Utah in the middle of surplus states

Utah legislators salivating at the prospect of record-setting surpluses may find themselves gazing enviously toward other states' even better fortunes.

Around the country, revenue surpluses are the norm, with many states seeing a boost in revenues thanks to increased jobs, a recovering stock market and booming real estate sales, according to a report released by the National Conference of State Legislatures. All told, 42 states have reported revenue collections that are above expectations, and budget officials in more than half of the states are optimistic that the upward revenue tick will continue for the foreseeable future.

While Utah is among that group of optimists, it is probably best considered the median state: Utah ranks 25th in surplus percentage, with 4 percent growth during the first quarter of fiscal year 2006 and $40 million in surplus. Many of the states above, especially those with double-digit growth, are economies driven by oil and gas, while those below are struggling with fading industries or an aging population.

State budget reports from the Nelson A. Rockefeller Institute of Government in Albany, N.Y., and a joint report from the National Governors Association and the National Association of Budget Officers show similar growth at state levels.

Richard Ellis, the budget director for Gov. Jon Huntsman Jr., said Utah's growth is as much a result of a recovering national economy as it is anything particular to the state. As opposed to growing rapidly like energy-reliant states such as Alaska or Wyoming or shrinking in Midwestern industrial states like Michigan, the Utah economy is growing steadily.

"I think it's just that the economy is picking up," Ellis said. "There are some states that are struggling, especially in the 'iron belt,' but many states are growing their economies."

The biggest growth in state revenues was in Alaska, which experienced more than 25 percent growth and already had a $650 million surplus, while New Mexico was second with 23 percent growth. Both states attributed much of their surplus to energy revenues, and both economies are expected to maintain that growth — as long as energy prices remain stable.

Energy prices can be a double-edged sword, however, as many states with revenue growth have seen equally rapid expenditure growth. Hardest hit are those in the Northeast, where corporate taxes and personal income taxes are both up significantly but assistance programs such as Medicaid are often outpacing revenue gains. A number of states are also using the surpluses to pay off debt incurred during the economic downturn in 2001-2003.