The National Governors Association and the National Association of State Budget Officers released a report this week that showed most state governments still are struggling against difficult budget constraints. Combining all 50 states, budgets will rise by 2.9 percent in fiscal 2012, which already is under way. But many states have a long way to go to dig out of the fiscal hole dug by the recession of 2007-08.
Seen in that light, Utah's situation looks good. Analysts for both the governor and the state Legislature released figures this week showing Utah will have $400 million in combined one-time surpluses and tax revenue growth for the upcoming budget year. The current year, which ends June 30, should see a tax surplus of $128 million or more. The next year should see a growth of at least $280 million in tax receipts.
That's certainly good news after several years of steep declines, which may be why Gov. Gary Herbert decided to release the figures earlier than usual. He normally waits to do so until unveiling his own budget proposal in December. But it won't mean Utah suddenly will have the money it needs to catch up with the growth in public schools and neglected needs in other areas of government.
Utah is in far better shape than many other states due to a conservative mix of cuts and spending from rainy day funds, as well as to a decision to reform public pensions, thus staving off a growing structural deficit that threatened to swallow much of state revenues over time. But the state still has a fair amount of catching up to do after surviving the hard times.
Lawmakers and the governor agreed to use one-time funds to pay some of the state's ongoing needs during the lean years. That has created a structural imbalance of about $52 million. Also, the state's portion of Medicaid costs are expected to grow by tens of millions of dollars. Some lawmakers are wisely taking the position that one-time surpluses no longer should be used to fund ongoing programs, meaning much of the extra money might be used to pay down debt or fund other one-time expenditures. That doesn't leave a lot of extra to go around.
Unlike many other states, however, Utah appears to be emerging from the recession with a government that, while battered and bruised by cuts and unable to keep pace with the growth in public education, has managed to keep tax rates low while keeping structural deficits from getting out of hand. Considering some states have sold off public buildings and closed state parks, that is an impressive record. More importantly, it is one that is likely to attract business to the state, making the rebound to prosperity even stronger.
Utah's unemployment rate, now at 7 percent, is relatively strong compared with other states. Business-friendly budgeting will improve that figure over time. That, in turn, ought to give lawmakers even more money in coming years to fund education needs and provide raises to public employees who, like many in the private sector, have had to struggle, as well.
But the hard times haven't ended quite yet. The upcoming legislative session promises to be another one of denying many requests for budget increases, even as things are looking up.