The Utah Legislature’s budget still has weeks to shape up and final revenue projections won’t be released until mid-February, but already powerful legislative leaders are indicating the governor likely won’t get everything he’s recommending for housing and homelessness programs.

“We just don’t have that amount of money available to us,” House Speaker Mike Schultz, R-Hooper, told reporters during a media availability Friday.

Gov. Spencer Cox has proposed the state spend more than $323 million on housing and homelessness initiatives, including:

• $150 million for his Utah First Homes starter home program with the goal to create 35,000 new starter homes by 2028.
• $45.5 million for affordable housing.
• $128 million to “stabilize” the current emergency homeless shelter system and find more shelter beds.

Though Schultz noted it’s a “bit early” to predict what lawmakers may or may not fund, he said much of the money Cox recommended for homelessness and housing programs was already earmarked for transportation dollars by legislators last year.

Based on last year’s revenue projections that indicated it was possible the state would receive up to $1.1 billion in additional “high risk” revenue, the Utah Legislature included intent language in the 2023 “Bill of Bills” — or the bill that funds all other bills by setting the state’s budget — that of all the revenue that actually ends up in the state’s coffers would be used to pay down transportation debt.

“We were not sure if that money was going to show up, but we made a decision collectively that if that money did show up that it would be placed into transportation,” Schultz said.

According to revenue numbers released in December, only $775 million of that revenue came in. Even though lawmakers last year earmarked that additional revenue for transportation, Cox included a portion of it to fund housing and homelessness programs in his budget recommendation, Schultz said.

“The governor took the assumption that we’d be willing to change statute and move that money outside of transportation,” Schultz said.

He indicated Utah’s Republican-controlled Legislature isn’t likely to change its priorities, arguing the state is facing some “high-pressure” transportation needs, “especially with the Olympics” potentially returning in 2034. Transportation, he said, is a “top priority.”

Another top priority GOP lawmakers aren’t likely to budge on is a fourth year of tax breaks. In December, lawmakers reserved about $160 million in anticipated ongoing revenue for some type of tax cut — likely an income tax cut. A bill to reduce Utah’s income tax rate from 4.65% to 4.55%, SB69, is making its way through the Legislature.

Meanwhile, Utah lawmakers are facing no shortage of funding requests. Last week, a group of Utah business leaders and organizations issued a call to action to address the state’s child care crisis, with $400 million in federal COVID-19 subsidies ending. That’s in addition to Cox’s hundreds of millions of dollars worth of proposals to tackle housing and homelessness, his two biggest priorities for the session.

While legislative leaders say they share concerns about those issues, they’ve also sought to temper expectations for how much funding those asks will actually get. They say they’re working with a limited amount of revenue this year compared to past years because of the cooling economy and the end of federal stimulus.

Income tax cut also a ‘top priority’

Still, GOP leaders are more interested in tax cuts than fully funding those priorities. Even though lawmakers could choose to use that $160 million in ongoing revenue for something else other than tax cuts, Schultz indicated that’s not likely to happen.

“Giving money back to the taxpayers is a top priority for this Legislature,” Schultz said. “Inflation is the No. 1 thing I hear about in my community. … I hear about that probably more than I hear about anything else. So allowing people to keep more of their paychecks is important to us.”

Schultz said the state would see a “significant tax cut” this year if the $160 million tax reduction is coupled with the $200 million tax cut that could happen if Utah voters this November decide to remove the state’s sales tax on food (which is contingent on another ballot question to remove the state’s earmark on income tax dollars for education).

“If you add that to the almost $1.2 billion in tax cuts that we’ve done over the last couple of years, that’s $1.5 billion in tax cuts, roughly,” Schultz said. “That’s a big deal.”

Schultz said lawmakers are taking a “slow, measured approach,” comparing Utah to Arizona, which is facing a more than $400 million budget deficit after cutting its income tax rate to a flat 2.5%, the Arizona Mirror reported.

“We don’t want to get to where we see shortfalls,” Schultz said, adding that his goal is to “do a little bit every year, spread it out, to make sure we’re being responsible.”

To arguments that lawmakers should spend the $160 million on other priorities rather than cutting taxes, Schultz said “there’s always arguments to just continue to grow government.”

“Government can’t solve everybody’s problems,” he said. “It just can’t happen.”

In response to Schultz’s comments, Cox’s spokeswoman, Jennifer Napier-Pearce, said in a prepared statement the governor’s office is continuing to work with legislators on homelessness and housing issues.

“Addressing our housing and homeless needs remains a top priority for the governor and we’re optimistic about a variety of policy and funding ideas as we work through the process with the Legislature,” Napier-Pearce said.

Policy approaches to housing, homelessness

While the Utah Legislature may not fund the governor’s budget recommendations for housing and homelessness, Republican lawmakers seem to be more inclined to tackle those issues from a policy and regulation standpoint.

Schultz pointed to several pieces of legislation aimed at housing affordability by targeting “regulation” that stands in the way of housing production.

He said lawmakers are working closely with the Utah League of Cities and Towns, an organization that represents Utah’s municipalities, to “help reduce the costs” and “incentivize cities to create more home ownership opportunities for our kids.”

Several bills so far have been filed:

• SB168, sponsored by Sen. Lincoln Fillmore, R-South Jordan, would set a statewide building code for modular homes and off-site construction (homes that are built in factories and delivered to lots), among other measures.
• HB476, sponsored by Rep. Stephen Whyte, R-Mapleton, would place a slew of requirements on cities to accept and complete applications for residential development.
• HB465, also sponsored by Whyte, would provide flexibility for redevelopment agencies to use money for income-targeted, owner-occupied housing. It would also encourage the Utah Inland Port Authority, the Point of the Mountain State Land Authority, and the School Institutional Trust Lands Administration to use their authority to increase the supply of housing in the state, among other measures.
• HB306, sponsored by Rep. Ray Ward, R-Bountiful, would categorize starter homes as a “permitted use” in Salt Lake, Davis and Utah counties, as well as cities with populations of over 15,000. Essentially, it would require those cities to approve single-family starter homes, or newly built homes that are sold at a price that is less than the area’s median price for detached, single-family homes.
• HB13, sponsored by Rep. Jim Dunnigan, R-Taylorsville, would allow developers of approved housing developments to create “infrastructure financing districts” that could bond to pay for infrastructure improvements (like roads), but the debt would need to be paid off before selling the homes.

At least three of these housing bills — SB168, HB476, and HB465 — came from the state’s Commission on Housing Affordability and have been at the center of months of negotiations with the Utah League of Cities and Towns, home builders and a variety of other housing industry partners.

Homelessness, mental health legislation

Several bills tackling homelessness and mental health issues are also winding through the Legislature, including:

• HB298, sponsored by Rep. Tyler Clancy, R-Provo, would rename and restructure the Utah Homelessness Council as the Utah Homeless Services Board and require that board to impose performance measures and accountability on programs meant to reduce homelessness, substance abuse, on-street camping and other issues.
• HB421, sponsored by Rep. Steve Eliason, R-Sandy, would raise the temperature for which a “code blue” alert takes effect from 15 degrees to 18 degrees, among other measures. Under current law, a “code blue” alert allows churches and other community centers to open their doors to house the homeless overnight without needing a permit. The bill would also withhold funding from cities unless they enforce ordinances that ban panhandling in traffic.
• HB299, also sponsored by Clancy, would require the Utah State Hospital to be sold and its proceeds to be used to replace it with smaller mental health facilities scattered throughout the state, meant to serve more people closer to home.

Utah News Dispatch is a nonprofit, nonpartisan news source covering government, policy and the issues most impacting the lives of Utahns.

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