The Legislative program for FY 1996 enacted in the 1995 General Session, totals $5,027,609,440 from all funds for the operations of state government and for state and local support to local school districts. This total includes the effect of all general appropriations acts, the School Finance Act, acts carrying specific appropriations, and estimated federal funding.
The FY 1996 program is compared by function and source of funds to the estimated budget for FY 1995 in Table 1. The estimated column for FY 1995 includes the original appropriations made in the 1994 General Session and any changes in federal funds and dedicated credits or other sources of funds. The revised FY 1995 column in Table 1 reflects the effect of supplemental appropriations made in the 1995 General Session. The FY 1996 program is an increase of 3.6 percent from the revised budget for FY 1995.
General and Uniform School Fund appropriations for FY 1996 are compared to the original appropriations for FY 1995 and to the revised appropriations including supplementals from these funds for FY 1995 in Table 2. The table also includes the effect of transfers from the General Fund to the Budget Reserve Account in both fiscal years. The FY 1996 General and Uniform School Fund appropriation is 10.6 percent above the revised FY 1995 amount.
The revenue projections adopted by the Legislature for FY 1996 for the General, Uniform School, and Transportation Funds are shown on Table 3. Also shown are the estimates for the Mineral Lease Account. The effect of legislative changes as the result of bills or other actions are shown in a separate column resulting in a revised estimate for FY 1996. Table 3 also includes revised estimates adopted for FY 1995.
One of the main areas of focus of the 1995 General Session was property tax relief. The Tax Commission factoring orders, if implemented by county assessors would increase assessed valuations of properties in 24 of the 29 counties. In addition to the factoring effect, property taxes would also increase as a result of an agreement made by the counties to move to current 1995 market values for homes and businesses. The combined effect from factoring and the move to 1995 values on assessed valuations could be as low as an 11 percent increase in a county like Grand County, or as high as a 70 percent increase in a county like Salt Lake. The tax increase from factoring resulting from the local contribution to the Minimum School Program at the new rate would have been about $46,828,000. Coupling the factoring effect at the new rate with the tax cut of $90,000,000 imposed in Senate Bill 254, results in a potential property tax cut of as much as $136,828,000 in FY 1996 from what could have been collected.
In order to provide relief to the taxpayer from factoring the Legislature passed a series of bills which were intended to offset the effects of the factoring orders and the shift to 1995 values. The most significant of these bills (Senate Bill 254) provided $90,000,000 in tax relief by decreasing the rate authorized for the local contribution to the Minimum School Program from .004220 to .002864. This bill also increased the gross receipts tax on utilities by $9,474,000 to offset the effect of the tax cut. The Legislature also passed Senate Bill 56 which increased the residential exemption for primary property to its constitutional limit of 45 percent. The benefit derived by increasing the residential exemption is to further offset the effects of the factor orders. To prevent any windfall from the factoring orders the Legislature passed House Bill 258 which floats the local contribution to the Minimum School Program and the state assessing and collecting levy. The net effect of these property tax changes should be to decrease the effect of the factoring orders on individual property owners.
The Legislature also provided sales tax relief to several taxpayers by narrowing the base on which sales tax is charged. Medical equipment and manufactured homes, and manufacturing equipment for new and expanding operations were removed from the sales tax base. The legislature also reexempted construction materials for school buildings from the sales tax. When fully phased in the effect of these changes will be to lower revenues by approximately $34,500,000. Extending the exemption to new and expanding manufacturing equipment purchases could serve as an incentive to induce corporations to relocate to Utah.
In summary, the focus of the 1995 General Session was to lower taxes for several groups including residential and business owners, lower income individuals, and large corporations. The only significant tax increase was the increase in gross receipts tax imposed on utilities.
The 1995 Legislature enacted a number of bills that will impact the revenue of the General Fund and Uniform School Fund for FY 1996 as follows:
House Bill 56 Sales Tax - Home Medical Equipment This bill exempts home medical equipment and supplies from the sales tax. The estimated loss of General Fund revenue in FY 1996 is $288,000.
House Bill 120 Sales Tax - Authorized Carrier Exemption This bill exempts sales of motor vehicles, aircraft, and railroad rolling stock sold to, leased or used by authorized carriers. The estimated loss of General Fund Revenue in FY 1996 is $150,000
House Bill 274 Sales Tax On Construction Projects This bill reinstates the exemption from sales tax for construction materials used in public education building projects. The estimated loss of General Fund Revenue in FY 1996 is $2,030,000
Senate Bill 43 Agricultural Sales Tax Exemptions This bill tightens the requirements necessary to qualify for a sales tax exemption for sprays and insecticides and agricultural seasonal sales. The bill also exempts the sales of hay from sales tax. The net effect of the bill is to increase General Fund revenue by $275,000.
Senate Bill 105 Sales Tax - Manufacturing Equipment This bill extends the sales tax exemption for manufacturing equipment to replacement parts. The estimated loss of General Fund revenue in FY 1997 is $8,577,000.
Senate Bill 273 Sales Tax Exemption on School Fundraisers This bill exempts sales by students in grades K through 12 for the purpose of fundraising. The estimated loss of General Fund revenue is $50,000 in FY 1996.
