For 20 years, Utah has stayed under its spending cap, garnering awards for fiscal restraint and wise planning. But a blistering economy and the massive surpluses that come with it are making it surprisingly difficult to budget.

For the 2008 legislative session, which begins Jan. 21, there is a projected $400 million surplus and the 2008 budget is estimated to be within $30 million of the cap.

"That right there tells you there is a lot more revenue than there is room under the cap," says state fiscal analyst Jonathan Ball.

The idea behind the cap was to keep government spending under control. By tying it to state population growth and national inflation, the budget would be allowed to grow only as fast as the state. But over the past several years salaries and population have climbed faster than inflation, meaning much more money is coming in.

Public education, transportation and capital funding are exempt from the cap, and lawmakers were able to keep the budget in line by giving surpluses to school districts for teacher raises, and the ticking off their laundry list of transportation improvements.

While there seems to be plenty of ways around the problem, lawmakers are wondering how often they can keep the budget at a simmer before the state's other needs, or perceived needs, such as law enforcement, social services and higher education, boil over.

Some lawmakers are also worried that continuing to give teachers raises, while ignoring public employees who aren't exempt from the cap, will lead to pay disparity and bad feelings.

"My deep concern is the impact on public employees," said Sen. Lyle Hillyard, R-Logan. "There is a price to be paid."

But concern is not likely to stop lawmakers from giving teachers substantial raises this year. A study from the Utah System of Higher Education that came out recently shows public school teachers are leaving at a higher rate and being replaced at a slower rate. Higher salaries are regarded as a way to improve the situation.

"Right now we have significant need and desire on the Legislature's part to work on the issue of teacher salary," said Rep. Becky Lockhart, R-Provo.

Gov. Jon Huntsman will have a teacher pay raises in his proposed budget, which comes out next month, said spokeswoman Lisa Roskelley. She added that while a spending limit is appropriate, perhaps a better balance is needed.

"Is there room for improvement with the statutory limit? Probably so," she said.

One of the big questions is whether higher education should be allowed the same cap exemption as public education.

Utah Valley State College doesn't have an immediate worry over the budget cap, as it received $8 million of the $10 million school officials asked for this year for the transition to university status, and expect to get the remainder next year.

"Philosophically, yes, it is a concern because the state really should start to see the connecting points between K-12 and higher education," said Cameron Martin, chairman of UVSC's transition committee to Utah Valley University.

With the economy humming along, there may be plenty of chances to explore philosophy.

"We're going to have to struggle with that over the next few years," Lockhart said. "I think the cap is a good thing. I think it makes us stop and evaluate where we're spending the taxpayers' money."