Despite tax collections that the Utah State Tax Commission's chief economist says are indicative of a "very robust" economy, Gov. Jon Huntsman Jr. isn't prepared — at this point — to support a tax cut.
Given record prices for motor fuel, an anticipated uptick in natural gas costs and unmet needs in state government, Huntsman is prudent to take a wait-and-see approach. While taxpayers are keenly aware of the huge spikes in motor fuel prices, they'd rather have surplus revenue in their pockets than the government's coffers. Ultimately, it's the Legislature's call to return some of the surplus back to taxpayers.
First, state leaders need to address some pressing needs.
Take the state's Department of Corrections. The state's prisons, and county jails that house state inmates, are bursting at the seams. To ease overcrowding, state prisons have resorted to the early release of inmates who had parole dates and had been on good behavior. This is hardly optimal, but Corrections does not have enough beds and some counties have become reluctant with the ongoing disputes over reimbursements they receive from the state for housing state inmates. If the counties hesitate to build more bed space, the state must. One option would be spending $15 million to build another "pod" at the Gunnison prison.
The Legislature also should take this opportunity to set aside a considerable amount of money for open-space preservation. A greater commitment to the LeRay McAllister Critical Land Conservation Fund would go a long way to preserve important open spaces and help maintain Utah's quality of life.
It's understood that lawmakers face challenges regardless of whether there is too little state money or a surplus. In times of shortfall, they have to make the difficult decision to cut programs and slash budgets. In times of plenty, there is an opportunity to restore funds and add more. But constraint is still a virtue because growth in ongoing programs that cannot be sustained over the long run means more cuts when times are lean.
Huntsman's instincts to hold the line — for now — are correct. But at some point, the state has an obligation — and an interest — in returning money to taxpayers so they can generate more economic activity.