SALT LAKE CITY — Utah may be poised to see as much as an extra $200 million in its coffers.
Depending on collection rates, the state may receive between a low projection of $130 million to $200 million more than earlier revenue excess projections when the fiscal year ends on June 30, legislative chief economist Andrea Wilko told the Executive Appropriations Committee this week. This number reflects excess revenue projections and not actual revenue.
The forecast for the state's General Fund revenue ranges between plus and minus $15 million, while the Education Fund forecasts an excess of $150 to $180 million. The Transportation Fund is projected to fall somewhere between negative and positive $5 million. These numbers will fluctuate according to how much the government manages to collect, Wilko said.
This money should be treated as a one-time increase, Wilko said, and should be spent accordingly. How the money is actually spent, however, becomes a legislative policy decision.
Roughly 50 percent of any revenue surplus will be put into rainy day, disaster recovery and other funds, according to Juliette Tennert, budget director for the Governor's Office of Management and Budget, and the rest will be available for spending. It is still too early to know where the extra revenue will be spent. Utah has accessed those rainy day and disaster recovery funds only a few times in recent history — including during the 2001 recession and again during the 2007-2009 recession.
The money will be available for appropriation by the 2014 legislative session, Tennert said.
Utah's booming housing sector is part of the reason to be confident in Utah's economy moving forward, because the economy perks up when housing improves.
“That’s really going to help us weather any sort of downturn potential,” Wilko said.
While it's good to start off the fiscal year with a positive balance, it is important to keep things in perspective, said Sen. Lyle Hillyard, chairman of the Senate's Executive Appropriations Committee.
It could be as late as September until legislators know just how much money is left over.
Other factors that may impact rising revenue numbers are the lingering impacts from the recent Kennecott landslide and looming federal budget cuts.
In Hillyard's experience, one-time gains do not necessarily lead to overall revenue gains. The state will have a clearer picture of where revenue lies when the overall revenue figures are released in early to mid-December.
His reservations aside, he said he would rather start out with a positive balance than a negative balance, although he is cautious about increasing expenditures just yet.
"I don't mind spending the money if I know I have it," he said.
The bottom line, though, is that more revenue is coming into the state's coffers than was initially forecasted, which is a good thing, according to Tennert.
"This is not a surprise but at the same time it's very good news. It gives us some confidence that what we've been saying about the economic recovery is showing up in the numbers," she said.
As a comparison, she said, surpluses last year were at $85 million.
"We are cautious because it is certainly one-time," Tennert said.
The economy is continuing to improve, as indicated by Utah's job growth. All of the jobs lost in the recession have been regained, and next year Utah stands to create 42,000 additional jobs, according to Wilko.
This increase in job growth has led to an increase in income tax and sales tax collections, which have boosted revenue returns.
The governor's office tracks the economy and revenue collections, Tennert said, so it has seen job growth and revenue collections tick up over time.
"We're not surprised by the magnitude of the numbers, given the economic recovery that is already underway," Tennert said.
The revenue surplus projections came from a consensus of several agencies, she said, which helps her feel more confident about the forecast.
The forecast is developed from a working group made up of legislative economists, Department of Workforce Services, Bureau of Economic Development and Research and the Governor's Office of Management and Budget. The group meets quarterly to assess the state's financial status.