PRESS RELEASE

June 12, 2003

Contacts:

WHERE DO UTAHNS' TAXES GO?
THE REDISTRIBUTION OF STATE TAX RESOURCES AROUND UTAH

Utah Foundation today released its May Research Report on the flow of state tax revenue and state expenditures across Utah's 29 counties. A year in the making, this analysis is a new approach towards understanding how state government spends its resources. Additionally, this report gives insight into which counties are net beneficiaries and net payers in the balance of state taxes paid versus state funds expended within the county. The report, entitled "Redistributing Utah's Tax Resources: Burdens and Benefits Around the State" should accompany this release, if not, it is available at http://www.utahfoundation.org/reports.html.

The amount of state funds expended in each county for every dollar that county residents send to state coffers varies widely from 12 cents in Summit County to $4.35 in Sanpete County. For the most part, counties clustered around Salt Lake are net payers; that is they provide more in tax revenue to the state than they receive in services. Rural counties mainly benefit from this redistribution of resources. The accompanying map provides a visual representation of the ratio of state expenditures to state revenue by county.

Janice Houston, Senior Research Analyst explains, "Rural counties without the ability to raise resources on their own, due to a small tax base, are more dependent on state funds to provide services such as public education. The exceptions to this are Washington and Grand counties which benefit from tourism and a larger economic base."

Urban counties tend to be net payers. For every $1.00 of tax revenue generated by Davis County residents, the state returns 82 cents in services. In Salt Lake County, the ratio is 80 cents for every dollar. However, Salt Lake County is unique, as it houses many state offices that do not have significant expenditures outside the county. When these offices are taken into consideration, Salt Lake County's ratio climbs to 96 cents for every dollar of revenue. Additionally, 62.7 percent of state employees work in Salt Lake County. Their personal spending within the county is an indirect benefit to the county's own coffers in the form of sales tax and other revenues.

Some of the other findings within this report are as follows:

• For all counties, with the exception of Cache County, K-12 public education expenditures comprise the largest portion of state expenditures. In Cache County, higher education funding to Utah State University surpasses K-12 funding.
   
• In all counties, support for low-income individuals, such as Temporary Assistance to Needy Families (TANF), Food Stamps and Medicaid state funding made up a very small portion of total state funding. Medicaid expenditures accounted for no more than 10 cents for every dollar of revenue for all counties except San Juan County. For state funding of TANF and Food Stamps, expenditures did not exceed 5 cents for every dollar of revenue, except in San Juan County.
   
• Jail contracts and jail reimbursements are integral to the economic well being of small rural counties. For example, these contracts are worth almost $1 million to Daggett County, or 7.5 percent of the total income generated within the county.
   
• Utah County is a net beneficiary of state spending due to the expenditures by the Department of Human Services for programs related to the State Hospital in Provo and the Developmental Center in American Fork as well as Medicaid funding to hospitals within the county.
   
• Where present, higher education expenditures comprise a large percentage of state expenditures within a county. In addition to Cache County highlighted above, Carbon, Iron, San Juan, Sanpete, Sevier and Weber counties received a significant boost in state spending levels due to the colleges and universities within their communities.

Commenting on the findings of this report, Ms. Houston concludes, "The fact that there are differences between who pays the taxes and who receives the benefits is no surprise. That's something governments frequently do. Nevertheless, we were surprised by how stark the differences are. However, readers should understand that this is not the result of a grand scheme to shift funds around the state, but is really the result of many separate decisions about programs and budgets over time."

Utah Foundation is a nonprofit, non-advocacy research organization. Our mission is to encourage informed public policy making and to serve as Utah's trusted source for independent, objective research on crucial public policy issues.