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Utah is ranked top state for economic competitiveness

Published: Monday, June 3 2013 5:37 p.m. MDT

A spray painted mural by El Mac is on the wall of the communal area of the Adobe Systems Inc. headquarters in Lehi on Thursday, Dec. 6, 2012.

Laura Seitz, Deseret News

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Utah retained its ranking as the best state for overall economic competitiveness, according to a recently released report from the American Legislative Exchange Council, or ALEC. This overall ranking comes from two primary analyses. First, an evaluation of each state’s historic economic performance was conducted. Second, an economic outlook was formulated for each state.

Three historic measures were considered by the analysts in calculating the relative historic economic performance of all the U.S. states. With a relative ranking of sixth, Utah’s gross domestic production was measured. Next with a ranking of 17th, domestic migration was assessed. The third historic measure was non-farm payroll employment growth, where Utah ranked third. Utah was awarded an overall ranking of third when the results of all three of these historic measures were compared to the other states.

Many areas remain where Utah can improve its relative economic competitiveness. Fifteen equal-weighted variables were assessed by ALEC in arriving at the overall future economic outlook ranking. The state of Utah ranks 31st in the category of sales tax burden. Utah ranks 20th in the categories of public employees per 10,000 population and debt service as a share of tax revenue. Utah’s aggregate ranking in this forward-looking measure was first among the states and reflects very positive relative rankings in many of the other 12 categories.

A focus of the forward-looking indicators is the degree to which state legislators can influence economic policy in each state. According to ALEC, these 15 variables are some of the best predictors of a state’s future economic growth potential. ALEC observes states with higher overall taxing and spending profiles experience lower economic growth rates as compared to states with lower proportional taxing and spending profiles. Higher relative levels of transfer payments between taxpayers and welfare recipients are identified as stunting a state’s future economic potential.

With a motto of “limited government, free markets, federalism,” the overall position of ALEC is fairly apparent. To those who favor these values, ALEC’s work is viewed as informative. To others, ALEC is thought of as a tool for large corporations to collaborate with conservative state lawmakers.

For the state of Utah, ALEC’s analysis of historic economic data and positive outlook indicates the relative positive effect the Utah Legislature is having on the business environment.

Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.

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