The approximately $1 billion that Utah taxpayers spend for public education could be reduced by $44 million if voters take the sales tax off food this November, according to calculations by Gov. Norm Bangerter's budget director.
An opinion pending from the state attorney general's office will tell state officials whether elementary and secondary schools will have to absorb part of the $90 million loss if the initiative taking the sales tax off food passes.In the meantime, state Budget Director Dale Hatch released figures Friday that show public education would lose $44 million in the budget year that begins July 1, 1991, if the loss is spread equally among all state agencies.
The Utah State Tax Commission has estimated that removing the sales tax from food would take $113 million from state and local coffers, including $90 million in revenue that now goes into the state's general fund.
Public education receives a share of the general fund, but the bulk of the approximately $1 billion annual budget comes from income taxes, which have always been used only for elementary and secondary schools.
Although many officials believe that tradition is mandated by the Utah Constitution, the governor has asked Attorney General Paul Van Dam whether the income tax dollars can be spent elsewhere.
Van Dam's spokesman, John Clark, said recently that the governor's office had been told income taxes can likely be used for higher education and other programs the Legislature designates.
Clark said Friday that tentative opinion could change as the issue is being discussed with officials in both public and higher education as well as the Legislature.
The attorney general's opinion, which Clark said could be released as soon as next week, will tell lawmakers what their options are if the sales tax initiative is approved.
Hatch said if only state agencies that receive general fund monies are affected, spreading the cuts equally would result in a 10 percent reduction in each agency's budget.
Public education would not lose any income tax revenue under this scenario, but the general fund monies used to supplement income tax revenue would be vulnerable. This year, public schools will get about $58 million in general fund monies.
But if the attorney general's office decides once and for all that income taxes don't have to be spent just on public education, an across-the-board budget cut would mean less than a 6 percent reduction for every state agency.
Under that scenario, public education - as the largest agency in state government - would be the hardest hit by the sales-tax initiative. Hatch calculates public schools would lose $44 million in the next budget year.
It's up to the Legislature to decide how to deal with the $90 million loss if voters approve the sales-tax initiative. Hatch said they'll likely come up with a solution that falls somewhere in between his two projections.
"I don't think public education will escape any impact," Hatch said. That's not lost on public education officials.
"Sure we're concerned about it," said Larry Newton, educational specialist with the state Office of Education, after seeing the projected loss Friday.
GRAPHIC: Potential revenue loss
Removing sales tax from food would cost state government about $90 million. Here's how the loss would affect each state agency if allocated equally among all state agencies.
LEGISLATURE $ 0
COMMUNITY/ECONOMIC DEVEL. $ 1,000,000
ELECTED OFFICIALS $ 1,000,000
BUSINESS/LABOR/AGRICULTURE $ 1,000,000
PUBLIC SAFETY $ 1,000,000
NATURAL RESOURCES $ 1,000,000
GENERAL GOVERNMENT $ 2,000,000
CAPITAL/DEBT/OTHER $ 5,000,000
COURTS/CORRECTIONS $ 7,000,000
HEALTH/HUMAN SERVICES $ 11,000,000
HIGHER EDUCATION $ 16,000,000
PUBLIC EDUCATION $ 44,000,000
Source: Governor's office