Utah’s Economy

Our economic situation has felt a bit like a roller coaster the past few years.  We all enjoyed the rapid climb in the early 2000’s when it felt like there was no end to the growth and new revenue. But then came the plunge to the bottom. Budgets were slashed, personal wealth diminished, and everyone made due with a whole lot less. After several years of twisting and plunging, the roller coaster leveled out just in time for a new European financial specter to appear on the horizon threatening another plunge and talk of another recession.

A recent poll by the Hill found that 75 % of Americans were either very worried or somewhat worried that the country was headed toward another recession. After so many years on the financial roller coaster, we are anxious to exit the coaster for more stable environments and we are all resolved to exercise greater fiscal discipline. Which brings up the questions of how Utah is doing and whether we have learned the appropriate lessons and put in place the safeguards to ensure we don’t repeat the roller coaster ride.

Utah weathered the Great Recession better than most of the other states, in part because we had learned some important lessons from the mini-recession of 2001-2002. The Legislature began to build reserve after that experience by depositing surplus revenues into the Rainy Day Fund.  Cash rather than bonding was used for building and highway projects, debt was paid down and budget liabilities like pension and sick leave programs were revised or funded appropriately. Those actions allowed us to survive the Great Recession with some budget cutting and sacrifice, but without the devastation experienced by other states.

Last year, Utah experienced slow but steady growth, which allowed us to balance our budget without cuts. In addition, we were able to deposit $11 million into the Rainy Day Fund to replenish what was spent during the Great Recession on top of $28 million in automatic deposits. We avoided a general obligation bond by paying cash for building projects and kept the State’s retirement fiscally sound. These may sound like rather boring fiscal accomplishments, but by rebuilding the Rainy Day Fund, staying out of debt and fully funding liabilities we are giving the private sector the assurance needed to invest and grow private enterprise in our State.

As a result our economic outlook today is more promising. Job growth in the State has been steady; ranging from 2.2% to2.9% from month to month with our State unemployment rate currently at 6%.  The unemployment rate is significantly lower than the national rate of 8.2% and lower than any of our surrounding states with the exception of Wyoming (5.2%).   Home sales in the first quarter of 2012 were up 11.2% and the number of foreclosures is on the decline. Sales tax collections continue to come in above target as well.  Our State Senate Appropriations Co-Chair, Lyle Hillyard, is predicting $50 million in revenue growth for the close of the current fiscal year (June 30th).

Storm clouds of financial crisis may appear on our horizon as neighboring countries or states experience the roller coaster of failed fiscal policies, but we have learned important lessons from recent recessions and are actively applying them to shore up our State budgeting procedures and build reserves. As a result, we are much better positioned not only to withstand any future financial setbacks, but we are providing the private sector with the proper environment for growth and prosperity.

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