Senate Bill 289 Sales Tax Mobile Homes This bill exempts 45 percent of the sale price of any new mobile home purchase or 100 percent of the resale price for a used unit. The estimated loss of General Fund revenue in FY 1996 is $1,060,000.
House Bill 20 Tax Incentives for Employ Persons with Disabilities This bill provides an income tax credit to employers who hire individuals with disabilities. The estimated loss of Uniform School Fund revenue in FY 1996 is $64,400.
House Bill 279 Income Tax Credit for Providers of Individuals with Disabilities This bill provides an income tax credit for cash contributions made to private nonprofit providers of services to individuals with disabilities. The estimated loss of Uniform School Fund revenue in FY 1996 is $72,000.
The Legislature approved a compensation package for employees of state agencies that included funds for merit increase steps of 2.75 percent for eligible employees; an increase in premiums for health insurance; retirement increases; selective salary range adjustments for those employees whose salary ranges will be changed; and bonus pay for those eligible due to performance.
The FY 1996 Appropriation Act includes 4.0 percent increase funding for salaries and benefit costs for faculty, staff and administration in Higher Education. The plan of financing includes: $12,186,300 from the General Fund, $15,200 from the Uniform School fund, and $4,260,600 from tuition revenue. There was also appropriated $272,500 to fund faculty salaries increases at Dixie College, Southern Utah University and Salt Lake Community College above the 4.0 percent received by the other institutions.
Compensation for administrators, teachers, and classified personnel in public education is established at the local level on a district-by-district basis through the negotiations process. Since State funds, through the Minimum School Program established by the Legislature, are usually the largest income source for local school districts, the percentage increase in the weighted pupil unit (WPU) guarantee has a direct correlation with increases in salaries and benefits.
The 1995 Legislature provided an increase in the value of the weighted pupil unit for FY 1996 of 4.0 percent. The School Finance Act specifies that, "local school boards shall provide higher salary adjustments to classified employee groups in comparison to other district employee groups when dividing the weighted pupil unit for salary adjustment purposes." A similar provision is also included providing the same salary adjustment intent language for "employee groups that work with the transportation of students." The Legislature also increased the Career Ladder program funding by $1,704,344 for FY 1996 which provided for indexing of the program to the WPU value and pupil growth.
The Legislature increased the salaries for elected officials and judiciary as indicated below.
The Legislature increased the minimum and maximum rates of the Executive Compensation plan for appointed official (department directors) by three percent for Governor who has authority to set the salary of appointed officials within the ranges approved by the legislature. Salaries for the Legislature did not change.
Table 1 State of Utah
|Public Safety & Nat'l Guard||65,283,900||292,600||65,576,500||69,648,800||6.21%|
|Min. School Program||1,359,445,262||12,000,000||1,371,445,262||1,440,836,640||5.06%|
|School Bldg. Program||21,416,000||2,000,000||23,416,000||24,116,000||2.99%|
|Bus., Labor, Agric., EQ||162,760,200||2,818,200||165,578,400||159,984,700||-3.38%|
|Community & Econ. Develop.||107,760,400||4,820,000||112,580,400||105,931,900||-5.91%|
|Plan of Financing|
|Uniform School Fund||1,124,918,866||16,637,600||1,141,556,466||1,274,846,576||11.68%|
|Restricted and Trust Funds||124,130,200||1,112,200||125,242,400||164,711,000||31.51%|
|Liquor Control Fund||19,683,000||19,683,000||20,215,200||2.70%|
|Commerce Service Fund||12,543,500||169,200||12,712,700||13,539,200||6.50%|
General Fund and Uniform School Fund
|Public Safety & Nat'l Guard||31,625,500||292,600||31,918,100||33,743,700||5.72%|
|Min. School Program||1,033,597,366||12,000,000||1,045,597,366||1,177,622,676||12.63%|
|School Bldg. Program||13,874,400||2,000,000||15,874,400||13,874,400||-12.60%|
|Bus., Labor, Agric., EQ||23,370,500||587,000||23,957,500||24,054,100||0.40%|
|Community & Econ. Develop.||34,609,500||4,820,000||39,429,500||35,987,600||-8.73%|
Table 3 State of Utah Revenue Estimates (In Thousands)
|Sales and Use Tax||$1,047,300||$1,127,300||($3,613)||$1,123,687|
|Beer, Cigarette and Tobacco||37,500||38,000||38,000|
|Oil, and Gas Severance||13,000||13,500||13,500|
|Total General Fund||$1,217,600||$1,297,349||($3,613)||$1,293,736|
|UNIFORM SCHOOL FUND|
|Individual Income Tax||$1,005,000||$1,082,000||$3,686||$1,085,686|
|Corporate Franchise Tax||125,000||120,000||120,000|
|Mineral Production Withholding||8,300||8,500||8,500|
|Gross Receipts Tax||4,300||4,400||9,400||13,800|
|Permanent Fund Interest||4,000||3,000||___||3,000|
|Total Uniform School Fund||$1,151,900||$1,223,600||$13,086||$1,236,686|
|Total Both Funds||$2,369,500||$2,520,949||$9,473||$2,530,422|
|Motor Vehicle Registration||22,000||22,800||22,800|
|Driver's License Fees||9,400||9,600||9,600|
|Total Transportation Fund||$246,400||$254,700||($1,500)||$253,200|
|FEDERAL MINERAL LEASE|