Do you know what makes week five of the legislative session special? It is the week when we receive the revenue estimates that dictate how much money the state has to spend and frames the final three weeks of budget negotiations.
Up until this point, we have been using estimates from the third quarter of 2010. These new numbers give us a much better look at how the past year closed and how the New Year has begun.
The release of the revenue estimates has been a time of apprehension the past few years. Revenue projections have been failing, at times rapidly, since this same week in 2008. Few things are more disheartening at this point in the session than learning you’ll have to go back into budget cutting mode after having already endured weeks of painful budget cutting meetings. It was one year ago today that I wrote my traditional week five revenue article that I announced that we had finally stopped falling; the revenue projects had come back as predicted, a sign the recession had at least hit bottom.
This year the numbers are much more positive and show we are indeed on the track to financial recovery. Our first estimates showed that we were short $313 million of meeting our current state liabilities without taking into account inflation or growth. The numbers projected only $216 million in new revenue, making for a $97 million net shortfall. This week’s estimates show $47 million in additional revenue growth making our total growth $263 million. It is interesting to note that the $47 million breaks down into $13 million in the general fund and $34 million in the education fund.
The lion’s share of the growth is coming as personal income tax, which is dedicated to education by our state constitution. This means Utah families are once again starting to see increases in their personal bottom line. These numbers are all ongoing revenue sources. We also saw an increase of $31 million in one-time funding sources that can be used to temporarily prop up programs while we await the more dependable growth in ongoing revenue.
When you do the math of the ongoing shortfall, combined with the new on-going estimates, we are left about $50 million short of meeting our ongoing needs. This is a much rosier picture than the one we faced just a week ago, but it doesn’t mean that all our problems are over. In addition to the now $50 million shortfall, we must also consider growth and inflation in Medicaid and public education which will require roughly $120 million combined in additional funding. Obviously, we still have some tough financial decisions to make in the last few weeks of the session, but we will be able to restore many of the cuts that were passed in base budgets a few weeks ago.
I’m excited to finally see our economy returning to a growth stage. The past few years of deep budget cuts have taken their toll on each and every section on the state budget and deeply impacted the psyche of every legislator when it comes to spending decisions. I feel that the lessons, though hard, have been valuable and helpful in our effort to streamline government. I commit, we will continue to be fiscally conservative in our budget spending so we can continue to experience economic recovery and growth.