Economy strong but face of Utah changing, lawmakers told

Published: Tuesday, Dec. 17 2013 2:35 p.m. MST

Aerial view of the Salt Lake City skyline, Friday, June 29, 2012.

Ravell Call, Deseret News

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SALT LAKE CITY — The economic recession that rocked the country a couple of years ago hit Utah harder than most states.

"We got thumped," said Natalie Gochnour, associate dean of the University of Utah business school.

Thirty-one states fared better than Utah during the 2009-10 financial crisis, which put 100,000 Utahns out of work, including 40,000 in the construction industry.

But Utah "leapfrogged" 29 states to come out of the recession with the third-best recovery in the nation, Gochnour said. She attributed the turnaround to several factors, including fiscal responsibility at the state level, a diverse economy and a young, tech-savvy population.

"Utah is very well-positioned right now moving forward," Gochnour, who worked for three governors, told about 100 state lawmakers at a legislative policy summit Tuesday.

She also said the state faces challenges with continued urbanization and a still discouraged workforce.

Building on the state's economic turnaround as its population changes will be among the issues the Legislature tackles when it convenes next month. Senate President Wayne Niederhauser, R-Sandy, said lawmakers need to see emerging trends to avoid reaching a cliff before having to make decisions.

"Utah is forever changed. We are not going back to the demographics of 1950, nor are we going back the economy of 2007," said Pam Perlich, a senior research economist at the U.

Perlich said the state is in the midst of an unprecedented transformation. It's becoming more diverse culturally, linguistically and ethnically, and the population is aging, she said.

"This fundamentally changed who we are," Perlich said. "There's going to be a lot of old white people, especially a lot of old white women."

At the same time, young people from all over the world continue to move to Utah, mostly to Utah, Salt Lake, Davis, Weber and Washington counties. Nearly half the immigrants to the state between 1990 and 2010 were foreign-born, Perlich said.

She asked lawmakers to recognize the new and growing population and that some have not integrated into public life and the economy.

What legislators decide to invest in will impact how the future unfolds, Perlich said, adding that children are the single most important investment they can make.

Perlich noted the achievement gap in Utah schools between Latino and white students. A U. study shows only 40 of 100 of Latino students graduated from high school, compared with 84 of 100 of white students. While 26 white students graduated from college, only four Latino students earned a college degree, she said.

Earlier this month, Gov. Gary Herbert announced his proposed $13.3 billion budget that included $261 million in new money for education.

That funding could go a long way in helping expand the state's economic development efforts, according to Kristen Cox, director of the Governor's Office of Management and Budget.

"When you have an educated population, it attracts business," Cox explained.

High-tech companies look at educational attainment of their potential workforce when they consider where to locate, so the state benefits greatly in the long run economcally, she added.

State revenues are expected to climb $338 million in the spending plan for the budget year that begins July 1, 2014, "the good news for us," the governor said.

But Herbert also cautioned the state is still "in a very tepid economic recovery" because of the uncertainty over the budget turmoil in Washington, D.C., that could be reversed if taxes were raised.

Herbert said he expects the 2014 Legislature to at least talk about boosting the state's gas tax for the first time in years.

Among the priorities for boosting revenue for the state is expanding tourism. The state brought in nearly $1 billion in tourism-related state and local tax revenue last year, said Vicki Varela, managing director of the Utah Office of Tourism.

The state hopes to expound on that revenue in the coming fiscal year, Varela said.

Over the years, tourism has also served as a magnet for economic development, said Spencer Eccles, director of the Governor's Office of Economic Development.

"A lot of people who do business here came as tourists first," Eccles said. "The goal is to leverage the state's many attributes."

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