Mero Moment: Utah’s Spending Problem

This week I want to talk about Utah’s spending problem. Our state government has a spending problem.

According to information from the governor’s office, between 1990 and 2009 the state’s total budget grew 120 percent, and that is after adjusting for inflation. Without the inflation adjustment, state spending growth was a whopping 261 percent. By comparison, Utah’s population over that same period grew only 62 percent, and median household income – a key consideration for government spending since every dollar the state spends starts out in taxpayers’ pockets – grew only 17 percent after adjusting for inflation.

Fortunately, Utah’s spending problem is not as dire as that of other states such as California. But even California’s state budget, adjusted for inflation, grew by a relatively modest 78 percent between 1990 and 2009.

Today’s significant, painful spending cuts in the face of the current recession are the result of Utah’s decades-long government spending spree. As long as the state’s spending policies and practices remain unchanged, Utahns can continue to expect more of this cycle of euphoric spending growth followed by painful budget cuts. More importantly, without reasonable changes to state spending policy, Utah risks ending up like California at some point in the future: standing on the brink of bankruptcy, with little choice but to ravage essential government services via dramatic spending cuts and/or to devastate the population and economy through crippling tax increases.

Of course, political pressures do magnify the spending temptation for public officials, which is why unadjusted state spending in Utah has grown more than four times as fast as the state population. But the fact that Utah government’s spending problem is grounded in human nature, rather than being caused by particular politicians or special interest groups, means that to truly resolve this problem, simply swapping out current elected officials for new ones is not the solution.

So what is to be done? Are we doomed to follow the paths of states like California? Fortunately, the answer is no.

The key to avoiding California’s fate lies in enacting prudent, fiscally responsible changes to state spending policy in the Utah Constitution. These changes should: (1) create tough but reasonable restrictions on state spending growth in good times, while still maintaining flexibility for elected officials and government workers to do their job, and (2) save surplus revenues in preparation for bad financial times and for emergencies such as natural disasters.

Legislation that would enact such policies in Utah is numbered House Joint Resolution 37. In addition to the spending limit and savings provisions, this bill would return to taxpayers any funds left over after savings are complete. The bill also would ensure that a state spending limit would not simply lead to more unfunded mandates for city and county governments in an effort to “free up” more funding for the state to spend.

In its most recent review of state-government management, the Pew Center on the States and Governingmagazine scored Utah as the best-managed state in the nation. Enacting such forward-thinking policies as HJR 37 will make certain that Utah remains an example of good governance to the country and never has to endure California’s fate. Utah didn’t achieve that title by being content with its financial stewardship, and it will not maintain that designation if we as citizens and our elected officials become complacent now.

For Sutherland Institute, I’m Paul Mero.