STATE LEADERS ANNOUNCE BUDGET FORECAST FOR FY 2017
SALT LAKE CITY (Dec. 7, 2015) – New consensus revenue figures show Utah’s growing and diverse economy is producing additional revenue for the state. The consensus revenue forecast shows an additional $180 million of one-time funds and $380 million in new, ongoing unrestricted revenue for the upcoming FY 2017 budget.
“Utah’s economy continues to be the envy of the nation, and today’s budget numbers reflect that growth,” said Gov. Gary R. Herbert. “Our continued commitment to fiscal conservatism has led to an encouraging budget projection for the upcoming fiscal year.”
“I am encouraged by the consensus figures,” said Senate President Wayne Niederhauser. “Our economy is growing, and tax revenues are up six percent. That’s a positive thing for Utah. Although revenues are up, we need to carefully examine the entire budget to make sure we find the right fiscal balance. Many thanks to legislative staff and the Governor’s staff for the hours of work that have gone into this forecast.”
“Utah’s economy continues to grow”, said Speaker Greg Hughes. “These new revenue estimates will help us put together a budget that addresses the critical needs of the state. While they are encouraging, we must continue our careful and measured approach to the state budget.”
This forecast marks the first time executive and legislative economists completed a comprehensive review of the budget process that incorporates budget stress testing and trend analysis into the consensus revenue estimate. They agree that of the $380 million ongoing revenue growth, $53 million ($16 million General Fund and $37 million Education Fund) is associated with expansion in the business cycle and should be treated with caution when establishing long-term obligations.
# # #
Most recent state revenue estimates can be found by clicking here or on the docs below:
We’ve got some good news, some better news and some bad news.
The good news is that Utah’s fiscal analysts are very, very good. New revenue estimates show that they were within a very slim margin of their fall estimates.
Overall, new estimates show that one-time revenue is up $11 million and ongoing revenue is up $47 million, with most of that increase in the education fund. In total, the state has $144 million in new one-time revenue and $253 million in ongoing revenue.
The better news is that while the numbers aren’t shooting up, they are on an upward trajectory. They show a growing economy that is creating jobs and improving our standard of living. Utah continues to be well-positioned for what lies ahead. Our consumer confidence levels are well above national averages, and our unemployment rate, at 4.1 percent, is well below the national average.
The bad news is that there are a LOT of requests for funding on Capitol Hill and it’s impossible to fund them all.
Requests are pouring in from public education, higher education, health care, transportation, public safety and more. There is also wisdom in potentially adding it to the rainy day fund. Over the next two weeks, lawmakers will decide what to do with the additional revenue.
A final word about our analysts:
Pew Charitable Trusts declared that “Utah has taken the most comprehensive approach to studying [revenue] volatility.” And through their use of data-driven practices “can help policymakers chart a clearer course.”
So, thanks nerds, for all you do!
Alright, let’s talk about the state budget. The responsibility of ensuring that our $12.8 billion budget is balanced, yet that we fully fund education along with all the other state entities is a major undertaking. Your legislators have worked hard for months, and a final budget is nearly ready for a vote by the Legislature. So let’s take thousands of hours of debate and boil them down to a few main points.
- Our public education system is being fully funded, period. Senate Bill 2 appropriates money to not only fund the growth in our public education system, but it also increases per pupil funding. The numbers actually reflect an overall 1.15% – roughly $200 per student in new money.
- Every department in the state is receiving a 1% increase in funding, which will allow the directors to decide what has the most immediate need. While 1% may not seem like much, we look to other states to find that many are still cutting budgets this fiscal year. An increase is a great sign of the strength of Utah’s economy and fiscal policies.
- House Bill 7 appropriates additional funding to school districts and charter schools to be used towards increases in teacher salary, along with other programs, such as the school lunch program.
- HB272 would create a pilot program for children with autism. This program is an attempt to curb the effects of autism in later life, and potentially save the taxpayer money in the long term. This program is being funded by not only the state, but many other organizations, including private insurers as well as donations from the community. This money donated by private groups is not mandated by the state, but strictly a voluntary basis.
- The state’s structural imbalance will also be addressed. The state will pay off $296 million of principal and pay $142 million of interest on general obligation bond debt.
- House Bill 173 changes the way transportation projects are funded in bonds. This bill is expected to save the state a significant amount of money in interest from bonds, due to the smaller amount of bonds that are allowed for transportation funding.
- The budget also increases the amount of money stored in the rainy day fund.
- Increases in the budget, as well as other obligations we are paying, have still led to no tax increases, and we have still managed to keep our budget balanced.
Keep in mind, these are not the final numbers, which will be approved this week.
Understanding the Budget-
- Numbers in parentheses are expenditures.
- Utah is constitutionally mandated to balance its budget.
- The Executive Appropriations Committee puts together a final budget, but the Legislature still must approve it.
A few highlights from Executive Appropriations Committee meeting today: (more…)
When it comes to dealing with the major problems in the state budget, sometimes the jargon can hold us back from really understanding the issue. Here’s an example: structural imbalance. A radio show host was recently asked what he thought about the structural imbalance and his response was “it is something that would put his listeners to sleep if we mentioned it on the radio.”
So here it is in a nutshell:
Structural balance refers to the matching of ongoing expenditures with ongoing revenues. If revenues equal or exceed expenditures, structural balance is achieved. If expenditures exceed revenues, structural imbalance occurs.
Before the Great Recession, Utah achieved structural balance. The fiscal 2006 surpluses were $241 million. For fiscal year 2007 that ended last June, surpluses were $308 million in the two main tax funds, the General Fund and the Education Fund.
In 2011 state revenues do not equal or exceed expenditures. In fact, the state is an estimated $313 million dollars short of achieving structural balance and that does not include the high growth areas of the budget such as medicaid, public & higher education.
House Majority Leader Brad Dee explained the structural imbalance in these terms:
What would you do if your take home pay was less than your mortgage? More than likely you would find additional income or reduce your household expenses. As a state we are not exempt from the laws of prudent finance. I am not in favor of increases to our income through tax increases. It leaves only the alternative, reducing our expenses.
In her opening remarks of the 2011 legislative session, House Speaker Rebecca Lockhart recognized the structural imbalance as one of the key issues to be addressed this session. Utah prides itself on being the best managed state, we aren’t able to print more money (although if the Sound Money Act passes we can mint our own coin) so balancing our budget and ensuring our on-going revenues match our on-going expenses is why you will be hearing structural imbalance throughout the 2011 legislative session.