Utah state government is rolling in the dough again.
State Tax Commission officials guessed two months ago that there would be a $50 million surplus at the end of the current fiscal year - July 1.But Wednesday tax officials told lawmakers the surplus, when the books are closed and audits completed, will be more like $70 million.
"There's good news and bad news," said Doug Macdonald, commission chief economist. "The good news is you have a significant surplus. The bad news is all kinds of people will be pulling at your coats, either for a tax cut or to get some of the surplus."
Gov. Mike Leavitt and legislators have already given nearly $250 million in tax cuts since 1992. At the same time, they raised the gasoline and the cigarette taxes - the first for road construction, the second to discourage smoking, especially by Utah's youths.
Legislators didn't give a tax cut in the 1998 session. In fact, because of authority granted counties by the 1997 Legislature, many Utahns saw their sales tax increase Jan. 1, 1998, when most counties imposed a quarter-cent sales tax hike, with an offset in the 1998 property taxes levied by counties.
Tax Commission Chairman Val Oveson noted that the cigarette tax, while bringing in more money, didn't come up to estimates in the 1997-98 fiscal year.
As reported by the Deseret News a year ago, part of that reason is that in imposing a 25-cent-per-pack cigarette tax hike starting July 1, 1997, legislators didn't give the commission the authority to impose the tax hike on cigarette distributors' inventories.
Being smart businessmen, distributors bought a lot of cigarettes just before the July 1, 1997, tax hike, held the tobacco products and then when they sold them to retailers, increased the price to nearly the quarter-cent tax hike and pocketed the difference.
The result, said Oveson, is that the state lost maybe $3 million. But he couldn't tell members of the Revenue and Taxation Interim Committee exactly how much of the disappointing cigarette tax income comes from the inventory problem and how much comes from fewer Utahns smoking because of the tax hike.
In the main state accounts - the Uniform School Fund and the General Fund - revenues are coming in at $60 million more than anticipated, said Macdonald.
But in addition to those revenues, the state inheritance tax took a big jump. A year ago, that tax brought in $10 million. Tax officials knew there had been several big inheritances that year and couldn't count on some more really rich people dying. So they lowered projections.
But some really wealthy Utahns did pass away, and in 1997-98 the tax brought in $25 million.
Some areas of the state's economy continue to outpace predictions, said Macdonald.
For example, single-family housing starts were supposed to drop. Instead, they grew by 0.6 percent the first part of 1998.
Sales tax was supposed to go up 7.2 percent, but went up 7.4 percent in the first quarter of this year.
And individual income tax receipts just keep going up and up. Individual income tax withholding is up 17 percent in 1998, and for the past fiscal year the state took in $46 million more in individual income tax than lawmakers had estimated, said Macdonald.
But all is not rosy on the horizon. The Asian financial crisis will, at some point, affect Utahns.
It could even lead to layoffs or reduced employment in some of the hard-metal industries and computer software, Macdonald warned.
About 40 percent of Utah's exports that leave the United States go to Asia, he said. "Much of that is copper and software." Certainly as the Asian economic crisis deepens, the demand for copper and computer items will drop, and that will come home to Utah, he said.