The Utah State Legislature has a problem this year: It has too much money.

After the recession took a big bite out of Utah budgets a couple years ago, lawmakers now find themselves coping with a $1 billion budget surplus, thanks to an improving economy and conservative budget estimates.

Most of us would not think that having too much money would be a problem. As the old saying goes, you can't be too rich or too thin. But if you are writing the state budget, sometimes having too much money is a problem. Unlike lean times, when you must cut back and tell people they'll have to do without, extra money stands out like a sore thumb. And plenty of people will want a piece of it.

What makes a surplus especially challenging is that it is "found money" -- like the $20 bill one discovers while doing the laundry. It is a nice bonus, but it won't be there all the time. A surplus generally cannot be used to fund ongoing programs unless it invested and the ongoing programs use the earned interest.

So, how should the Utah Legislature deal with the state's budget surplusfi

Give it back to the people. The Legislature has done this before, back in the heady days of the 1990s when it appeared that the good times would never stop rolling. The refunds were usually done through credits on income tax or reductions of property taxes.

The Legislature's rationale for this approach is that the money "belongs" to the people, and it should be given back since they paid too much. There is some merit to this argument. When we overpay income taxes, we expect the government to return the excess in the form of a refund. And refunds are good politics.

But a refund may not be the wise course of action this time. The proposal to return the money through a $75 tax credit would ease a grocery bill or buy a night on the town. And because the state budget is based on estimates, Utah could suddenly find itself in the lurch if the economy suddenly went south, as happened in 2002.

Some legislators may be reluctant to spend the money on state programs because they see this as "growing government" -- a slippery definition that may not connect to reality in this case. To the business community, it makes a lot more sense to use excess income for desperately needed capital improvements. Utah, for example, needs some vital infrastructure to maintain a healthy economy.

Invest it in transportation. One way to put the budget surplus to good use is to deposit it in the Transportation Investment Fund. The fund, created last year, is an interest-bearing dedicated account that will finance future transportation projects, such as upgrading Interstate 15 in Utah County.

When it was originally conceived, the fund would have been financed by diverting $90 million a year in sales tax revenue, allowing it to grow to $2 billion in 10 years. But lawmakers balked at the idea of "earmarking" money, for fear that it would tie the hands of future Legislatures.

This is an unwarranted worry. The money is a windfall that doesn't tie anybody's hands. Earmarking a windfall is not the same as earmarking ongoing revenues. And putting Utah's surplus funds in an interest-bearing account that will help solve the transportation crisis is better than leaving it open for a future Legislature to grab. A billion-dollar infusion would put the account four years ahead of schedule, and the money would be earning interest and working for the common good. We all depend upon roads.

Use it to improve public education. It is no secret that Utah's public schools are woefully underfunded. A blue-ribbon panel of Utah business leaders appointed by then-Gov. Mike Leavitt made that proclamation years ago, and things have not improved much.

Part of the problem is that Utah has a higher proportion of children than other states. This puts the schools in a bind; classes are overcrowded and, in some cases, students go without textbooks.

The surplus would provide temporary relief in a department with a $2.5 billion budget. The money could be used for one-time expenditures, such as helping districts build new schools, or it could be placed in the State School Fund, an interest-bearing dedicated account that state officials hope to grow to the point where its dividends will support public education on its own.

Soften the blow of tax reform. By the time the Legislature adjourns in a little over a month, some version of tax reform will be enacted. Whatever form it takes, it may mean an initial reduction in revenue but likely a more stable system.

Part or all of the surplus could be used to ease whatever pain tax reform brings. It might allow some entities to ease into the post-reform world, rather than experience the rude shock of suddenly doing with less money. This transition would be a one-time expense, as the departments would have a year to revise their budgets and operations for the coming year.

As the Legislature wrestles with the budget in the next six weeks, we hope that it will do what is right for all Utahns, and not what is politically expedient.

What do you thinkfi

How should the Legislature handle the budget surplusfi Send your comments to dhpolls@heraldextra.com or call 344-2942. Please leave your name, hometown and phone number with your comments. E-mail comments should not exceed 100 words; voice-mail comments should be no longer than 30 seconds. Anonymous and unverifiable responses will not be published.

The Daily Herald will publish comments on Jan. 29.

This story appeared in The Daily Herald on page A6.