On Monday, Gov. Olene Walker introduced a proposed 2004-2005 budget for Utah. Not everyone was impressed with Walker’s tentative finaincial guidelines.
“Actually, the package – in total – is bad,” commented Sen. Mike Dmitrich on Tuesday. “There are a lot of things in this budget that the former governor tried before and they didn’t make it through the Legislature.”
In the Monday announcement, Walker referred to the matter in her address when she proposed the new numbers.
“If at first you fail, try, try again,” remarked the governor. “That’s what my mother used to say.”
However, the new proposal has some wrinkles that former Gov. Mike Leavitt’s budget did not include.
Part of Walker’s plan is to require self-employed business owners to pay quarterly taxes, similar to the federal government.
One of the emphasis in Carbon County’s economic development program is to get people to start small businesses. County economic development director Delynn Fielding thinks the tax could hinder people wanting to do startups.
“A plan like that simply burdens small business with added government paperwork,” said Fielding.
But the new budget primarily takes money from one area to contribute to another.
For instance, Walker previously announced that the gubernatorial emphasis would be on education during her term in office.
The governor’s budget plans include a $116 million increase for public education and a $26 million increase for the schools of higher learning. Walker wants to give state corrections $25 million more and increase Medicare by $24 million. She also recommends putting $25 million in the state’s rainy day fund.
In addition, Walker wants to give all state employees a 2 percent raise in salary. The governor said the salary increase is important because state employees have not had any raises for a couple of years.
But based on Novembers figures, the state’s revenues – while improving – have not grown enough to put more money into the areas without cutting other funding.
First, Walker wants to take $65 million from the Centennial highway fund. The fund was established during Leavitt’s reign and some consider that money a promise in trade other things that went on at that time.
“I consider the Centennial highway fund a covenant that was made by the former governor,” noted Utah Rep. Brad King. “That money was set aside to be used for rural roads because of all the funds spent on the Interstate 15 rebuild project.”
But Walker said transferring the money would primarily affect roads in the metropolitan area, with the exception of one rural project in Box Elder County.
Utah Department of Transportation officials were not available for direct comment on Wednesday. But region four spokesman Myron Lee stated that the “department would do whatever the governor asked them to do.”
By law, the governor must propose a budget in December. But the Utah Legislature decides the final spending priorities of the state.
“That’s kind of the funny thing,” said King. “California got rid of their former governor, not because of what he did, but because of what the Legislature in the state did. If the people did that every time things went bad, we would have 50 new governors in this country.”
King, who will be in charge of authoring the Democratic budget plan, said part of the problem is Walker is having to use November numbers, while he will be able to wait until February.
“Obviously, we will have more and better information to do that than she did in November,” said King. “But we need to remember that we also have a $38 million budget deficit that is ongoing that we need to take care of. The revenues that were projected for this year are not as good as was expected.”
The Centennial highway revenues are the biggest part of the proposed budget, but Walker also wants to transfer $18 million from city and county road funds, take $14 million from water loans, absorb $9.5 million in fire fighter retirement revenues and hire collectors to work on delinquent tax accounts. The governor estimates delinquent taxes will produce $10 million.
“Taking money from water has failed every time it is presented,” pointed out Dmitrich. “And I don’t think it would pass this time.”
Another wrinkle in the governor’s budget is the proposal to take away fire fighter retirement benefits and turn the responsibility over to local governments running the services.
“That is one of the things that would really affect Carbon County,” noted Dmitrich. “People actually pay the cost for the volunteers retirement through their fire insurance premiums and don’t even realize it. But in this case people would still pay the money but it would go somewhere else and local government would have to pick up the bill for the retirement. I am definitely opposed to that.”
The state’s budget shortage is primarily the Legislature’s fault, said Dmitrich. A few years ago, the body removed the federal deductibility from certain classes of income earners, cutting the taxes.
“They dug themselves a hole which resulted in about a one billion dollar reduction and now there is a big shortage,” he said.
The governor’s budget is beneficial to funding recipients.
“We will always welcome any help we can get,” said Carbon School District Superintendent David Armstrong. But he added that the money is only really good if “it is unrestricted.”
Restricted money is usually tied to a program like Title I or can only be used for certain things such as capital outlay projects, explained the superintendent.
“Based on my calculations, in a perfect world, we could use about $2.8 million a year in additional money,” said Armstrong, admitting the chances were remote. “That would allow us to have money for programs the legislature has already mandated we include like foreign language and intervention teachers.”
As an administrator at College of Eastern Utah, King liked Walker’s picture for education.
“I love her priorities,” said King. “That kind of program would bring some balance back for education.”
Most money appropriated under the governor’s budget would come for growth, explained King. CEU declined in size last year.
“It hasn’t been a great couple of years around here,” stated King. “Everyone is wearing at least two hats and we have gone from 23 professionals down to about 16. However, we aren’t as bad off as some places. In Colorado the colleges lost over 20 percent of their staffs because of decreased funding.”
There are two ways to remedy a deficit – cut programs or increase revenues. New business growth is not expected to meet the needs. But Dmitrich said a tax increase is a remote possibility.
“The Legislature gave all these tax reductions in years past, but they are not going to look at increasing them in this session,” explained the state senator. “There is a big election going to take place next fall.”
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