"During our watch, state government will become even more efficient and effective, and it will not grow faster than the private sector." - Gov. Mike Leavitt's inaugural address, Jan. 4, 1993.
Gov. Mike Leavitt's watch is nearly a year old, and revenue growth of state government already is inching ahead of the local economy.
Personal income, an indicator Leavitt chose during his campaign to measure the economy, is forecast by state budget planners to increase 7.8 percent during the current fiscal year, which began in July and ends June 30, 1994.
As Utahns spend their increasing wealth, the state collects more money through sales, income, property and gasoline taxes. Tax revenue during the current fiscal year is forecast to be 8 percent higher in the current fiscal year, slightly ahead of personal-income growth. The growth rate includes a $58 million surplus over what planners expected to be collected when they drafted the current budget.
A tax cut, advocated by some conservative lawmakers, would rein in government growth. But Leavitt has told the Legislature he will monitor the situation another year or two before considering such a move.
"The governor indicated (during his campaign) that over his full term he will monitor government growth and that growth would not exceed personal income during his term," said Charlie Johnson, Leavitt's chief of staff. "It's not a year-to-year adjustment, but over a longer period of time, during his term."
If state revenue growth continues to exceed state economic growth next year and the next, Leavitt told lawmakers this month that a tax cut will be "part of the equation."
"When he runs for re-election in 1996, he will be accountable for (his commitments)," Johnson said.
In submitting his $4.5 billion budget for fiscal year 1995, Leavitt told legislators that growth in the local economy, and therefore state revenue, is suspect.
Much of the growth is tied to a construction boom, which could slow if mortgage rates move up and the number of people moving to Utah drops off. Also, Leavitt warned that if the Pentagon and Congress agree in 1995 to close Hill Air Force Base, one of the state's largest employers, the state's economy could take a drastic turn for the worse.
But the possible closure of Hill would not occur until the end of the decade, and local economists see no signs of the state's economy slowing up, at least through the first half of 1995.
Leavitt's budget planners don't expect the state growth to outpace the local economy again.
The state Office of Planning and Budget predicts personal income to continue its 7.8 percent growth clip from July 1994 through June 1995. But during that same period, according to Leavitt's proposed budget, state revenue growth will slow to 6.5 percent.
When asked for updated figures on future state growth, budget planners said they use a specific selection of expenditures instead of state revenues to measure growth. Using those expenditures, state growth at a 7.1 percent rate during the current fiscal year and in 1995 will again lag behind personal income.