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House, Senate compromise: $300 million for tax cuts, improvements

SHARE House, Senate compromise: $300 million for tax cuts, improvements

The on-again, off-again compromise between House and Senate leaders on how much money to spend on tax cuts, transportation and water projects is finally official.

The Executive Appropriations Committee, which is made up of House and Senate leaders from both parties, agreed Tuesday to dedicate $300 million toward unspecified tax cuts and infrastructure improvements. The committee also approved 2.5 percent cost-of-living increases for state employees, a 5 percent increase in the weighted pupil unit for public education and the fee increases for the Commerce and Revenue Appropriations Subcommittee. All of those were expected to be approved last Thursday, but the deal fell through moments before a vote was supposed to be taken by Executive Appropriations.

The compensation packages for state employees and higher education employees, as well as money to cover increases in retirement and health care costs, is included in HB4, which passed the House on a party line vote, 57-17, Tuesday afternoon. The education funding will be part of a later budget bill.

Committing the $300 million does not mean that the House and Senate are any closer to solving their budget disputes, especially when it comes to tax cuts. Instead, it simply means that the money can be "used for further discussions," Senate President John Valentine, R-Orem, said.

The same $300 million compromise had been reached last week, at least between leadership and Gov. Jon Huntsman Jr., but the Senate Republican caucus did not back it. Monday, the caucus agreed on the $300 million, although GOP senators are considering an alternative tax reform plan proposed by Sen. Curt Bramble, R-Provo.

"We were trying to make certain we have an agreement within our caucuses," Valentine said about the reluctance to approve the compromise last week. "But it's now going to be real tight in some budgets," especially public education and human services.

House Republicans continue to support a $230 million tax cut, including eliminating the state's share of the sales tax on food and a 5 percent "flatter" income tax. Senate Republicans, meanwhile, have drawn the line for tax cuts at $100 million and have yet to express any willingness to remove the food tax, which would amount to a $160 million hit to state revenues.

To accomplish the larger tax cut, House Republicans have suggested using part of the $528 million in one-time surpluses for transportation, buildings and water projects. But Valentine said the money for those major infrastructure needs, especially roads and water, needs to be a long-term commitment and come from the $542 million ongoing surplus.

"It's extremely important to have the transportation and water as ongoing funding," he said. "It's an ongoing problem, and we can't solve it with one-time money."

Some legislators worry that the ongoing problems may have trouble getting addressed, as they will be hard-pressed to find money for all of the proposed specialized education programs or supplemental disability funding. After taking the $300 million off of the table and funding the compensation packages for state employees, there is only about $56 million in remaining ongoing surplus funding.

"I think many of those costs would be best served by one-time money," House Minority Whip Brad King, D-Price, said about the $300 million compromise. "We are painting ourselves into a box where we are choosing between pavement and people."

Education funding did get a $114 million boost Tuesday with the approval of the WPU and retirement money, which was in the State Board of Education's request. It was not, however, enough to satisfy the state's largest teachers union. Instead of 5 percent increase to the per pupil funding, the Utah Education Association would like to see an 8 percent increase in a year where the state has more than a billion dollar surplus.

"It's not enough to me . . . because of the money that is available," said Pat Rusk, president of the UEA. "They can do much better than that for public education."

Contributing: Jennifer Toomer Cook

E-mail: jloftin@desnews.com