Utah’s economic growth slowed in 2024, meaning that — while they won’t be checking between couch cushions for loose change — lawmakers are dramatically scaling back their visions for new programs and spending this year.
New revenue numbers, agreed upon by the governor’s and Legislature’s budget offices, said that the sales and income tax collections for the year will total about $13 billion, up about $200 million from last year, but down $112 million from what they were expecting just a few months ago.
The sales and income tax collections combined with money from the gas tax and mineral lease collections make up about 40 cents of every dollar the state spends, but represent the bulk of what lawmakers have at their disposal to fund new projects or expand existing programs.
Senate Budget chair Jerry Stevenson, R-Layton, said lawmakers are used to calling lean budget cycles the “socks and underwear” years, but this year they might have to wash them and keep wearing the old ones.
“This is going to be a very limited year and maybe we should all take a hard look at the asks that we have,” he said.
It’s not quite as bad as legislative leaders are conveying. The money they have available to spend does not include about $230 million that they set aside for tax cuts. Legislative leaders would not say that a tax cut is off the table.
“That’s above my pay grade,” Stevenson said.
Legislators have cut taxes each of the previous four years, chopping $1.3 billion from state revenues over the last four years.
Two bills are looking to once again cut the income tax. One, by Rep. Kay Christofferson, R-Lehi, would cut Utah’s tax rate from 4.55% to 4.45%. Another by Riverton Republican Sen. Dan McCay would cut the rate to 4.5%. They would cost $195 million and $97 million, respectively.
“I think we’re still looking at a tax cut,” Senate President Stuart Adams, R-Layton, said. “Tax cuts will be on the table until we say they’re not.”
The limited new revenue has legislators tempering their expectations in the coming year.
For example, Senate Majority Leader Kirk Cullimore, R-Cottonwood Heights, had initially requested $80 million to expand the state’s school voucher program, nearly doubling the existing funding for the program and providing enough money to provide vouchers to about 10,000 additional students.
That request had already been cut in half before Wednesday’s budget numbers were announced and legislative leaders set about prioritizing projects.
All told, legislators requested $1.4 billion in spending on new projects — not including requests for new items from the governor and state departments — only a small percentage of which will actually become a reality.
Legislative leaders will set about picking apart the recommendations made from subcommittees that oversee specific areas of state spending to whittle down the list and produce their own budget priorities. Almost all of that work is done behind closed doors.
Among the big ticket items was a proposal from Sen. Luz Escamilla, D-Salt Lake City, to forgive student lunch debt for low-income kids. Wiping out all lunch debt would have cost $160 million and so far just a few million dollars have been recommended for the forgiveness.
With a glut of COVID-related funding expiring in the last couple of years, Utah’s overall budget has been fairly flat, hovering around $30 billion, all told. With the population influx into the state slowing, federal spending ratcheting back and wages normalizing, legislative budget forecasters are projecting slower growth in the state budget in the coming years.
Cox has proposed eliminating the state income tax charged to Social Security recipients, a change that he said would mean a tax break of about $1,000 for 150,000 Utah seniors. But it, too, has a steep price tag, totaling about $150 million. His budget in December also requested $24.7 million to double the state’s energy production, $130 million for school safety and $18.8 million for homelessness programs.
Many of those requests will also be scaled back in the face of the new budget paradigm.
This story is developing and may be updated.
