SALT LAKE CITY — Utah state government is facing a hefty deficit when the budget year ends June 30 because of the decision to move the deadline for filing income tax returns from April to July in the wake of the COVID-19 pandemic.
So lawmakers are planning to meet in what will likely be the first virtual special session soon to transfer an estimated $840 million from the new $20 billion budget passed earlier this month, Senate Budget Chairman Jerry Stevenson, R-Layton, said.
The money will come from about $250 million budgeted for construction, including a new state office building at the Capitol complex, as well as rainy day funds and other sources, Stevenson said, describing the shift as “just a paper move” to prevent a deficit that could affect Utah’s credit rating.
He said he expects the special session to be “sooner rather than later.”
House Speaker Brad Wilson, R-Kaysville, also suggested it could be called quickly by Gov. Gary Herbert, as Congress rushes action on a $2 trillion stimulus package that includes individual payments to Americans and a $500 billion lending program to businesses as well as states and municipalities.
“Having clarity in the federal government actions is helpful. I’m impressed with their efforts and they will be helpful for our state,” the speaker said. “We will be discussing the need (for a special session) and items to consider over the next few days with the Senate and the governor.”
Senate President Stuart Adams, R-Layton, said there’s no question there has to be a special session.
“We’re going to have one,” Adams said, because of the new income tax filing deadline set by the federal government. “We’ll probably have enough cash but we have a potential problem that we’re going to have to solve. Even if the revenue numbers hadn’t changed, we’d have to come in to do that.”
The governor’s spokeswoman, Anna Lehnardt, made it clear in a statement that a special session is coming.
“Our office is coordinating closely with legislative leadership and working to identify which aspects of Utah’s coronavirus response should be accomplished by executive order, and which should be done through legislation,” she said.
“We will continue to coordinate with the Legislature to determine at what point a special session will be most useful and necessary.”
While Stevenson said moving money will get the state through the growing economic crisis associated with COVID-19 for now, there’s still a big question about how dramatically the revenue estimates used in the upcoming budget will be affected.
“That’s the short-term fix. Long term, depending on how long this goes, I think this is one of probably a few special sessions we will have to have through the year,” Stevenson said. “We’ll move things around, but the real impact will be what we have to do next (budget) year to make it work.”
While plans to spend $60 million toward a new state office building may “go by the wayside quickly,” he said, there’s an effort underway to look at what else might have to be cut if the business closures and other effects of the virus continue to impact the economy for months or even up to two years.
“We’ll have a list of things that we will have ranked from the easy things we can do to the more difficult. I can’t talk about those things right now,” Stevenson said, because they’re still being discussed privately by GOP senators and legislative leaders.
He said it’s not clear how much will have to be slashed from the $20 billion budget.
“We don’t know yet. That will be determined by the length, the duration of what we’re dealing with here,” the Senate budget chairman said. “If the governor felt safe to change some of the standards in three or four weeks, I think there will be kind of a pent-up demand to do things.”
Still, getting back to “a more normal situation” by the end of May might not be realistic, he said. “If you could, then I don’t know that you’d see much disruption at all. ... If this drags on through midsummer, then we’re going to have to enact some of these things that are a little more severe.”
While budget cuts are all but certain, Stevenson said layoffs of state employees aren’t inevitable.
“I think that’s a last-case scenario,” he said, suggesting before that happens, there could be a halt to hiring or even a freeze on the 4% pay increase in the budget. “I don’t want to talk about that right now. I think we have the best people in the world working for the state and really believe we need to try to take care of them.”
Stevenson stressed the state can handle the economic hit.
“We can make this work and we will make it work. It’s just going to take some time. We won’t do it all at once. A lot of it is going to depend on the severity of what we’re dealing with,” he said.
“We are very well prepared. The problem is we don’t know what we’re prepared for because we can’t see the end of this.”