PRESS RELEASE

December 16, 2003

Utah State Government Growth: Among the Fastest of All States in 1990s

Utah Foundation today released its report on state government growth through the 1990s. This report is the second in a series of three to be released this year on the topic of state government finances. The first report, "Redistributing Utah's Tax Resources: Benefits and Burdens around the State" was released in May while the third, analyzing state government debt and bonding, will be released soon.

Some of the findings in this report include:

• Utah state government expenditures increased at the fastest rate of any state in nation, growing at a compound annual rate of 6.3% from 1992-2001 according to federal sources. When adjusted in proportion to personal income growth, Utah's spending growth was fifth highest in the nation. Most of the states in the top 10 nationally were fast growing states in the South and West.
   
• In 1991, Utah state government expenditures, adjusted for inflation, were approximately $4.15 billion or $120.21 for every $1,000 of personal income generated in the state. By 2002, total expenditures grew to $6.94 billion or $126.69 per $1,000 of personal income. As a proportion of personal income, state government expenditures reached their peak in 1997, with $129.99 of every $1,000 of personal income going for state government use.
   
• The drivers of growth during the decade were Health, Corrections, and Transportation Capital while the largest budget category is Public Education, followed by Health and Human Services.
   
• Since 1999, federal funds to Utah have accounted for almost as much funding as is raised through the entire General Fund and exceed the amount collected in state sales taxes. For example, during fiscal year 2002, Utah expended $1.595 billion of General Fund revenue ($1.441 billion from sales tax) and $1.563 billion of federal funds.
   
• Funds derived through dedicated credits or "user fees" for state government services grew from 6.0% of total government expenditures to 7.5% in 2002. Higher Education and Health and Human Services are the largest users of dedicated credits.
   
• State government employment grew during the decade, but at a rate slower than the private sector. Overall state payroll spending grew slower than the private sector, but average monthly pay for state employees grew slightly faster than private sector salary growth. The average monthly wage for state government employees grew by $294 from 1990 to 2000, compared to $267 for private sector employees.

Commenting on the findings above, Janice Houston, Director of Research said, "The drivers of growth for Utah state government are not surprising. The cost of health care grew by double digits during the 1990s and government, like individuals and businesses everywhere were struggling to keep pace with that growth. The decade also saw a national movement to get tougher on crime, especially against drug crimes, and Utah's expenditures on corrections echoed that. Finally, capital project funds were spent on major transportation improvements, such as the I-15 expansion."

Ms. Houston continued by focusing on Utah's rank as first in the nation for state government expenditure growth, "This may surprise and concern some Utahns. However, Utah was experiencing an economic and population boom during the decade as well as trying to meet federal mandates on Medicaid and welfare reform. In fact, the growth in health, corrections, and transportation capital spending was so strong that other budget categories declined in proportion to personal income. Utah has been cited in the national press as one of the best fiscally managed state in the country. Largely because much of the state's surpluses were spent on one-time capital projects rather than ongoing programs, Utah state government has managed to weather the economic downturn fairly well."

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. Learn more and view research reports at www.utahfoundation.org.