On Tuesday, Gov. Jon Huntsman Jr. proposed a mammoth $10.7 billion budget for next year that contained some of the largest increases in both revenues and expenditures in Utah's history.

Much of the new spending focuses on education, including raising salaries for public school teachers and higher education faculty. The governor is also pushing again to establish an all-day kindergarten program, and he proposed spending to deal with traffic congestion, expand health insurance for poor children and boost the salaries of state workers.

He also wants to further lower the state income tax rate to 5 percent. Another priority, eliminating the sales tax on food, was not included in Huntsman's proposal.

"It is a budget that is done responsibly," Huntsman said. "It is one that is done with an eye toward capital investments in our core assets -- which, by the way, are people, and students and teachers. And roads and transportation systems that I think are absolutely critical for a viable future.

"If you don't invest in your core assets, they will atrophy and fail over time."

While the governor's office prepares budget recommendations, it is the state Legislature that has the final say. Lawmakers convene Jan. 15, and when they do, they'll find a state flush with cash for the second year in a row -- and some plan to push for a bigger tax cut.

"It's the largest revenue increase that I have ever seen in my 19 sessions in the Legislature," said Senate President John Valentine, R-Orem. "It is a very, very robust economy, and it's primarily driven by employment."

The general fund and the education fund, which together represent more than half of state revenues, are expected to increase 15 percent next year to a total of $5.7 billion. Other state revenues come from federal funds and other sources such as property taxes and mineral leases.

A $1.6 billion surplus is projected for the next budget year.

Education and transportation spending, and tax cuts, generally find support. But some will be concerned about the size of proposed increases in government spending.

"There will be members who will balk at it. I will guarantee it," Valentine said. "And there will be members who will readily embrace it. I have both elements in my caucus."

The Senate GOP caucus is scheduled to meet this morning, he said.

House Republicans, however, met Tuesday, and they will call for a substantially larger effort to cut taxes, said state Rep. Greg Hughes, R-Draper.

Huntsman called for $100 million to be set aside for lower taxes, but Hughes said, "I think you'll see it about times three."

"The House GOP caucus will be supporting a tax cut package ... to the tune of $300 million," he said. "Also, $300 million in education spending, which is a landmark commitment from this body for public education."

Huntsman's priorities for K-12 education total $314 million.

Those include:

$153.7 million to boost the weighted pupil unit by 7 percent -- essentially a raise for teachers -- as well as $25 million for a one-time bonus for teachers.

$28.7 million to reduce class sizes in kindergarten through third grade classes.

$7.5 million to establish a pilot all-day kindergarten program at schools with lower-income students.

"We're very pleased with this proposal," said Kim Campbell, president of the Utah Education Association, to the Associated Press.

"He's added many of the things we've talked about needing to be added in public schools.

"The governor stepped up to the plate and changed the trajectory for education funding and we're looking to the Legislature to do the same."

His recommendations also include $38.2 million for additional compensation to higher education employees and $45 million to provide state workers with a 3.5 percent cost-of-living adjustment and benefit rate increases.

The salary issue is key, said Mike Styler, executive director of the state Department of Natural Resources, in a written statement.

"The governor recognizes our challenge of losing our trained employees to competing agencies that can pay more," he said. "The proposed salary adjustments can have a tremendous impact on our employee retention efforts."

Valentine noted that Huntsman's blueprint didn't include funding for two items that he considers important -- starting construction on a new building for the Mountainland Applied Technology College, and decreasing the tuition disparity faced by Utah Valley State College.

Money in this year's budget procured land for the Mountainland ATC at Thanksgiving Point, but construction needs to begin within the next year or two to hold onto that land, Valentine said.

UVSC pays a higher share of its operating costs out of tuition compared to other institutions, and Valentine said addressing that is part of the push to make UVSC a full-fledged university.

Budget recommendations

Gov. Huntsman released proposals for a $10.7 billion state budget Tuesday that would include the following:

$314.2 million in new public education spending that would boost teacher pay, start an all-day kindergarten program and reduce K-3 class sizes

$62 million for higher education spending, including higher salaries and more money for nursing and engineering initiatives

$45 million to raise state employee salaries

$100 million to reduce the top income tax rate to 5 percent

$100 million to improve traffic conditions at chokepoints and unsafe areas

$330 million for road projects, corridor preservation and bridge repairs

$200 million for new school and state agency buildings

$20 million to purchase and preserve land around Tabby Mountain in eastern Utah

$4.2 million to expand access to the Children's Health Insurance Program, and $350,000 for a program to help people and small businesses find health insurance.

All of his proposals are available online at www.governor.utah.gov/gopb/budget.html.

This story appeared in The Daily Herald on page A1.