Former Gov. Mike Leavitt has characterized himself as a proud fiscal conservative. However, a new study suggests Leavitt as well as his GOP colleagues in the Legislature who passed the budgets might be remembered more as big spenders.
According to a report released Tuesday by the nonpartisan Utah Foundation, state government during the Leavitt administration grew faster than any other state in the nation with 6.3 percent compounded annual growth from 1992 to 2001 — a rate faster than the red-hot economy grew during that same period.
"This may surprise and concern some Utahns," said Janice Houston, director of research for the Utah Foundation. "However, Utah was experiencing an economic and population boom during the decade, as well as trying to meet federal mandates on Medicaid and welfare reform."
But that is only part of the reason. The state was in a free-spending spirit with revenues growing at record clips and an unprecedented investment in highways and new buildings. In particular, the study found that I-15 construction contributed to the top ranking, as well as the state's enthusiastic approach to getting tough on crime that sent more people to prison and health care costs that grew by double digits.
The study found that increased spending for transportation, health care and corrections was so significant that it overwhelmed increased spending in other budget categories, which did not keep up with growth in personal income.
"All other budget categories were actually shrinking" when compared to personal income growth, said Steve Kroes, executive director of the Utah Foundation.
The study noted that Utah spending on public education was slightly less per $1,000 of personal income in 2002 than it was in 1991 — despite the infusion of hundreds of millions of dollars into public schools and various education initiatives. Public education funding actually declined in the latter 1990s, corresponding to declining enrollment.
Funding of the states colleges and universities lost ground during the decade even though enrollment growth was increasing by an average of 3.4 percent.
On Monday, Gov. Olene Walker unveiled her own budget for the 2004-2005 fiscal year, which calls for a 3.4 percent overall budget increase. Most of that increase has been earmarked for public and higher education.
Kroes said the foundation has not yet crunched the numbers in Walker's proposed budget, but he said it was not unrealistic to expect the economy to grow at a 3.4 percent rate. During the salad days of the 1990s, personal income was growing by 7 to 9 percent annually.
Utah Foundation researchers approached the study from two perspectives. One was to examine the rate of growth in state spending from 1992 to 2001, and Utah came in highest. Then they calculated a ratio of government spending per $1,000 of personal income — a measure of government growth in relation to the economy.
Thirty-eight states had spending that grew faster than the economy, and Utah was again near the top of that list with the fifth fastest growth rate per $1,000 of personal income. That amount is equivalent to state spending being 12 percent of personal income.
"When examining the burden placed on Utah's economy by state government," the study found that in 1991, $120.21 of every $1,000 in personal income generated within the state went to pay for government operations and capital improvements. By 2002, the number had grown to $126.69.
The report found one silver lining in the spending boom of the 1990s: At least lawmakers spent much of the flood of new revenue on one-time projects like buildings and roads rather than wrapping it into their base budgets. When the economy dipped downward in 2001, many states that spent it on ongoing programs were left in dire financial straits.
"The report carries two messages," Kroes said. "One is we sure had a lot of growth in the last decade in the state budget, and I was shocked to see we were the fastest growing of all 50 states. The second is there was not a lot of free-wheeling spending by state agencies."
Rather, there was a lot of one-time investment in infrastructure. When the economy dried up, that proved to be a cushion for the state against the recession.
"In times of plenty, we made policy decisions to invest in transportation infrastructure, health care and corrections. It was a conscious policy decision," said Lynn Ward, deputy chief of staff to Walker and Leavitt's former budget chief. "What Gov. Walker is saying is that it is now time to shift those priorities to education."
E-mail: spang@desnews.com