SALT LAKE CITY — House Republicans are pushing a plan to scale back the state budget by withholding some $400 million of the $1.1 billion budget surplus until lawmakers pass a tax reform bill later this year in a special session.
A Friday evening Executive Appropriations Committee meeting to make key decisions about what was expected to be a $19 billion budget was abruptly cancelled after the House GOP's decision in a closed caucus to call for sticking only to "core" spending.
"Basically, the idea is to just get the main things covered," House Majority Whip Mike Schultz, R-Hooper, said, such as "must haves" like covering student enrollment growth in public schools and a cost of living pay increase for state workers.
House Budget Chairman Brad Last, R-Hurricane, described the plan as including "things we feel absolutely have to be funded in order to keep things running smoothly" in areas of public safety, corrections, social services and public education.
Last said the $400 million proposed to be held back is just a starting point.
He said the House plan is to "have kind of this core budget that will get us through the session," so once tax reform is dealt with in a special session, "we can make some decisions about what to do with the remaining surplus."
The House, he said, "is nervous about spending all the money without having a game plan going forward. Next year we’re going to be in a real bind if we can’t get this structural imbalance fixed.”
Schultz said setting aside money that would have been used to pay for new programs and other needs that have already been approved but not funded is to "make sure if tax reform doesn't pass, we have the money to get us by."
Earlier in the 45-day session, which is set to end next Thursday, lawmakers approved what are called base budgets tied to prior year spending. Now is the time when decisions are finalized about new spending in the upcoming budget year that begins July 1.
The move by the House sparked a second Senate Republican caucus Friday.
Senate President Stuart Adams, R-Layton, said after the nearly 1 1/2-hour closed-door caucus meeting that he heard about the House plan earlier in the day and that discussions were continuing through the weekend.
"We're talking about it all. Everything is on the table," Adams said, including setting aside some of the surplus. "It’s a new concept. As far as the House and Senate goes, we're trying to maintain decent relations."
But the Senate leader said he wasn't upset over the last-minute move by House Speaker Brad Wilson, R-Kaysville.
"I think they're trying to do what they believe is responsible," Adams said. "We're too close of friends to be angry."
Utah Education Association President Heidi Matthews reacted strongly to the plan.
"The huge budget numbers we’ve been hearing since December have given teachers hope that we’ll at long last see significant education increases," Matthews said in a statement.
She warned, "It would send an exceptionally grave message if the Legislature ends the session without making substantial new investments in our students in a year of such incredible prosperity."
Schultz said the House plan is not intended as leverage to get tax reform passed. Thursday, the plug was pulled on HB441, a bill extending sales taxes to a wide variety of services while lowering the sales and income tax rates.
Gov. Gary Herbert and GOP legislative leaders held a news conference to make that announcement, pledging to continue to work on stabilizing the shrinking sales tax base while giving Utahns a $75 million tax cut.
The issue, Schultz said, is the growing imbalance between income tax revenues that can only be spent on education and the state's general fund, which largely comes from sales taxes.
He said despite the big numbers in revenue growth, there's actually ony $178 million in ongoing money expected to be added to the general fund to pay for new spending in every other area of state government.
Although the upcoming budget can be balanced, Schultz said that's not going to be possible in future budget years without taking action to expand sales taxes to a wide range of services.12 comments on this story
House Democrats haven't been part of the discussions about the plan to leave the session with only a limited budget. Like many lobbyists and advocates on Capitol Hill, they were waiting to hear details.
House Minority Leader Brian King, D-Salt Lake City, said lawmakers do have to get the word out to Utahns that there's a problem with sales tax revenues that needs to be solved.
But King said that's going to be tough "when you’ve spent months and years talking about what a booming economy we have and how high our growth rate is economically and how Utah’s the best, 'rah rah rah-ing' as they've done."
Contributing: Marjorie Cortez