Utah is a fiscally well-managed state with strong financial principles
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1 comment [ View ]By Rep. BRAD DEE
Guest commentary
If you've been following the economic news in the media the past several months, you know that we are experiencing a national economic slowdown. Some experts have even gone as far as using the "R" word to describe what is happening. Though Utah has weathered this most recent economic storm better than most states, we are not completely immune from economic forces rocking the nation. Utah, however, has a tradition of being a fiscally well-managed state.
We hold a triple-A bond rating. Multiple media outlets, including Governing magazine, Financial World and USA Today, have all ranked Utah as one of the best fiscally managed states in the nation. Our state's financial policy is not an accident of the legislative process, but rather something the Legislature diligently works at every session. Each year we consider our revenue projections carefully. Our fiscal policy is really the heart of the legislative session -- around which all other issues orbit. In this regard we take our direction from Benjamin Franklin, who said, "Ere you consult your fancy, consult your purse."
Our budget must balance every year; we cannot spend funds on wishes, when there are needs to fund first. In the current economic climate, the Legislature is proceeding with caution. The revenue projections tell us how much revenue we can anticipate the state will collect during the fiscal year. The new revenue estimates show that the slowing national economy has caught up with Utah. Our projected revenue is down nearly $340 million from earlier estimates. While this news obviously means we will have less funding to spread around to the various programs and departments, it is no reason to panic. This is still the third-highest revenue projection year to date.
We still have enough funding to meet our basic needs plus a few extras. It does mean, however, that a tax cut is most likely off the table.
To give a sense of the size of our state budget, the Legislature has nearly $11 billion with which to fund state government; $10 billion has been appropriated thus far to departments and programs in the base budgets. That leaves nearly $1 billion to fund additional programs. The competition for these remaining funds, which is already intense, will increase since we have less money than originally anticipated.
The new revenue projections will, of course, impact the priority lists compiled by the sub-appropriations committees and the levels of funding different projects receive. This is not necessarily a bad thing. When we are spending the people's money, it is always good to make sure we are stretching dollars as far and as efficiently as possible. Further scrutinizing each funding request ensures it is the best use for the state's funds and helps the overall budget process.
Look to see the Legislature use the available funding in conservative ways this year. In our base budgets, we have fully funded all current departments and programs, plus covered growth and inflation. It is unlikely we will expand ongoing government programs at a time when revenue projections are declining. With the funding remaining after the base budgets, we will likely fund one-time projects that won't require on-going funding like the Riverdale Road reconstruction project and reconstruction of I-15 through Utah County.
We will also use one-time funding on the Veterans Nursing Home in Ogden and save some money in our rainy day fund. The Legislature has been keenly interested in economic development projects, like the Utah Science Technology and Research initiative, which diversify our state's economy and ensure we are not easily upset by a downturn in one economic sector.
As we continue to move forward in uncertain economic times, your Legislature will continue to use fiscal principles that keep government growth at minimal level and set money aside for a rainy day. We will also keep looking for economic development opportunities that will continue our economic growth and diversity, further insulating our economy from trouble in any sector and providing prosperity for all sectors.
Dee, the Utah House of Representative's assistant majority whip, represents legislative District 11 (Ogden).
Actually, the picture is not as rosy as Rep. Dee paints it.
A recent report by Utahns for Public Schools shows that Utah’s tax structure – a combination of all the taxes we pay – is out of sync with the economy. That means when economy grows by $1.00, our revenues grow by about 97 cents. (We have an elasticity of 0.97).
Utah’s tax structure is also inequitable. Whereas the poorest people in Utah pay about $11.40 out of every $100 of their income in state and local taxes, people making over $800,000 per year pay about $5.50 out of every $100 of their income. Such an inequitable tax structure exacerbates income disparities that impose serious drag on our economic prosperity.
All the tax proposals that are on the table at the legislature will make our tax system more out of sync with the economy and more inequitable. This means that in the near future, Utah will be unable to meet the needs of public education, transportation, infrastructure, and safety services that we all value.
While our economy looks good on paper, it isn't benefitting ALL Uthans.