Despite the bleak revenue situation, non-smoking Utahns were spared a tax increase by the recently concluded legislative session.
Legislators focused on spending cuts and dipping into the rainy day fund, points out the Utah Taxpayers Association.
To balance the $256 million budget deficit for the fiscal year ending June 30, legislators reduced previously approved general and uniform school fund expenditures in all major categories, explained the association.
The Utah Legislature also utilized $45 million from the rainy day fund, leaving a balance of $75 million.
Despite reductions in the 2002 budget, total appropriations were approximately 7 percent higher than expenditures.
In addition, Utah lawmakers approved the state's budget for fiscal year 2003, which begins July 1.
The Legislature appropriated $3.72 billion from the uniform school and general funds for the 2003 budget. Appropriations from all sources totaled $7.6 billion.
The 2003 public education appropriation is approximately $30 million less than 2002, but still registers at approximately $50 million more than 2001's allocation.
Highlights of the 2003 budget include:
An 18 cent tobacco tax increase. The tax generates $13.8 million, $6.7 million of which will be used for general purposes.
A small increase in the weighted pupil unit, from $2,116 to $2,132
A 1.5 percent decrease for the minimum school program
Hiking state fees by $8.7 million.
A 20 percent increase for economic development and human resources from all sources.
A 7 percent increase for health from all sources.
A 9.4 percent increase for capital facilities.
Lawmakers debated at length about how much bonding would be appropriate, indicated the taxpayers association.
In recent years, the state has used general fund revenues to pay for a large share of construction projects.
The approach was prudent during the 1990s, when the economy was growing and the government was flush with revenues, added the association.
However, since the revenue situation for 2002 and 2003 is not favorable, several legislators argued that the state should opt for borrowing, especially while interest rates are at historic lows, as a means to stimulate the economy and prop up the ailing local construction industry.
Eventually, state legislators approved a $348 million bond. The bond revenue allocations include:
$25.9 million for renovation of the Utah Capitol.
$113.5 million for buildings at state universities and colleges.
$209 million for road construction.
Even with the $348 million, Utah remains below the state's constitutional and statutory bonding limits, pointed out the association.
The state's credit rating, currently the highest available, will not be adversely impacted by the bond.
The Utah Legislature addressed a public education financial crisis by passing SJR6. The bill directs the review commission to investigate the taxation of government enterprises competing against the private sector.
Government operated enterprises like municipal electric utilities, public golf courses and recreation centers are not subject to being assessed the same taxes as private sector competitors.
By subjecting the entities to the taxes, additional revenue for public education can be generated while establishing fairness for the private sector companies, maintained the association.
During the 2002 session, the Utah Legislature discussed tuition tax credits. SB69, which would have provided a $2,116 universal tuition tax credit, was passed by the Senate's education committee. However, the proposal was not forwarded to the Senate floor for a vote.
The 2002 Utah Legislature did not follow the course of the 1987 session, indicated the association.
In 1987, the state faced a similar fiscal situation and Utah lamakers increased individual income taxes by $70 million, corporate franchise taxes by $10 million, sales taxes by $60 million, gas taxes by $40 million and other taxes by $22 million.
The total tax hike registered at $202 million, roughly $315 million in current dollars. Only eight elected officials from the 1987 session are still serving in the Utah Legislature, concluded the asociation.