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Leaders may raid the Rainy Day fund

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State legislative Republicans, switching an earlier position, now want to dip into the state's Rainy Day fund for $3.9 million to balance the bleeding budget this year.

Leaders cut millions of dollars from budgets Thursday afternoon in an effort to make up an estimated $202 million revenue shortfall, and final budget tweaking will take place Monday, when the Legislature formally starts its 2002 general session.

But legal concerns may keep GOP lawmakers from using the fund, House Speaker Marty Stephens said today.

Using the $120 million savings account is the main sticking point between GOP Gov. Mike Leavitt and Democratic lawmakers. Leavitt suggested spending $67 million from the fund; Democrats wanted $30 million; and Republicans before Thursday didn't want to touch emergency reserves.

By Monday GOP leaders will know whether they can tap the fund like they want or have to find the $3.9 million someplace else, said Stephens, R-Farr West. "In the whole budget it is a small amount, and we'll get it" for public and higher education one way or another, he said.

House Majority Leader Kevin Garn, R-Layton, explained the Republicans' switch in thinking: "Last year (following state law) $3.9 million in surplus went into the (Rainy Day) fund. But in a time of dropping revenues, we really don't think we should add to the Rainy Day fund when we don't have enough revenues" to cover state agency spending. Last March, Leavitt saw state revenues begin to turn south. And he ordered that a number of state buildings not be constructed. That saved some cash, and the state ended with a surplus when the fiscal year ended June 30. By law, a percent — $3.9 million in this case — of that surplus went into the fund. But that amount shouldn't be considered surplus, said Garn and Stephens, since it wouldn't have gone to the fund if Leavitt hadn't trimmed budgets.

Thursday, both the House and Senate GOP caucuses, in closed meetings, voted to tap the fund for that $3.9 million. "We'd only take the amount that went in in July," said Stephens. " And since it makes little sense to put money into the account when we're having financial difficulties, you may see an effort to avoid putting any more in" at the end of the current fiscal year, he added.

In scripted motions passed out to the audience and legislators Thursday afternoon at the Executive Appropriations Committee, lawmakers were to take $1.9 million out of the Rainy Day fund and spend it on higher education; $2 million and give it to public education. But upon learning of the legal problems, staffers quickly asked those given the scripts to tear off the that last page so those motions wouldn't be considered. And Garn said later the committee wasn't ready yet to act on Rainy Day money.

GOP leaders also decided not to raid the Legislature's own "reserve" fund, which has $3.3 million. Thursday, the Deseret News reported on the fund, which Democrats didn't know existed and even some GOP leaders said they weren't aware had grown so big over the years.

"There is no plan now to use any of that" $3.3 million in balancing the current year's budget, House budget co-chairman Jeff Alexander, R-Lindon, said after the Executive Appropriations Committee votes.

In the end, however, Republicans did decide Thursday to add money back into a variety of programs cut over the last two weeks of special budget committee hearings, including the CHIP child health insurance fund, Medicaid prescriptions and Meals On Wheels, which provides meals for the elderly and sick in their homes. Here are some of the major actions:

In public education the committee voted to forgoa $20 million savings account for student growth, which would have carved that much more into school districts' budgets next fiscal year. But it approved what translates into an $18.5 million budget cut that school districts would have to spread around immediately.

Budgeting for public schools isn't over, either, as leaders meet Monday to add to public education funding.

"We're quite anxious to know what that might be," State Superintendent of Public Instruction Steve Laing said.

The Public Education Appropriations Subcommittee had cut another $20 million out of next year's base budgets in order to save that money for projected student enrollment growth. The savings account was set up by the 2001 Legislature.

Garn sought to dissolve the savings account and disperse the money instead. His motion failed among senators on the joint House and Senate committee, but after a quick recess and chat with opponents, it passed.

Senate Majority Leader Steve Poulton, R-Holladay, said the savings account would be "prudent and wise," but voted to let it go "in light of the desire for public education to have the money now."

