by Peter Donner, Lead Budget and Policy Economist
Revenue forecasts are needed to determine the amount of money available to fund state government programs. The State of Utah uses a consensus process, which includes forecasts from the Governor’s Office of Management and Budget, the Legislative Fiscal Analyst, and the Tax Commission. Each of these agencies uses a common set of economic indicators to model the state’s various revenue streams. The Governor’s budget recommendations, released this week, are based on this forecast which yields approximately $132 million in new one-time funds (including $122 million from the FY 2013 revenue surplus) and $206 million in new on-going unrestricted General Fund and Education Fund revenue available for appropriation.
Primary economic indicators include wages, employment, taxable sales, construction value, auto sales, oil and gas production, and pricing. The indicators are developed in consensus between the three agencies with assistance from subject matter experts. Forecasts of the indicators at the state level are informed by IHS Global Insight’s forecast for the U.S. economy.
The two largest revenue sources are income tax ($2.8 billion in fiscal year 2013) and sales tax ($1.6 billion for the same year). For the education and general funds, which are the state’s general purpose funding sources, the corporate tax is third largest source at over $300 million. At about $350 million, the gas tax is larger than corporate, but is restricted to transportation programs. Other sources in the general and education funds include beer, cigarette, and tobacco taxes ($120 million), insurance premium taxes ($90 million), liquor profits ($80 million), severance taxes ($70 million), and a variety of miscellaneous sources. Total revenue to the general and education funds during fiscal year 2013 was $5.3 billion.
In order for Utah to maintain a healthy and growing economy, there must be a balance between revenue supply and funding demands. By living within our means, ensuring that spending does not exceed revenue, and by maximizing our limited resources, Utah’s future prosperity will remain strong.