Will Gov. Olene Walker be suggesting a gasoline tax hike this week?
Or will she just sweep the corners of Utah's $7 billion budget to find $150 million more next year for public and higher education, carrying the programs until she leaves office in January 2005?
Walker is mum on how her "revenue enhancements" will appear next Monday afternoon when she formally recommends her 2004-05 budget to state lawmakers.
Walker has previously said she won't suggest a tax increase. That would normally apply to sales, income, property and gasoline taxes.
But aides to Utah's first female chief executive have been hinting that some kind of new tax dollars should come into state government next year for increased support for public and higher education.
Deputy chief of staff Lynne Ward recently said local counties have been "getting a windfall" because 1/16th of a cent in state sales tax has been earmarked for local road projects. The gas tax should be the revenue source for such roadwork, she added.
And earlier this week, Walker's spokeswoman, Amanda Covington, declined to say if Walker considers the current 24.5-cents-per-gallon tax on motor fuels a tax or a user fee.
But whether you call the gas tax a "tax" or a "user fee," such an increase will meet stiff resistance from the 2004 Legislature, say GOP legislative leaders.
House Speaker Marty Stephens, R-Farr West — who is running for governor next year — told the Deseret Morning News this week that he personally won't support a gas tax hike this year and doesn't believe most other legislators will, either.
The gasoline tax was last increased in 1997. At the time, former Gov. Mike Leavitt (Walker was his lieutenant governor) said the tax increase should go up to help pay for a multi-billion-dollar reconstruction of I-15 and other road projects in the newly created Centennial Highway Fund.
But Leavitt also refused to admit raising the gas tax was a tax hike. He called it a periodically required adjustment to a user fee.
Conservative legislators seven years ago didn't buy Leavitt's name change — from gas tax to user fee. And Leavitt's gas tax hike was stalled in the House until he agreed to cut the state sales tax by one-eighth of a cent to offset the gas tax hike.
Lawmakers could then claim the gas tax increase, combined with the sales tax cut, was a tax shift instead of increase required to pay for huge new road projects.
But that happened in the early to mid-1990s, when the state was yearly running huge budget surpluses of $50 million to $100 million. Today, the state is barely keeping its financial head above water — the latest Tax Commission report shows only a $6 million surplus in the main state funds.
So Walker — who Wednesday said public education should get $115 million more next year, a 7 percent increase, and Thursday said higher education should get $39 million more, a 4 percent increase — can't afford to cut the sales or income taxes to offset any gasoline tax hike.
To come up with more money, Walker is looking at several pots of money to come up with the money, sources said, including taking the 1/16th cent of sales tax dedicated to county and city roads, part or all of the state's sales tax dedicated to water development, culling some of the $65 million in sales tax now going to the Centennial Highway Fund and so-called "one-time" funds.
A gasoline tax hike could offset losses to B&C roads and the highway fund. Each cent of the per-gallon state gas tax is now bringing in around $9.5 million, the Tax Commission reports. So a 7-cent gas tax hike could replace all of the $65 million in sales tax money now going into the Centennial Highway Fund.
But one source close to Walker says she could come up with the money without a gas tax increase if she just delays new highway construction for a year. Money saved by delaying the projects could be diverted to education this year, and replaced next year after the economy — and the state's tax revenue — rebounds.
"It's no great secret she is going after general fund money in roads and at least some of the water money," said one source. "And she's going after every pot of one-time money she can find. And she's gone out and found it."
Using one-time money for ongoing programs like education causes all sorts of problems for legislators, who must find some way to replace it the following year.
They also won't like being backed into a corner politically. "If she goes after that money and the Legislature doesn't go along, it will fall back on Legislators to cut (Walker's recommended) education budget," he said. "That raises an interesting issue in an election year and forces the education debate among (gubernatorial) candidates" next year.
E-mail: bbjr@desnews.com; spang@desnews.com