State spending limit: decreased chatter
A couple of weeks ago, we noted that we had been monitoring a lot of chatter about attempts to weaken Utah's state spending limit. One source even mentioned the possibility of a "contingent budget" based on the possibility of the spending limit being weakened or repealed. Recently, we've noticed a decrease in the volume of chatter. This is the time of the year that state government starts finalizing the next fiscal year's budget and the current fiscal year's supplemental budget.
In our September newsletter, we wrote an article about the state spending limit. The FY2007 budget is $20 million under the limit. Considering the size of the education fund ($2.76 billion) and the general fund ($2.18 billion plus $207 million in earmarks), the state is just barely under the spending limit. As a percent of the general and education funds, $20 million is about 0.4%. As a percent of expenditures subject to the limit, $20 million is about 0.9%. Click here to read the newsletter article.
We've noted that the current spending limit is not very strong since so much is excluded from the limit. In the current, pre-supplemental FY2007 budget, only 43.7% of the education fund and general fund (including earmarks) is subject to the limit. In fact, since all K-12 expenditures and most transportation expenditures (particularly earmarked general fund expenditures) are excluded from the limit, defenders of maintaining the limit have argued that the best way to increase K-12 education and transportation spending is to keep the limit in place.
The following is a list of items that are excluded from the limit:
Exempt education fund expenditures
- K-12 operations ($2.103 billion)
- K-12 capital ($37.288 million)
- Higher education cash for capital projects ($68.042 million)
- Tax Commission ($19.263 million)
- Debt service ($17.164 million)
Exempt general fund expenditures
- Transportation Investment Fund ($256.0 million)
- Debt service ($51.7 million)
- Revenue bond debt service ($9.97 million)
- Section 63A-5-104 capital developments ($128.62 million)
- Earmarked general fund ($207 million)
Source: Governor's Office of Planning and Budget
Despite the recent chatter decrease, we are still anticipating an attempt to weaken the state spending limit.