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Monday, December 10, 2007

'Tis the Season

By Lyle Hillyard
Senate Chair of Executive Appropriations

The Governor and Legislative Fiscal Analyst have announced the new revenue estimates, so we can begin to address various requests of legislators and public agencies for funding in the upcoming session. One must remember that they are estimating (guessing) where the economy will be 6 to 18 months from now.

This year's prediction is a very large increase, until you compare it with the past two years. Then it pales a little by comparison.

In preparing a state budget we do have to distinguish between on-going and one-time moneys, general funds (sales tax revenues) which can be used for anything, and education funds (income tax) which can only be used for education. We also need to pay attention to the spending cap and what we have committed to supplement last year’s budget.

There has been a lot of discussion about equalizing money for capital construction. If that is successful, each school district will have the same amount per student to build new schools. Tht way the students in a low property tax value district will not be deprived of the educational opportunities received by those in a richer district. One proposal was to take the property tax from the “richer” districts and give it to the “poorer” districts which would really impact Salt Lake City, Park City and most of the rural districts with a power plant in their boundaries. The districts losing money would be forced to raise their property taxes to make up for the lost revenue or cut programs or forfeit on bond payments. Another proposal meets these needs by the surplus income tax revenue much like we do to fund the WPU for the school operation budgets. The experts tell us that this would need to be $300.0 M ongoing money to really make an impact. This becomes even more important when we see tremendous growth in the Jorden School District and the impact of the split there, and what is left on the West side for a property tax base to fund their need for new facilities.

If we address teacher salaries by increasing the WPU, it will cost us $25.5 M for each percent increase. If we add salary increases for areas of special need such as Math, Science and Special Ed teachers, that could cost another $10.0 M. What about going to a true merit system whereby the truly outstanding teachers regardless of discipline received a bonus for the outstanding progress their students make while in their care? What about ELL or a new reading initiative?
It doesn’t take much effort to run out of money. I could easily take whatever department you care most about and find worthy line items so fast even unprecedented income disappears. For me personally, I believe that we owe it to our state employees (and not just the teachers) to do our best to address their low compensation. We cannot update the freeway from Point of the Mountain to Springville or even think of the Mountain View Corridor without using a lot more of the General Funds money than we have in the past unless we are willing to forgoe other road projects and take over 15 years to pay for the I-15 improvement through Utah County. Don't suggest we raise taxes. That won’t happen.

Stay tuned. I hope that by exploring the problems and process in a public manner we can focus on the real meat and potatoes of legislative work. We're going to make some tough choices. Ignoring challenges or rejecting every proposed change will only increase the pain when we finally agree that changes must occur.

I should add that our financial experts warn that the future of our current economy is very difficult to predict. The revenue estimates may change in February so we should be careful how we commit to spending. In the past we've increased spending in certain areas, only to hear it labeled as a "cut" when we had to scale back the increase a little due to new revenue estimates. I don't think that is accurate or fair.

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