No tax hike as Utah lawmakers face $235M in new red ink

Slide continues » Leaders plan 15 percent cuts and will steer clear of rainy-day cash.
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Utah legislators were swamped with a flood of new red ink Tuesday as they learned that the economic slowdown has left the state with $235 million more to cut than they had anticipated.

"I guess we're happy they [revenue estimates] weren't worse," said Senate President Michael Waddoups, R-Taylorsville. He said that, by tapping federal stimulus money and trimming programs, lawmakers will be able to balance the budget without raising taxes, a step he added "could have been devastating."

Fresh figures released early Tuesday found that the anticipated state revenues for the current year have fallen by another $171 million. That is on top of $365 million in budget cuts that legislators already approved earlier this month.

In the coming budget year, lawmakers now face a $320 million deficit, which has ballooned from an $85 million anticipated shortfall.

Senate Budget Chairman Lyle Hillyard, R-Logan, sees a silver lining in the figures.

"I really, honestly, expected those revenues would be down $350 million to $400 million," he said. It is "substantially less than I was concerned we would be facing."

The new numbers will drive the budget debate in the coming weeks as legislators slash programs to meet their constitutional mandate to balance the state's revenues and spending.

The 2010 budget that lawmakers adopt will be about $1.1 billion smaller than the $11.7 billion spending plan they passed a year ago. About half comes from state taxes and fees, the remainder is from federal funding.

Waddoups said the 15 percent reductions legislators called for entering the session would cover the entire $320 million shortfall.

"We'll be right on target if we make the 15 percent cuts," he said. However, that means that any hope of restoring some of the projected cuts in the coming year may have to be abandoned.

What would a 15 percent cut mean? Lawmakers tentatively have approved cuts that could mean:

» Reducing the public school year by five days, and bigger class sizes.

» Paring programs for at-risk youths and eliminating about a third of the court-ordered beds at the Utah State Hospital, a safety net for the state's mentally ill.

» Delaying about 500 prison beds and pruning staff, potentially forcing the Department of Corrections to release inmates early.

Senators said that lawmakers do not anticipate tapping the state's $414 million rainy-day funds or $100 million set aside for education programs to meet the current-year budget gap. Instead, they will save that money and try to plug the current-year budget gap with federal stimulus money.

"We're in pretty good shape," said House Budget Chairman Ron Bigelow, R-West Valley City. "I'm just tickled to death to live in Utah because we have funds to be able to resolve these concerns, and we'll work through it. We've positioned ourselves very well, and we will not be taking any options off the table."

Waddoups said federal money for education and federal health and welfare programs could cover the current-year deficit and leave the state in a strong position, with the rainy-day funds intact for future needs.

"We all knew things could've been worse," he said. "I personally have been somewhat encouraged to find the rate of decline is slowing."

The drop in revenues from the September special session to December was larger than the decline from December to now.

"We've certainly not bottomed out," Hillyard said, "but I think the fall has been diminished substantially."

Public supports cuts, but not from schools

Utahns by a wide margin (78 percent) are willing to cut services to balance the budget -- but do not support reductions in public education. In fact, more than 70 percent of Utahns oppose cutting public schools -- 54 percent adamantly so.

Source: Newly released survey of 1,000 residents by Utah Center for Public Policy and Administration, the University of Utah