Sales tax revenue is piling up in state coffers faster than either the Legislature or the governor's office predicted, according to a report from the Utah State Tax Commission.
The report includes an analysis of sales taxes collected by the state during the first two months of 1989, which represent the sales taxes charged on purchases made during the fourth quarter of 1988.That analysis shows that sales tax collections are up an estimated $13 million above what the legislative fiscal analyst forecast and about $7 million more than what the governor's budget director determined.
Despite the strong showing of sales tax collections, however, no one is suggesting that lawmakers convene for a special session to spend the potential windfall.
Before adjourning last month, the 1989 Legislature could not agree on how to cut taxes to prevent future state surpluses. Gov. Norm Bangerter had proposed a $19 million reduction in taxes.
The $19 million will be added to the $24 million already sitting in the state's "rainy day" fund, which may be saved for unanticipated emergencies or spent by the Legislature during some future session.
Dale Hatch, the governor's budget director, said the final surplus won't be tallied until after the end of the state fiscal year on June 30. A final estimate is made in mid-May.
"There are a lot of things that could happen between now and then," Hatch cautioned. Hatch had said that the state would likely collect $14 million more in taxes than budgeted for the current fiscal year.
Legislative Fiscal Analyst Leo Memmott was more optimistic, telling lawmakers that state revenues would end up some $29 million more than expenditures by the end of the fiscal year.
Marion Wittwer, senior legislative fiscal analyst, said that during the session Memmott was concerned his estimate might be too high. "I'm sure he'd say, `Let's be a little cautious,' " said Wittwer of Memmott, who is out of town this week.
Part of the reason for the hesitancy to accept what appears to be good news is the bad news contained in the analysis: The amount of withholding taxes being collected by the state is down from projections.
Tax Commission forecasters say that is the result of last year's tax cut. In a special session last summer, the Legislature voted to cut income tax rates to help reduce the already growing surplus.
Still, there is the feeling among forecasters that the surge in the economy shown by the increase in sales tax collections means that the state will end up even more in the black than expected.
"I don't think it's earth-shattering," Tax Commission Chief Economist Doug MacDonald said of the analysis. "But it's certainly reassuring that things are looking up in Utah."