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Show Long-Range Financial Picture Is Uncertain Although the short-term financial prospects for the State of Utah are excellent, the long-range picture is somewhat more uncertain This was the conclusion reached by Utah Foundation, the private tax research organization in their annual analysis of the condition of Utah state finances. According to the Foundation study, Utah should conclude the present (1975-76) fiscal year with a sizable surplus and balance its 1976-77 state budget without any major tax increase. In fact, if the revenue and surplus outlqpk remain optimistic, there is a possibility that a tax reduction could be effected next year. Based on the mid-range revenue estimates prepared by Utah Foundation, the state could end the 1975-76 fiscal year with a surplus in excess of $25 million. The 1975-76 budget approved by the 1975 Utah Legislature indicated that the ending surplus would be less than 12 mUUon. Among th factors accounting for this apparent improvement in the State's fiscal picture are the following: 1. The revenue estimates used by the 1975 Legislature now appear to be somewhat conservative. 2. The national recession has not had as severe an impact on the Utah economy as was first anticipated. 3. The added revenue from the 1975 state income tax increase is likely to be greater than was originally estimated. 4. The boost in state withholding rates should produce a one-time "windfall" of $4.5-5.0 million. 5. The 3 percent appropriation cuts made by the Governor in 1974 tended to reduce the base on which the 1975-76 appropriations were calculated. 6. Lapses from 1974-75 appropriations were greater than anticipated. 7. The required lapsing of excess local taxes for the school program will reduce state costs by nearly $10 million over a three-year period ($0.9 million from 1973-74 appropriation, $2.4 million from 1974-75 appropriation, and an estimated $6.4 million from 1975-76 appropriation) This excess arises primarily because assessed valuations and local contributions to the school program were underestaimatcd at the time the program was being considered by the Legislature. The fiscal outlook for 1976-77 also appears encouraging. According to the Foundation report, if per capita and per student costs are raised 8-percent to reflect increases resulting from inflation, and if revenues follow a mid-range projection, approximately $39-million would remain for tax reduction, one-time items such as buildings, amounts for new programs, and ' or supplements to the amounts projected for regular appropriation. Foundation analysts warn, however, that part of the balance remaining after providing for basic state expenditure requirements represents nonrecurring funds. This presents a potential hazard, because if such funds are used to enlarge operating programs, financial problems could occur in the future when the nonrecurring funds are expended and revenue growth slows down. While the short-range fiscal outlook of the State is excellent, there are a number of factors which make the long-range picture uncertain. The Foundation report lists the following as possible clouds on the State's financial horizon: 1. School enrollments in Utah are beginning to rise which will place greater financial pressures on the State in future years. 2. Highway financing has encountered financial difficulties during the past year. This has required some financial support from the state general fund. 3. The federal revenue sharing program now supplying Utah with more than $12 million a year in state revenue is scheduled to expire at the end of the 1976 calendar year. 4. The 1975 Utah Legislature enacted several programs which will have a delayed impact on state finances. For example, the expanded retirement program enacted by the 197S Utah Legislature provided for a phasing-in of the necessary increased contribution rates. In addition, a new $70 million bonding program was adopted this year, but repayment of the bonds is not scheduled to begin until 1980. |