Utah Senate opens special session to plug $274 million ongoing shortfall; leadership proposes 4% agency cuts and education backfill

The Utah State Senate convened in a special session called by Gov. John M. Huntsman Jr. to address a multiyear revenue gap and make changes necessary to balance fiscal-year budgets. Senator Hilliard, speaking for legislative leadership, said the Legislature faces about $82,000,000 in one-time needs and about $274,000,000 in ongoing revenue shortfalls and outlined a package of ongoing reductions and temporary backfills.

"We have a shortfall of about 82,000,000 in 1 time money. We have a shortfall of about $274,000,000 in ongoing revenue," Senator Hilliard said, framing the scale of the challenge. He explained that, for context, a 1 percent reduction across state agencies equals roughly $50,000,000 and that leadership is proposing a 4 percent ongoing cut for most state agencies to capture about $100,000,000 of that ongoing reduction.

The leadership plan would use one-time funds to partially "fill back" 1 percent of the reductions in the current year so that agencies would face a smaller net cut this fiscal year while the lower base would remain in future budgeting cycles. "If we fill it back in with 1 time money, then the budgets this year will be only a 3% reduction. But next year... they'll start out at 4%," Hilliard said.

Public education is treated differently in the framework. Hilliard proposed $75,000,000 in one-time funding to fully backfill a 3 percent ongoing reduction so that school budgets would not experience an actual ongoing cut this year but would start with a 3 percent lower base in the next budget cycle.

Leadership also highlighted capital and transportation constraints. Hilliard said $30,000,000 of ongoing revenue had been used for capital facilities and cautioned that removing that support could force bonding to complete current contracts. On transportation, he reported the budget had already absorbed a $35,000,000 reduction — about $10,000,000 from lower gasoline tax receipts and about $25,000,000 from reduced auto-related sales tax share — and warned that converting ongoing transportation revenue to one-time funding would reduce the state's capacity to leverage large-scale bonding. "Dollars 100,000,000 of ongoing revenue for transportation can be used for an excess of a $1,000,000,000 bond that would be paid off on that revenue over 10 years," Hilliard said.

Hilliard also said leadership planned to repeal the effective date of a deduction included in House Bill 359 (the Healthcare Task Force package) that would have reduced revenue by about $18,000,000; the repeal would preserve that revenue this session with the intent to readdress health reform later.

Members were directed to review lists of recommended 3 percent reductions provided by staff and to avoid heavy reliance on nonlapsing balances except for limited fillbacks. Hilliard urged committees to work quickly and said leadership hopes to complete appropriations work by Friday afternoon, noting the compressed timeline of a special session.

Next steps: senators were assigned to caucus and committee meetings to consider the distributed motions and proposed cuts; executive appropriations will reconvene with committee reports and possible amendments.