Utah's tax surplus continues to grow in the new budget year, but state officials caution it's too soon to count on having extra money to spend.
The latest revenue report shows the state nearly $45.8 million ahead for the first two months of the budget year, July and August. That's on top of last budget year's nearly $94 million surplus.
Good news, right? Not so fast, said Gov. Olene Walker's deputy chief of staff, Lynne Ward.
"It's a positive sign, but it's so early," Ward, a former state budget director, said. "It's premature to be counting on this money. . . . We can't come to the conclusion that this trend will hold for this year."
So far, Ward said, the governor hasn't adjusted the budget she's preparing for 2006 to reflect the upswing. Walker, who lost her bid to become the Republican nominee for governor, won't be in office when lawmakers consider her proposed budget next year.
The Legislature planned for only a 1.8 percent growth rate this year over the 2004 budget year that ended June 30. In the first two months of the 2005 budget year, however, that growth rate is close to 12 percent.
"Wow, that's great," Senate Majority Whip John Valentine, R-Orem, said when he heard the size of the increase in collections reported by the Utah State Tax Commission. "This is very good news for the state of Utah and its taxpayers."
But he also agreed it's too early to start planning on the additional cash. "It's too soon to use these numbers for budget purposes," Valentine said, noting the budget projections now being exceeded are made more than a year in advance.
"There's a tendency for the actual revenues to go up and down from what's projected when you take it on a monthly basis," he said. "But we'd much rather see it above projection than below projection."
Doug Macdonald, Tax Commission chief economist, predicted the state could end up with as much as $150 million more than budgeted by next June. Still, Macdonald said, lawmakers should be careful.
"I think it's kind of a bounce, not necessarily a surge," Macdonald said of the 10 percent boost so far this budget year. He said summer tourist spending could account for a chunk of the 10 percent increase in state sales tax collections, for example.
That rate of growth could be cut in half within a few months, he said. "I'm pretty sure it's going to diminish," Macdonald said, noting that revenues ran about 9 percent above projections during the 1990s, when the economy was booming.
The only significant downturn came in gas taxes, which fell 2.7 percent below what was expected in August. Macdonald said that's likely because of high gas prices, which over time encourage consumers to cut consumption.