SALT LAKE CITY -- The state finished the 2013 fiscal year with a budget surplus of $242 million in education funds, a state report released Tuesday said.
The surplus is tied to a large number of state residents who sold their stocks and took capital gains in December 2012 in fear of what would happen with the expiration of the Bush tax cuts this year, said Sen. Lyle Hillyard, R-Logan.
The state's fiscal year runs from July 1 to June 30.
A portion of the surplus, $119,492, will be transferred to the state's rainy day funds. The remaining $122,366 will be available as a capital reserve for the state's 2014-15 fiscal year. The infusion of new money in the state rainy day fund boosts that fund balance to more than $400 million, according to the governor's office.
The surplus was found only in the education fund, said John Reidhead, director of the state division of finance. He said the state's general fund actually finished the fiscal year with a $350,000 deficit. He said the deficit was covered from budget reserves.
Jonathan Ball, a legislative fiscal analyst, described the surplus as one-time money related to profit taking in 2012. He said the surplus will have an impact on future revenue projections.
"It does have an ongoing impact, though. These are taxes that would have been paid in the future, so actually if you follow that logic, it will reduce your revenue in the future," Ball said.
Gov. Gary Herbert described the surplus as a sign of the state's growing economy.
"Utah's steady economic progress is evident on several fronts -- job creation, a dropping unemployment rate and additional revenues for the state," Herbert said. "This surplus is not only encouraging, it's needed. We can now augment the critical investment we make in education and economic development."
Herbert noted the surplus is nearly double the $99 million surplus from the 2012 fiscal year.
Hillyard said the surplus does not translate to a surplus in projected revenues for the 2014 fiscal year.
"Having a nice surplus in the education fund at the end of a fiscal year does not mean a surplus in the projections for FY 2014. We will know that by the first of December, so we can begin putting budgets into place when the session starts the end of January subject to adjustment when the final revenues are set the mid part of February," Hillyard said.
Hillyard said the infusion into the rainy day fund is needed. He said lawmakers will have to address a $3 million settlement for the Deep Creek case in January, which is funding slated to come from the rainy day fund.
One lawmaker worries that talk of surplus leads to unrealistic expectations from residents.
Sen. Daniel Thatcher, R-West Valley, said the rising cost of growth and Medicaid will likely eat up any potential surplus at the state level.
"When people hear that, they think we're rolling in dough, and everybody is going to get a free pony," Thatcher said of the surplus. "Unfortunately, I doubt we'll have enough to even cover growth.
"We have so many critical needs we don't have enough money to cover," he added.