Senator Lyle Hillyard, Co-Chair of the Utah State Legislature's Executive Appropriations Committee told those in attendance at a Sutherland Institute Legislative Policy Conference that uncertainty about federal funding requires continued spending restraint. He also said that there would be no tax increase.
If there is a limited surplus in February when revenue projections are released, the state may be able to cover: 1) the growth of enrollment in public education, 2) to make up for an unbudgeted $25 million for public education in last year’s budget and 3) to cover the additional cost of Medicaid for people who are eligible for the program under existing rules but who are not yet enrolled.
Referring to a conversation with a constituent whose take home pay went down despite a 3% salary increase, Hillyard said that there will be no increase in state taxes since citizens have already seen their taxes go up due to the increase in federal payroll and other taxes.
Uncertainty about federal funds, both in the short and long term, due to sequestration and the huge federal debt requires Utah to be extremely prudent in budgeting and to plan for less federal funding in the future. “If you live by the federal dollar, you die by the federal dollar,” Hillyard said.
Most state agencies are willing to find new ways to maintain existing service levels with stable or even less revenue; however, the education establishment simply wants more money to continue doing the same thing, according to Hillyard.
Education’s entrenched position led Hillyard to tell leaders of Education First that just spending more money on education is not enough and that new, more efficient and effective education methods must be found before any funding increases can be considered. In addition, students must realize that they have to personally work and succeed in school in order to be prepared for the jobs of the future.
When legislators from other states ask how Utah is able to keep its budget balanced, Hillyard tells them, “We know how to say no.” He also rejects the proposition that government can spend its way out of debt.
Since there will never be enough money to fund all desired programs, Hillyard suggests that those responsible for establishing budgets at the federal and state levels ask themselves, “Is this program important enough that I want to borrow more money from China to pay for it.”
Hillyard was asked, “Given fact that the state is fiscally prudent, would it be a time to think about another conservative idea – investment in school kids. Should we think about adjusting our revenue and increasing taxes?” Hillyard noted that the state had substantially increased funding of public education in real terms over many years and that “money alone does not serve the problem.”
When asked, what it would take to get the legislature to raise taxes, he respond that there would have to be a plan that does more than just spend more money doing the same thing. In addition, the governor would have to take the lead.
Hillyard also expressed concern about the fact that Utah is bonding at 85% of the state’s bond limit which is far above the traditional 45%. This was done on a one-time basis in order to rebuild I-15 in Utah County but some legislators and powerful interest groups want to keep it at the new higher level. Hillyard argues that the state needs to strictly limit new bonding otherwise it will end up like cities and states that are in serious financial trouble.
Hillyard also reminded those present that a huge proportion of Utah’s land is owned by the federal government so the state does not have a strong property tax base like many other states do.
When asked about expanding the coverage of Medicaid as authorized by Obamacare, Hillyard said that he opposes taking any federal money that Utah doesn't have to take because of the high risk that the federal government will eventually be forced to stop borrowing 40% of the budget from the Chinese. When that happens federal funds will dry up and the state will have to make up the loss of massive amounts of federal funds in order to balance its budget.
In response to the question “What is state’s role in compassion” Hillyard responded: “To encourage people to do as much of that by themselves.” He then explained that he has a child who qualifies for government assistance but that his family chooses to forego enrollment in government programs because “The less government does, the better off people are.”