Utah could be viewed as an island in a sea of red ink. California and the mountain states are struggling through the recession, building up structural imbalances that threaten their budgets for years to come unless political leaders make tough decisions — but not so in the Beehive state.
That's part of the message of a new report from Brookings Mountain West, a cooperative effort by the Brookings Institution and the University of Nevada Las Vegas. The report's main purpose was to focus on the devastating economic impacts of state deficits in California, Arizona, Nevada and Colorado. But we were especially interest in one of the study's sidebars, titled, "Stability in Utah: Maintaining balance with good information and sound processes."
The authors cited a few reasons why Utah's budget doesn't face the long-term challenges of these other states, including the fact the state didn't experience as much of the housing boom as did, say, Arizona and Nevada, and therefore wasn't as affected by its collapse. But a more important reason they cited has to do with the state's "strong embrace of quality budget information and sound budget processes."
They cited the way the state's many agencies, its governor and lawmakers share the same revenue data, and how they align budget priorities with strategic goals, as reasons for success. In addition, the state has a public budgeting process and annual reviews to keep spending on target. All of this allowed Utah's political leaders to react quickly "to slash expenditures surgically and strategically rather than bluntly to close the $272 million, 5 percent projected budget gap for (fiscal year) 2009."
Other states, the report said, used "one-time budget tricks" to manage their deficits last year, and they face even bigger problems now that federal stimulus funds are no longer expected to be available. They have had to make massive cuts to important services such as education and public safety, and to slash infrastructure investments, such as to highway construction and maintenance. In Arizona, the government decided to sell the state capitol for a one-time infusion of cash. Now these states face the need for even more cuts while pushing some services onto the backs of local governments that are unprepared to carry the load.
To be sure, all does not smell completely like a rose in Utah. The report says the state didn't have a structural deficit until a round of tax reductions in fiscal 2008 and '09. But it is clear the state has a much better handle on budget problems than its neighbors. In one area that presents a looming catastrophe for many states — public pension reform — Utah has a new law in place that keeps the long-range future manageable.
All of this points to good fiscal management by the state's political leaders, but it also is a testament to a good public budgeting process.