clock menu more-arrow no yes

Filed under:

In our opinion: State budget is good balance of prudence and investment in education

Gov. Gary Herbert talks about his annual budget proposal at the Utah Highway Patrol Salt Lake County headquarters in Murray on Wednesday, Dec. 7, 2016.
Gov. Gary Herbert talks about his annual budget proposal at the Utah Highway Patrol Salt Lake County headquarters in Murray on Wednesday, Dec. 7, 2016.
Kristin Murphy, Deseret News

Utah has built a reputation for frugality and sound state management.

With increased government revenues, low levels of debt, relatively low taxes and a thriving economy, Utah should seek to make strategic spending increases without disrupting the state’s positive economic trends.

Gov. Gary Herbert’s newly proposed $16 billion budget does just that.

A booming economy has resulted in an extra $287 million in new revenue to spend, and the governor intends to put 79 percent of it toward education. That’s smart.

When considering state budgeting, several principles apply: the state should only spend what it can afford, it should prepare for both rainy days and for anticipated population growth, and lastly it should strive to keep government costs from rising.

In the current context, this kind of allocation to education makes sense, especially since the state has grown its rainy day fund to $552 million, a figure exceeding pre-recession levels. Moreover, the new funds will cover the estimated $68 million in costs associated with the increase of students entering the public school system, and will also allow a healthy increase in allocations to school districts through the state’s weighted pupil unit.

Still, there are prominent voices making the case for even more. An initiative started in the business community called Our Schools Now is arguing for an increase in the state income tax from 5 to 5.875 — a 17 percent increase — in order to raise more than $700 million for education. The governor said he opposes tax increases and has commissioned a task force to look into ways to clean up the tax code of some deductions and loopholes in order to increase revenue. What comes of that remains to be seen, but the proposed budget as it stands — offering the bulk of additional revenue directly to schools — gives little reason for education interests to feel slighted.

With the additional funds, the budget also takes a necessary stab at relieving an inequity in the compensation of state correctional employees and appropriates $1.5 million for pay increases for Highway Patrol troopers. Those allocations recognize the need for the state to adequately compensate employees in order to attract and retain their services, something that is also very much an issue when it comes to teachers, particularly in STEM subjects. Although the proposed budget does not earmark money for teacher retention, we hope school districts will dedicate at least some of the new funds to attract and retain math and science teachers.

On the revenue side, the governor announced a deal with online retail giant Amazon to begin to collect and forward sales taxes on purchases made in Utah. That helps address a thorny problem that has limited the state’s ability to fully capitalize on a healthier economy. While total revenues are up by raw numbers, the governor believes the state is losing potential funds due to unpaid taxes from online sales, which the state estimates could be as high as $200 million per year.

The Amazon arrangement, timed nicely to coincide with the release of the budget, is a significant breakthrough that demonstrates a commitment to bolster revenues without increasing taxes. That commitment is in accord with the state’s sensible fiscal strategy. It takes a big-picture look at the realities of present and future revenue streams and has even prudently implemented “stress testing” to better assess long-term budgeting realities in potential down economies. The test is similar to that used by the Federal Reserve Bank to gauge the health of large banks, and its adaptation here is another reason the state is rightly looked upon as a prudent steward of its finances.

The governor has made reasonable choices that maximize the benefits of Utah’s bullish economy while striving to ensure it stays that way.