PRESS RELEASE
June 18, 2008

Contacts: 
Laura Summers, Research Analyst, Utah Foundation
(801) 355-1400, ext. 123

Stephen Kroes, President, Utah Foundation
(801) 355-1400, ext. 5

TAXES AND SPENDING: UTAH’S STATE BUDGET STRIKES A CAUTIOUS BALANCE OVER TWO DECADES

Utah Foundation today released a research report examining Utah state taxes and spending growth for nearly two decades. The report, entitled “Spending Your Tax Dollars: Two Decades of Utah Tax and Spending Trends,” is available at www.utahfoundation.org. An executive summary is attached to this release and also available on the website.

The report is part of our ongoing Utah Priorities Project, which began with a statewide survey asking voters to rate the most important issues facing our state in this election year. Taxes and government spending ranked third highest on the list of voters’ concerns.

The report tracks Utah state spending in seven major categories over time, comparing spending growth to Utah’s economic growth. It also reviews Utah’s tax burdens and how they have changed over time.

The following are the major findings from the report.

• In the early 1990s, state government spending grew slower than Utah’s economy, as measured by personal income. Between FY 1996 and FY 2002, Utah’s state expenditures grew faster than the economy, largely due to an increase in capital spending and debt service. From FY 2002 to FY 2008, state government expenditure growth slowed relative to personal income, but surged in FY 2007 and FY 2008.
• Looking at spending trends over this entire period, a few budget categories have grown faster than the economy, while other categories have declined in proportion to personal income. The categories that have grown include health spending, driven by Utah’s contributions to Medicaid, and transportation capital spending.
• Between FY 2005 and FY 2006, Utah’s overall burden of state and local taxes and mandatory fees increased. However, Utah’s ranking fell from 11th highest in the nation in FY 2005 to 12th highest in FY 2006.
• Having a government which focuses on stable financial management smoothes Utah’s transitions from economic booms to economic recessions. Utah’s preference for using budget surpluses to fund one-time capital investment projects reduces major volatility in state spending.

Regarding the report’s findings, Utah Foundation President Stephen Kroes said, "Over nearly two decades, state spending has generally declined as a percent of Utahns’ incomes. And when spending has grown as a result of economic booms, Utah’s policymakers have usually spent much of the new revenues on one-time capital projects, leaving a cushion for cutbacks when the economy slows. This reflects the fiscally conservative nature of Utah’s political leaders, and it works well in terms of avoiding large deficits during economic recessions."

Research Analyst Laura Summers, the primary author of the report, said, "Over the past 18 years, the only categories of government spending which have grown faster than the economy are health, transportation capital, other capital spending, and debt service. The increases in these two categories were offset by slowed growth in other spending categories, including public education. However, recent budget increases have reversed this trend for education."

The report is freely available to the public on the web at www.utahfoundation.org.

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The mission of Utah Foundation is to promote a thriving economy, a well-prepared workforce, and a high quality of life for Utahns by performing thorough, well-supported research that helps policymakers, business and community leaders, and citizens better understand complex issues and providing practical, well-reasoned recommendations for policy change.