise for state employees and public education teachers.
But that 3 percent raise for teachers turns into only a 1 percent raise if the health care is added in.
All totaled, there is $50 million in additional expenses not included in the governor's recommended budget, legislative leaders say.
How do Republican budget writers come up with the $50 million extra and still give $19 million tax cut?
"That's the box we are in," said one GOP leader.
They may try to get the governor to back away from the $19 million tax cut.
"We and the governor want some kind of (state government) spending limitation. He also wants a property tax freeze. With limitation and a freeze, maybe we don't do a tax cut this year," said another leader.
Also, what if Utah's economy over the next couple of years isn't as good as the governor believes (see accompanying story). "We could be two years down the road or maybe even this coming year, facing cutbacks in state programs or a tax increase because we spent everything the governor wanted this year, including bonding and gave the ($19 million) tax cut and then came up short," a legislative leader said.
Bangerter and the GOP-controlled Legislature were criticized this past election for "yo-yo economics" - raising taxes one year and cutting them the next. Republican leaders don't want to walk into that Democratic trap again.