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FIGHT OVER UTAH `SURPLUS’ IGNORES HOW IT CAME TO BE

SHARE FIGHT OVER UTAH `SURPLUS’ IGNORES HOW IT CAME TO BE

Utah teachers certainly succeeded in capturing the public's attention with walkouts to dramatize their outrage over the governor and Legislature cutting taxes while failing to increase funding for a seriously troubled education system.

But demanding that any surplus left in the budget be applied only to schools is taking a narrow view. Other state workers and agencies are showing signs of restlessness. State employees are talking about staging their own one-day demonstration.It is clear that the struggle for any "surplus" is going to be intense and that teachers cannot automatically count on all of the available funds going into education.

What Utah officials are facing is a triangle in which each point is seeking at least a share of the surplus. The three include education, other state employees and programs, and at least some taxpayers.

Part of the public wants all surplus money returned to taxpayers, saying teachers are overpaid and underworked and too much money is wasted in the school system. They also seem antagonistic to more spending on other state programs.

Some groups, while acknowledging the needs of education, still argue for more tax cuts, especially the sales tax on food.

It is the tax cutters who have held the attention of state legislators in recent sessions. Yet polls repeatedly show that a majority of Utahns understand the critical needs of the state and would prefer to have any extra money spent on those problems rather than being refunded.

While the numbers sound large, the surplus is not that huge. There is about $130 million left from the 1988-89 fiscal year that ended June 30. It includes nearly $50 million in the state "rainy day" fund.

All of this money represents a one-time surplus for that particular fiscal year. It cannot be used in such a way as to commit similar amounts in future years. For example, $50 million could not be set aside from this surplus for salary increases, since that would mean an extra $50 million in salaries for all the subsequent years.

The surplus also includes an estimated $94 million in the current 1989-90 fiscal year that began July 1. This is money that can be expected to continue to show up in future years and thus can be committed to salaries, social programs and such.

However, the Legislature gave back nearly $40 million in tax cuts to be claimed on tax returns next April. As a result, the expected $95 million surplus for the current fiscal year has shrunk to about $55 million.

All things considered, the Legislature probably acted too hastily in returning so much of the surplus before considering the enormity of the rest of the state's problems.

Much of the argument and confusion about the surplus arises from some misperceptions. In some people's eyes, the word "surplus" means that all needs have been met and money is left over. Others argue that anything beyond the current budget amounts to "excess taxation."

Neither view recognizes that basic state needs are not being met and have not been met for many years.

Earlier in the decade, repeated revenue shortfalls forced state budgets to be slashed below agreed-upon minimums, even while tens of thousands of additional children entered the school system.

That situation, in turn, led to the record $160 million tax hike of 1987. Fortunately, the economy turned around that year and the higher taxes produced more revenue than the pessimistic, bare-bones budget had planned for. Technically, it was a surplus, but it was a surplus that came into being alongside starved and shaky state programs.

A 1988 taxpayer revolt against the higher taxes was defeated, but political leaders were nervous. Much of the surplus was refunded to taxpayers based on a percentage of their tax bill. A legislative lid was applied to spending increases. Most state programs, including education, did not have previous deficits made up.

Now it has reached the point where political leaders, educators, state workers and taxpayers must recognize that the so-called surplus is money that was squeezed for years out of basic state programs. If those programs, including the schools, are to survive, that money must be put back.