by Howard Stephenson


One of the biggest victories for taxpayers at the recently concluded General Session of the Utah Legislature was passage of SB 223 – the omnibus tax cut package – which enacted eight different tax cuts totaling $219 million including a significant cut in individual income taxes, a drop in food sales taxes, and several tax cuts related to economic growth efforts.
Tax cut summary
•Income Tax Reform – repeals the dual system beginning in FY 2009, reduces the flat tax from 5.35% to 5.0%, implements credits based on income levels, and provides a retirement tax
credit. FY 2008 impact: $27,175,000 Education Fund; FY 2009 impact: $108,700,000 Education Fund.
•Research and Development Credits Expansion – FY 2009 impact: $14,500,000 to the Education Fund.
•Renewable Energy Credit (Sales Tax and Education Fund Credit) – FY 2008 impact: $688,200 Education Fund and $644,000 General Fund; FY 2009 impact: $2,326,700
Education Fund and $644,000 General Fund.
•Dental Prosthesis Sales Tax Exemption – FY 2008 impact: $915,700 General Fund; FY 2009 impact: $1,886,400 General Fund.
•Non Oil and Gas Mining Exemption- FY 2008 impact: $2,431,000 General Fund; FY 2009 impact: $5,013,000 General Fund.
•Cable Equalization – FY 2008 impact: $2,384,000 General Fund; FY 2009 impact: $5,006,500 General Fund.
•State Sales Tax Reduction from 4.75% to 4.65% – FY 2008 impact: $19,642,800 General Fund; FY 2009 impact: $40,857,000 General Fund.
•Food Tax Reduction from 2.75% to 1.75% – FY 2008 impact $19,427,000 General Fund; FY 2009 impact: $40,408,200 General Fund. The total state revenue loss from SB 223 S2 is $73,307,700 in FY 2008 and $219,341,800 in FY 2009.

Record spending increases adopted

Due to Utah’s private sector economic expansion revenues have been growing at record rates. The legislature decided how to spend $300 million in surplus tax collections and estimated revenue growth of $1.4 billion over the next two years.

The Legislature provided a 3.5% cost-of-living adjustment (COLA) and an additional 1.5 percent discretionary salary increase for all state and higher education employees, excluding judges and elected officials; funding was also provided for a 4% increase in the value of the Weighted Pupil Unit for Public Education. Judges will receive a 10% COLA and certain local contract service providers will receive a 6%COLA. The Legislature also approved a 3% salary increase for elected officials (except for the State Treasurer, whose salary will increase to95 % of the Governor’s salary) and appropriated $5.7 million for market comparability adjustments for the Office of the Attorney General, Highway Patrol, and the Department of Corrections.

School teachers will each receive a $1,000 one-time bonus and an ongoing salary increase of approximately $2,500. Efforts to enact merit pay for teachers and differential pay, to ensure that Utah can attract math and science teachers by paying them $5,000 more than other teachers, failed but will be reconsidered in 2008.

In addition to salary increases, the Legislature provided funding for increases in the termination pool rates, judges’ retirement rates, and health insurance premiums.

Public education receives half billion dollar increase

The Legislature increased total appropriations to public education by $489.5 million, appropriating over $2.5 billion in state revenues to support the public education system, representing a 23% increase over the FY 2007 state appropriation enacted a year ago.

Shown below are some of the most significant increases in public education funding:

Minimum School Program

•Weighted Pupil Unit-$88 million in ongoing funds increases the value of the WPU for WPU driven programs and selected non-WPU driven programs by 4 percent.

•Teacher Salaries-$68.7 million ongoing to increase teacher compensation & $33 million one time funding to provide teachers with a one-time bonus. An additional $7 million one -time funding provides bonuses to classified employees.

•Enrollment Growth- $72.8 million ongoing to fund the projected 14,500 new students in fall 2007.

•Electronic High School-$700,000 ongoing supports student enrollment growth in the Electronic High School

•Library Books and Electronic Resources-$1.5 million ongoing for schools to improve library/media center collections.

•Teacher Supplies and Materials-$10 million in one-time funding for reimbursements to teachers for out-of-pocket expenditures on classroom supplies and materials.

•K-3 Reading Program – $2.5 million ongoing to support school reading programs, state matching funds total $15 million.

•Pupil Transportation-$4 million ongoing & $8 million one-time funding to offset increased costs to school districts associated with transporting students to and from school.

•Computers in Schools-$50 million in one-time funding to provide education technology enhancements directed at improving classroom instruction.

•Quality Teaching-$6.6 million ongoing funding to support additional professional development time for educators.

• School Building Program-$50 million in one-time monies to support construction and renovations of school buildings throughout the state.

•Charter Schools- $14.4 million ongoing & $15.5 million onetime to support Local Replacement Funding, Student Growth, School Level Administrative Costs, and administrative support

for the State Charter School Board.

Education Agencies

•Office of Rehabilitation-$150,000 in ongoing funding to support rural outreach services by Independent Living Centers & $1 million in one-time funding for Assistive Technology.

•Utah Schools for the Deaf and Blind-$897,300 ongoing to provide for statutory teacher salary increases, steps, and lanes as defined in 53A-25-111.

•Utah State Office of Education-$3.4 million ongoing funding to support the U-PASS assessment system.

•Utah State Office of Education-$9.5 million & $100,000 onetime funding to support the Parent Choice in Education Act.

• State Charter School Board-$300,000 ongoing funding for additional staff support, $100,000 was transferred from the Minimum School Program.

•Outreach Programs-$700,000 ongoing & $100,000 one-time to provide additional services to students and teachers in the Fine Art Outreach and Science Outreach Programs.

All in all, taxpayers, state workers and public education had big victories this year. The real question for the future is how much of these increases are sustainable.