The state Department of Health will cuts about $1.3 million less than expected, while the state Department of Human Services will have to cut about $800,000 less.

The departments were facing total cutbacks of about $10 million each before Thursday's actions.

Included in new money is $75,000 for the Children's Health Insurance Program (CHIP). The money will allow the Health Department, which had capped enrollment and reduced dental benefits for the 27,600 poor children it covered as of December, to accept about 300 more children. But the dental benefit can't be reinstated, administrators said.

The money is not a give-back but is to be generated by an increase in the co-payment for services to those families in CHIP that earn about 150 percent of the national annual poverty level, which is about $17,400 for a family of four.

The dental coverage will still allow only emergency treatment and examinations.

Health Department director Rod Betit said the dental benefit was never intended to offer full coverage, but it grew over time and turned out to be more expensive than anticipated. Initially, coverage was expected to cost $3 to $4 per month per child but worked out to actually cost about $12 each. A tripling of the cost clearly indicates a big need for dental care among those in the program, Betit said.

Child advocates had hoped and the legislative committee assigned to review budgets and recommend cutbacks had asked if money became available that $1.7 million be added back into the budget to lift the cap and fully reinstate the dental benefit.

Human Services won't be closing 30 beds at the state hospital as a result of the appropriation committee's budget adjustment, said director Robin Arnold-Williams. And additional money will be available for meals provided to home-bound elderly and senior citizen centers.

Some of budget changes will depend on moving funds among programs and will have to take federal matching money restrictions into accout, "but this definitely gives us a little more breathing room," she said. Some legislators have not been happy with the Judicial Conduct Commission for some time. And House Majority Whip Dave Ure, R-Kamas, succeeded in taking $50,000 from the commission and giving it to Meals On Wheels.

The conduct board had just filled an administrative secretary position but now won't be able to actually hire the person and could lose an investigator because of the transfer, said Sen. Gene Davis, D-Salt Lake, a member of the conduct board, which investigates complaints against judges.

"It's a move that really hurts us but doesn't amount to pencil dust in the state budget," Davis said. "But then, it will probably buy a lot of meals."

A one-day furlough for all health and human services employees that had been suggested by fiscal analysts to help save money was not approved by the committee. However, the money it would have generated must still be cut from the budget.

Higher education officials were pleased that the budget committee agreed Thursday to allow a bill early in the upcoming session that would give university and college heads the latitude to look at budget line items as a source for budget cuts.

The Higher Education Appropriations subcommittee asked for the legislation as a one-time, stop-gap measure to help the institutions whack some $23.5 million from current budgets. With school already in session and a growth rate of about 10 percent this academic year so far, the institutions were struggling to make the required cuts.

Being able to look at line item accounts, which are protected by law, as a source would help them through this year, said Norm Tarbox, associate commissioner for finance and planning.

The proposed bill would need two-thirds support in the Legislature and the signature of Leavitt to provide relief for the current fiscal year, he said, "But the support of the executive appropriations committee is an encouraging sign. It would give us a degree of flexibility we don't now have."

About $1.7 million will be cut from the Utah Department of Public Safety. Part of the money will come from the Utah Highway Patrol's DUI squad, but $150,000 for the squad was put at the top of a wish list should more funds become available. Trooper overtime was also reduced.

Legislators voted to take $450,000 back from Davis County. The vote came despite Davis County Commissioner Dan McConkie's promising legislative leaders that $450,000 given to the county in 1998 really did go to buy land for a still-unbuilt convention center — the intended purpose of the grant. How the county will return the money is unknown.

Concerning the Republicans' use of the Rainy Day Fund, House Minority Leader Ralph Becker said: "We are glad to see they are using at least a small part of it. It's what it was intended for.

"We still think our own (the Legislature's) $3.3 million reserve account should be put into the mix, at least considered, when we're asking so many state agencies" to give up money this year, Becker said.

Contributing: Jennifer Toomer-Cook, James Thalman, Twila Van Leer

E-MAIL: bbjr@desnews.com