SALT LAKE CITY — There could be nearly $200 million more tucked away by Utah lawmakers this year to ensure there’s money for schools and other state needs if Utah’s bright economy starts to fade.
But legislative leaders said that doesn’t mean there still couldn’t be a tax cut, too.
“There’s always storm clouds somewhere out on the horizon. We don’t know how far out they are, but it looks like they got a little bit bigger over the last week or two,” House Speaker Brad Wilson, R-Kaysville, told reporters Wednesday, citing the impacts of the coronavirus outbreak and a slowdown in U.S. manufacturing.
Wilson said the bottom line is that House Republicans “feel like it’s important for us to be very, very careful about preparing for the future and having money set aside for rainy days when they come. Who knows if they’ll come anytime soon?”
So the House Republicans decided in their closed-door caucus to set aside $57 million to deal with an upturn in Medicaid demand should the economy falter, as well as $25 million to fight wildfires and cover costs associated with building.
Still being discussed is putting perhaps $100 million in a new rainy day account for education, where ongoing income tax revenues would be deposited so money would be available in the next budget year to pay for an increase in the weighted pupil unit, the funding mechanism for funding schools.
“We’re just trying to prepare for whatever comes,” Wilson said.
Senate Republicans, who like their counterparts in the House hold a supermajority, have not yet signed on to the proposals.
“There’s a lot of options,” Senate Budget Chairman Jerry Stevenson, R-Layton, said.
Stevenson said setting aside more money is “probably the way we need to approach this ... so we don’t have a crisis on our hands next year.” There’s already well over $800 million in the state’s two main rainy day accounts and revenue estimates jumped another $127 million above projections last week.
Talk of stockpiling even more money doesn’t mean legislative leaders are ruling out a tax cut this session, which began with the repeal of a tax reform package that would have lowered income taxes but raised sales taxes on food, gas and some services to address lagging growth in sales tax revenues compared to income tax collections.
The tax reform package, passed in November in a special legislative session, was the subject of a citizens referendum that was headed for the November ballot had lawmakers not acted. It would have cuts taxes overall by $160 million.
There are a number of proposals to revive some of the tax cuts in the failed package, including increasing the state income tax dependent exemption to help families hurt by changes in the federal tax code as well as new breaks for Social Security and military retirement benefits.
“We are trying to make decisions from a big picture standpoint,” before discussing what to do about tax cuts, the speaker said. “We haven’t got there yet. We haven’t touched the $80 million we set aside last year” for a tax cut anticipated to be part of a larger tax reform package.
House Budget Vice Chairman Jefferson Moss, R-Saratoga Springs, said a tax cut “is definitely still being discussed. It’s a question of being fiscally responsible for a potential of a downturn, and how do we ensure we can continue to provide the services we need to. But three is still a desire and a good discussion happening.”
That’s being “weighed in light of where is the economy going and what the timing of that might be,” Moss said.
Wilson, who has talked about a one-time income tax rebate this year for Utahns, disagreed when a reporter suggested a tax cut is not likely at this point.
“I wouldn’t say that,” the speaker said. “It’s premature to call that.”
Senate President Stuart Adams, R-Layton, also did not rule out a tax cut this session.
“We’ll assess that,” the Senate leader said. “Tax cuts are still on the table. And this working rainy day fund is on the table. The budget is on the table. We’ve got a lot to do in the last 15 days” of the 45-day legislative session.