SALT LAKE CITY – Utah’s part-time lawmakers will be seeing a lot more of the State Capitol building in coming weeks as they try to resolve a looming budget crisis.
The Legislature will meet in special session late next week for appropriations subcommittee meetings, according to Senate chief of staff Mark Thomas. Preliminary budget adjustments will be discussed in those meetings, but final decisions will depend on estimates of the budget shortfall for next year that won’t be available from legislative analysts until another special session is called sometime in June.
Thanks to the economic shutdown due to the coronavirus, a state budget shortfall for Fiscal Year 2020-21 is a foregone conclusion. The question in lawmakers’ minds is how bad the fiscal deficit will be.
“We know now that revenue from income tax and sales tax is plummeting,“ said Utah Sen. Lyle Hillyard in a recent Facebook town meeting. “But we don’t know how far it’s going down, when it’s going to end or where it’s going to be when it does end. We’re just … watching the free-fall right now.”
The prospect of a significant decline in state revenues is a matter of particular concern for Hillyard, since he is a member of Senate subcommittees that weigh appropriations for both public and higher education.
Hillyard said lawmakers are not contemplating tax increases as an option to resolve the fiscal dilemma. Senate Budget Chairman Jerry Stevenson has said previously that Utah would prefer to avoid any layoffs of state employees.
Instead, legislators are attempting to develop alternate plans for how various state programs and accounts would have to be trimmed if the revenue shortfall represents 2 percent of the previously planned $20 billion budget, 5 percent and even 10 percent.
In a worst case scenario, according to Senate staffer Thomas, a 10 percent budget shortfall would mean $20 billion less in income and sales tax revenues.
Like the rest of the state, Utah lawmakers have been in limbo since the end of their regular 2020 session in mid-March.
Even before the last gavel fell in the regular session, it was obvious to state officials that the coronavirus shut-down of businesses would adversely impact the current year budget. Two special sessions of the Legislature were called in mid-April to transfer more than $800 million from the 2020-21 budget to cover the shortfall in current funds and pass emergency legislation to respond to the pandemic.
Now, lawmakers face the dual challenges of replenishing those funds borrowed from the state “rainy day” fund and other accounts, plus planning how to adjust next year’s budget to accommodate the anticipated revenue shortfall.
Both those processes are further complicated by the federal decision to move the deadline for filing income tax returns from April 15 to July 15 in the wake of the COVID-19 pandemic. That decision also delays realistic revenue projections from Utah’s fiscal analysts.