Utah lawmakers plan special session in May to distribute billions of dollars in federal coronavirus aid
Billions of dollars in federal COVID-19 relief spending has boosted Utah’s economy over the past year.
The spending has fueled an astonishing increase in tax collections for the state, and it looks like the trend may continue. If so, lawmakers might have a lot of extra money to spend next year.
New revenue figures of the Utah State Tax Commission show that the overall tax collection for the first nine months of the fiscal year ending in June is $ 1.52 billion higher than the same period last year, which is an increase of 19, 3%.
Most of this money comes from increased tax revenues for individuals and corporations. Personal income tax increased by over $ 1 billion, while corporate income tax increased by $ 119 million. Next year’s budget is $ 21.7 billion.
These numbers are bigger than what lawmakers expected. In the 2021 session that just ended, projections showed just over $ 1.4 billion in additional revenue, which they used to budget for next year. Given that there are still three months to go in the fiscal year, it stands to reason that the income surplus will increase.
“We expected to receive a lot of money, but it will be difficult to determine if this is one-time or ongoing income,” said Majority House Whip Mike Schultz, R-Hooper.
Not all good news
Gasoline tax recoveries are about the same at the same time last year. Gasoline taxes are used for the construction and maintenance of roads. Aviation fuel taxes fell more than 23%, mainly because fewer Americans traveled during the pandemic.
Part of the increase in income can be attributed to the shift in the tax filing date from last year to July 15, after the start of Utah’s current fiscal year. In practical terms, the money that lawmakers thought was going to be accounted for last year is now showing up. This year’s tax collection date has been moved to May 15, but that won’t be the same problem as Utah’s fiscal year begins July 1.
Legislative budgets were already wary of the potential impact of billions of dollars from the first two rounds of federal coronavirus spending. In anticipation, they took about $ 500 million of this year’s planned permanent income and treated it as one-time money in case that cash evaporates in the future.
This is mainly to avoid the temptation to finance ongoing programs with a source of income that could disappear. This is also why Utahns probably won’t see a big tax cut, because those cuts come from permanent income.
The most recent federal relief program will inject an additional $ 8 billion into the state, nearly half of which will come from the $ 1,400 in direct payments to Utahns. All that federal money could supercharge the state’s economy and again lead to significant surplus earnings next year.
“The federal government cannot continue to spend so much money in Utah and support it,” Schultz said. “That’s where we think a lot of it comes from. As soon as he dies, he will disappear. “
Upcoming special session
Lawmakers will need to hold a special session to accept and distribute incoming federal funds. They plan to hold it in May.
One-time money traditionally pays for things like buildings, roads, or other construction. Schultz said they could use it to invest in infrastructure projects if they see another big surplus next year in one-time cash. But, he admits it could be a tough sell, as lawmakers just agreed to $ 1.2 billion in infrastructure spending, which includes $ 200 million in bonding for transit projects as well as million for improvements in Utah state parks.
“We just approved the biggest one-time infrastructure bill in our history. I just don’t know how we’re spending all this money, ”Schultz said.