By Derek Monson
Utah has a well-earned reputation as one of the best-managed states in the nation. But according to George Mason University’s Mercatus Center, Utah is the 11th best state in the nation in terms of its fiscal health.
These rankings were compiled after a researcher at the academic institution analyzed the financial statements of all 50 states. This analysis looked at five areas of fiscal solvency individually, before combining them into one ranking of overall fiscal health. The five areas were: (1) cash on hand vs. short-term bills, (2) current state revenues vs. current state spending levels, (3) the state’s ability to meet long-term spending commitments and to respond to economic shocks, (4) the financial room the state has to increase taxes and/or spending in the face of increased citizen demand for services, and (5) levels of state debt and unfunded liabilities, such as pensions and health care costs.
The analysis shows that Utah is doing well when it comes to the first two measures, but only moderately well on the latter three.
Some interesting numbers from the report: Utah has a budget surplus of just over $538 per person, overall bonded debt of $1,751 per person, and $1,856 per person in long-term financial liabilities, such as pensions and health care costs for retired state employees.
Additionally, the state’s overall bonded debt is equal to 5 percent of the state economy, while the state’s unfunded pension liabilities equal 27 percent of the state economy. These latter two figures are useful as measures of the state’s financial obligations relative to the state’s ability to pay off those obligations (i.e., the amount of money in the economy that could possibly become tax revenues for the state to use to pay its bills).
Utah’s policymakers and taxpayers have a lot going for them when it comes to the financial well-being of the state. We are not known as one of the best-managed states in the nation for nothing. However, as the Mercatus Center report shows, there is still significant room for improvement when it comes to Utah’s fiscal stewardship.
Utahns should be pleased with the wise fiscal decisions of past legislatures, but neither policymakers nor taxpayers can get complacent if we want to remain a state of prudent, fiscally conservative government.
This is especially true at a time in which the state legislature has increased property taxes and gas taxes, has authorized an increase in local sales taxes, and is further being pressured to increase income taxes. It would be a strike against Utah’s record of fiscal conservatism if, in the span of only a few years, lawmakers increased every major tax available to them, whether directly or indirectly.
Certainly, most of the recent tax hikes were for legitimate public policy needs: filling transportation funding shortfalls due to the decreasing value of the gas tax and fixing funding equity concerns between school districts with high property values and those with low property values. But the proposed sales tax increases for the Utah Transit Authority are an exception.
UTA, of its own accord, chose to prioritize an expensive light-rail and commuter rail system over a more cost-effective bus system. The de-prioritization of bus service, unsurprisingly, has led to calls for more and better bus service. But rather than owning up to the consequences of its decision-making (and asking middle- and upper-income transit riders to pay to restore adequate bus service), UTA is asking low- and middle-income families to pay – through higher sales taxes – for the consequences of UTA’s poor management decisions.
In any case, now that the legitimate requests for tax increases have been met, policymakers in Utah should move beyond thinking up new ways to take more money from taxpayers, and instead get back to applying conservative principles to the management of taxpayer dollars and the state’s fiscal health.