Making the best of crisis in Utah

Making the best of crisis in Utah

By Bob Bernick Jr., Deseret News
Published: Thursday, April 23, 2009 11:53 p.m. MDT

They argued over money versus people. They cut programs and employees. And they were saved by a federal government that many of them love to hate.

Now, a new report shows that Utah legislators have placed this state in a better financial situation than most of their lawmaking colleagues in the 49 other states.

Across the nation, state governments have been hit especially hard by the economic recession — facing total budget shortfalls of $62.4 billion, says the National Conference of State Legislatures, a study and training association for the elected bodies and their staffs.

Utah and 43 other states have already held their annual legislative sessions this year, balancing budgets for both the current and next fiscal years. So the new NCSL report has complete budget data for most states.

Utah's 45-day session ended March 12, with legislators trimming around $1 billion from the state's $10.6 billion spending plan for next fiscal year, which starts July 1.

Unlike most states, Utah lawmakers did it without raising any general taxes. The vehicle-registration fee was increased by $20, however.

Speaking for the 50 legislatures, NCSL executive director William T. Pound said, "Legislators were left with only tough and unpopular options to balance state budgets."

Utah is a small state, in terms of its population and the size of its state budget. Many U.S. cities and counties have more people and higher budgets than Utah.

"State fiscal directors are using terms like 'grim,' 'bleak' and 'dire' to describe the situation," the new report says.

Hawaii's revenues have dropped dramatically, as have visitor arrivals. Its unemployment rate is at a 30-year high. New Jersey's fiscal situation "is the most dire in recent history."

But as bad as 2009 is for the states, 2010 will be even worse, says Corina Eckl, director of NCSL's Fiscal Program.

Among all the states, there will be a "jaw-dropping gap" between revenues and set budgets "of at least $121 billion" next year, she said.

And many states are also predicting further shortfalls for 2011 and beyond.

That is exactly what worries Utah House Speaker David Clark, R-Santa Clara, who recently said he greatly fears what may be coming for Utah. That's one reason GOP legislative leaders balanced the 2010 budget without tapping the state's $414 million Rainy Day Fund, or spending any of the $100 million set aside in the state's education fund a year ago.

Gov. Jon Huntsman Jr. had a similar note of concern, saying that while Utah is still better off than many states, it's too soon to say the economy has turned the corner.

"I think we're bouncing along the bottom," he said during a taping Thursday of his monthly press conference on KUED Channel 7.

The only bright spot for the states, says the NCSL report, was the federal stimulus money. "Without this money, state finances would be even worse," the report says.

Still, Utah legislators were not opposed to biting the hand that fed them. Conservative lawmakers actually passed a resolution criticizing President Barack Obama and the Democratic-controlled Congress' $800-billion-plus stimulus-package spending bill.

But that bill brought Utah $1.6 billion, much of it allocated by those conservative legislators to slim down program and employee cuts.

Instead of having to cut next year's spending by 15 percent, most programs will see 7 percent cuts, with public education getting only a 5.2 percent cut.

Thousands of state jobs were saved, at least through next fiscal year, which ends June 30, 2010.

"The fiscal situation facing states is like a bad horror movie," Eckl said. "The details get more gruesome, and the story never seems to end."

The report said the "current state fiscal crisis began in fiscal year 2008 for 19 states and Puerto Rico. This means that fiscal year 2011 will be the fourth consecutive year of fiscal problems for many states, with no immediate end in sight."

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