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HEALTHY BULGE IN STATE COFFERS WILL MEAN FATTER UTAH WALLETS

SHARE HEALTHY BULGE IN STATE COFFERS WILL MEAN FATTER UTAH WALLETS

Utah state government will have a $138 million surplus this fiscal year, which ends in two weeks, and another $86 million surplus next year - a total of $224 million, Gov. Norm Bangerter said Thursday.

And that means you'll get a sales, income or property tax cut this year.Speaking at his monthly KUED Channel 7 news conference, the governor said the surpluses come about through an improving economy, and thus greater tax revenues, and conservative budgeting by him and the Legislature.

Bangerter wants about $50 million of the surplus to go to tax relief this year, with most of that coming in some form of retiree pension exemption from the state income tax. A Sept. 19 special legislative session will take up that matter.

A year ago, in the middle of a tough re-election fight, Bangerter got lawmakers to give a $77 million income tax rebate - on the average, a check of just over $100 for each taxpayer - and an 11 percent reduction in state income tax rates. At the time, the state had $110 million in surplus.

This year's surplus will rival the 1988 surplus, but the tax cut won't be as great. "We have many needs in water development and transportation," Bangerter said. Some of the surplus could go to education as well, he added.

Two years ago Bangerter and the Legislature raised taxes by $165 million. Add the $77 million tax rebate with the income tax reduction that accompanied it, and Bangerter says, the coming $50 million tax cut will "just about equal what we did (in tax increases) before." In other words, the tax increases that led to the divisive tax protest movement of 1988 have been removed.

Even so, Bangerter said taxpayers were right in rejecting the tax initiatives last November, adding "it would have been pretty difficult for us to live with all those cuts, especially the reduction of the gasoline tax and its harmful effect on the Transportation Fund."

Talk radio host Mill Crenshaw, one of the leaders of the tax limitation movement, said Thursday: "They lied to us then (in 1988) about state revenues and surpluses. And they're lying to us now. The surplus is even bigger. These people (Bangerter and most legislators) can't run a government, they can't budget."

But Bangerter said considering Utah has a $2.9 billion budget, state budgeters and economic forecasters only missed by 3 percent. "That's pretty good. You don't do better at home with your family budgets."

The growing, unexpected surpluses means there will be a tax cut come Sept. 19, the governor predicted. Bangerter couldn't even get GOP senators to agree to just a $19 million tax cut this past February, although, admittedly, no one knew back then there might be a $100 million surplus six months later.

State surpluses automatically fall into the "Rainy Day Fund" at the end of the fiscal year. The fund currently has about $22 million in it. State officials believe there will be such a large surplus that the fund will "top out" at its $48 million limit and

there'll still be about $90 million left over when the fiscal year ends June 30. Bangerter wants to keep the $48 million fund intact, a cushion against unexpected state needs.

In fiscal 1989-90, which starts July 1, there may well be another $86 million surplus, Bangerter believes.

There are plenty of demands on that cash, excluding tax reductions.

For instance, federal retirees living in Utah have just sued the state, saying the state must refund state income taxes they paid over the past three years. The U.S. Supreme Court ruled that states can't exempt state retirees' pensions, as Utah does, and tax federal retirees'. If they win the suit, that's a $60 million hit, state officials say.

Bangerter said most of the $50 million he'll recommend in tax reduction will go to raising the current retiree pension exemption from $6,000 per person - $12,000 per couple - to at least $25,000, thus treating fairly all senior citizen retirees in the state.

The rest of the tax cut could come through lower income, sales and/or property tax rates or restoring more of the deduction on state income tax returns for federal taxes paid.