The news comes as President Biden is pushing to spend $350 billion in aid for state and local governments as part of a $1.9 trillion stimulus package, according to the Tax Foundation, even as the U.S. national debt approaches $28 trillion.
State lawmakers and Gov. Spencer Cox on Friday said they estimate a surplus of $427 million in revenue that the state will collect over the 2021 General Session, consisting of $112 million in additional ongoing funds and $315 million in one-time funds.
Utah was already expecting to collect an estimated surplus of $1.1 billion one-time funds and about $100 million in ongoing funds over the next two fiscal years, bringing the total estimated excess funds to $1.5 billion, according to a press release.
"Key indicators continue to show that the Utah Way has again paid dividends, with our state leading the nation in the economic recovery," Cox said in a Friday statement. "While I remain optimistic that this trend will continue as more Utahns get vaccinated, we need to be extremely mindful of the sectors of the economy and the families which continue to struggle in our communities."
He continued: "With prudent use of taxpayer resources, I’m confident that we can respond to outstanding needs, navigate future challenges and leverage opportunities that may come as we rebound from this pandemic recession."
Cox's office told Fox News on Monday that "the main cause of the significant amount of new revenue the state expects to collect over the next two fiscal years is the Utah economy performing exceptionally well relative to expectations in the beginning months of the pandemic."
The fiscal year 2021 forecast was adopted in June of 2020 and acted as the baseline for calculating the estimates released Friday.
The June fiscal year 2021 forecast was "much lower than" the forecast adopted in February of 2020 because of "the significant economic shock that hit as the pandemic took hold, the great deal of uncertainty about future economic performance at the time, and the relative pessimism of macroeconomic forecasts," the governor's office said.
In June, the Utah legislature cut more than $891 million in previously allocated funding during the fifth and sixth special sessions.
"This set the conditions for any upward revision in revenue expectations to translate into additional available budgetary resources," Cox's office said. "When it was time to revise the forecast in November, it had become clear that the economy had performed much better than expected, and tax collections likewise exceeded expectations."
The state's better-than-expected performance came as a result of the billions of dollars in federal stimulus funds that helped boost Utah's economy during the pandemic; a "relatively short period" of COVID-19 lockdowns, resulting in fewer economic losses; and a new digital sales tax adopted in 2019 that proved useful as online shopping boomed during COVID-19, according to the governor's office.
Utah's unemployment rate is among the lowest in the nation, according to the U.S. Bureau of Labor and Statistics.
"As a result of these factors, the fiscal year 2021 forecast was significantly revised upward in November. This happened again in February when economists met to revise the forecast during the annual Legislative session and it became clear that tax collections were continuing to exceed expectations," Cox's office said.
Economists expect the state's economic success to continue into the 2022 fiscal year.
The state legislature will focus funds toward critical needs while determining current and future spending proposals with long-term economic sustainability in mind, the release states.
Utah plans to increase public education funding by $400 million this session. Another "significant" portion of the ongoing funds will go toward more enrollment in Medicaid expansion and tax relief. The governor's office expects additional funds to go toward infrastructure investment and "other short-term needs."
“Years of smart and responsible fiscal planning have allowed Utah to weather recent economic hardships better than many other states and positioned us for continued economic expansion,” Utah House Speaker Brad Wilson said in a statement. "Now we are able to maximize the return on that investment
Wilson added that the legislature is focused on increasing spending for public education "significantly"; offering tax relief for qualifying individuals; and making "strategic investments to enhance our economy and quality of life."