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Some people may feel Utah's financial crisis is over since tax-cutting initiatives failed last fall, the economy is improving and lawmakers are debating the best way to refund a $19 million state budget surplus. But that "surplus" may be more imaginary than real.

For example, the state faces serious problems with sewage and waste water plants, with upkeep of highways, with urban transit, with education and many other programs where critical needs far, far outstrip available finances.Take just the sewage and waste water difficulties. Dozens of Utah communities are threatened with sanctions by the Environmental Protection Agency because their sewage systems are wearing out or are working beyond capacity.

The situation is so serious that in some communities, septic tanks can't handle the problem and raw sewage is seeping above ground, entering creeks and irrigation canals, contaminating underground water supplies and even running down street gutters in town.

Yet few, if any, such communities have the finances to construct new waste water and sewage treatment plants. Costs can run into the millions of dollars on any single project, completely dwarfing the people's ability to pay, particularly in many of the smaller towns.

As a News Extra in the Deseret News pointed out this week, the 39 most urgent waste water projects - those that absolutely must be taken care of immediately - would cost about $78 million. Other projects described as "current needs" would raise the total to $358 million.

Against this demand, the state has a mere $1.7 million in its revolving loan fund and controls another $16 million in federal loan money - all of which is already committed to various projects.

In the 1970s, the federal government was making direct grants to states and communities for water treatment plants to bring them up to EPA standards, but budget deficits have caused those funds to dwindle away. By 1991, there will be no more federal grants; only a revolving loan fund will be available. In any case, federal loans must be matched by 20 percent in state money.

To make things worse, as the federal funds have dried up, the EPA has tightened its environmental standards. Not having the money to meet those standards is not an acceptable excuse as far as the EPA is concerned. Failure to remedy the problems could result in fines and prohibition of any new construction, including housing.

Clearly, the best way around this problem is for the state to dramatically increase its own revolving loan fund. A measure to increase that fund by $50 million is now before the Legislature, but the bill's future appears doubtful.

Under the circumstances, lawmakers ought to be taking a serious look at state finances, recognizing that instead of surpluses, what the state is really facing is an enormous revenue shortfall compared to need.