Republican legislative leaders and GOP Gov. Mike Leavitt agreed Tuesday on a compromise to make up a $173 million revenue shortfall in the current fiscal year, but it will require small cuts to public and higher education.
Still, many other state programs will suffer, and as many as 171 state employees will probably lose their jobs.
However, in early morning party caucuses, House Republicans fell short of the 38 votes needed to pass the new package. Senate Republicans did agree, and leaders believe a compromise will be reached by the end of the second day of a special session called to deal with the budget problems.
"Our caucus felt the compromise was not the best plan, that the GOP leadership plan was better," said Senate President Al Mansell, R-Sandy. "But the caucus also recognized it is not the only player, that the governor has a role to play, and we will work out our differences."
Under the compromise, public education — the biggest part of the state's budget — would only take a 0.6 percent reduction over the already-approved fiscal 2003 spending plan; higher education only a 0.51 percent reduction. In dollar terms, that would be a $10 million reduction in public education, just a $2.3 million cut for Utah's public colleges and universities.
Leavitt had pledged no more cuts for education programs, but Leavitt spokeswoman Natalie Gochnour said the governor agreed to the cuts because "there are ways to maintain the quality of the education system even with these cuts."
Of the proposed compromise, Commissioner for Higher Education Cecelia Foxley was "very pleased with the hard work of the Legislature and the governor" that recognized the value of higher education as the "economic engine of the state." Protecting funding for higher education ultimately is "good for the state," she said, as one means of speeding economic recovery.
Human services still takes a $24 million cut under the compromise, a 3 percent reduction that advocates for the poor and disabled say is hurtful and ultimately not necessary.
While praising the latest accommodation, which came only after GOP legislators lambasted Leavitt Monday for "blindsiding" them with last-minute budget proposals, Republican leaders warned the state's budget and 20,000 workers aren't out of the woods yet.
The fiscal 2003 budget started just July 1, and new revenue forecasts in October, December and February could mean further budget cuts before Utah recovers from the mini-economic recession it fell into last year, state officials said.
One number that jumps out in the compromise is taking $64.7 million in sales tax money out of the Centennial Highway fund, which rebuilt I-15 in Salt Lake County and now has dozens of other road projects to build.
"We actually don't have to bond any more (to make up) for that (lost) money," said House Speaker Marty Stephens. Current highway bonds that are being being paid off in four or five years will be extended to 15 years before being paid off, he explained.
Lynne Ward, Leavitt's budget director, said preliminary budget figures show the compromise will cost about 171 state jobs. But Ward said legislative budget committees were still tinkering with their individual budgets Tuesday morning and that number could change.
Leavitt was not happy with a $300,000 leadership cut in his own office's budget nor with $580,000 coming out of Attorney General Mark Shurtleff's office that went to child and family legal support. House Assistant Majority Leader Greg Curtis, R-Sandy, couldn't say if part or all of those cuts were restored in the compromise.
"We will have a compromise by the end of the day," Stephens said following a contentious House GOP caucus Tuesday morning. "Some (House Republicans) are still upset over how the governor handled the process."
Mansell said GOP senators were also upset at Leavitt over a Saturday press conference, the first time lawmakers had heard anything about Leavitt's budget-balancing proposal and only two days before lawmakers were to convene in special session.
"Our only disagreement with the governor was the timing," Mansell said, adding Leavitt could have announced his proposal a week ago and avoided the intraparty bickering of the past two days. "Timing is everything."
A key point of the negotiations was Leavitt's idea to take money from state water projects. "Some wonder in time of severe drought why we are cutting monies from the state's water development fund," Stephens said.
Leavitt originally wanted to take $18.5 million out of the water fund, saying it is wrong to give a tax subsidy to a scarce resource that we want Utahns to conserve. The compromise was to take $2.1 million out of the fund for other state programs. But Curtis said his caucus was six votes short of the 38 needed for passage of the compromise because rural lawmakers didn't want that fund touched at all.
Democratic lawmakers were basically left out of the budget-cutting process and complained about it. While they sit on the joint budget appropriation subcommittees, which met briefly Tuesday morning to rubber stamp the agreement between Leavitt and the House and Senate GOP caucuses, the compromises were really forged in half a dozen closed Republican party caucuses Monday and four private meetings between Leavitt and GOP legislative leaders.
Democrats had some ideas on how to balance the budget this year with fewer cuts to state programs, including raising $60 million by making self-employed Utahns pay state income taxes quarterly as they now pay federal income taxes. But Republicans didn't listen much to the minority party's alternatives.
Stephens, R-Farr West, apologized to House Democrats Monday afternoon for the slow pace of the proceedings but blamed it all on Leavitt. He said Ward has been meeting with legislative budget chairmen (all Republicans) and legislative staff budgeters for two months, and never said a word about Leavitt's alternative budget plan, which the governor outlined in a Saturday press conference. "We didn't know (Leavitt's proposal) was coming and it threw a monkey wrench" into the Legislature's budget-cutting process, said Stephens.
Republicans originally wanted to cut state programs by $101 million and raise $72 million by taking cash from buildings, a road fund and the state's tobacco settlement account. Leavitt agreed with $47.5 million in cuts but said public education shouldn't see a $25 million cut, higher education shouldn't take a $9.3 million cut and Corrections and Human Services shouldn't suffer an $18.5 million reduction. Instead, Leavitt said leave those programs harmless and take ongoing sales tax revenue from the Centennial Highway fund ($35 million) and take $18.5 million in sales tax from a water development fund.
GOP lawmakers balked at the governor's alternative. Through daylong private meetings, stretching into Monday night, the compromise was reached.
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