Utah FY 2022 revenue surplus tops $1.3 billion
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Utah ended fiscal 2022 with a $1.365 billion revenue surplus and most of its budgetary reserve funds at their highest levels since at least fiscal 2013 as the state mulls safeguards in the event of a future decrease in federal funding.
Gov. Spencer Cox and legislative leaders announced Tuesday the legislature will have an additional $130.2 million in the general fund and $1.235 billion in the income tax fund to appropriate during the 2023 session.
“Many anomalies, including unparalleled federal funding, have led to surplus revenue,” they said in a statement. “We remain committed to fiscal responsibility as we seek to fund projects that will serve our state now and for generations to come.”
Federal funding, which accounts for the largest portion of Utah’s revenue stream, was around 27% of the budget before jumping to 34% in fiscal 2022 with the influx of COVID-19 pandemic relief, according to Jonathan Ball, the state’s legislative fiscal analyst who said it decreased to 29% in the current fiscal year.
He told the legislature’s Federalism Commission on Tuesday growth in U.S. debt could start to squeeze out federal discretionary spending, making it harder to bail out states in the event of an economic downturn.
“Over time, the federal government’s going to be less and less willing to provide states with assistance,” Ball said.
While Utah already has a Medicaid rainy day fund and can tap its general rainy day fund in the event of federal funding losses, Ball said federal programs could be prioritized for state funding purposes and surplus money could be set aside to transition high-priority programs to state funding. He also suggested including federal programs in future budget stress testing.
At $330.3 million, the general rainy day fund is at its highest level since at least 2013 as is the Medicaid rainy day fund, which totals nearly $114 million, according to legislative data.
Working cash funds used to finance infrastructure projects in lieu of issuing bonds totaled $665.7 million for buildings and $1.2 billion for roads.
Utah’s first-ever debt affordability study released by State Treasurer Marlo Oaks earlier this month said while pay-as-you-go should remain the primary and preferred funding method for the triple-A-rated state, an economic recession could lead to increased use of debt to fund capital projects.
