Federal spending in Utah rose by $45.5 million during the fiscal year ending Sept. 30, 1988, but the increase is one of the smallest experienced in recent years, according to a private research organization.

The Utah Foundation reached that conclusion in its annual analysis of federal expenditures in Utah.The study attributed the slowdown to reduced Defense Department spending in the state and a decline in federal grants to Utah state and local governments. Federal defense spending in Utah dropped by $296 million, or 14.2 percent, last year, while federal aid to state and local governments dropped by $58.6 million, or 7.5 percent.

The decline in defense spending during 1988 was due to reductions of $315 million in Defense Department procurement contracts and $11.4 million in civilian defense salaries. These reductions were partially offset by an increase of $35.9 million in federal military pay, which resulted mainly from the massive "FIREX 88" military exercise held in western Utah last June.

Some of the major factors accounting for the decline in grants to state and local governments were reductions in the allocations from the highway trust fund, urban mass transportation funds and disaster relief funds.

However, Foundation analysts say these reductions in federal spending for state and local grants, defense contracts and other programs were more than setoff by increases in federal payments to individuals and federal salaries and wages. Federal payments to individuals, including Social Security, Medicare, food stamps, climbed by $143.4 million while federal salaries, including military wages, rose by $52.6 million during the 1988 fiscal year.

Total federal expenditures in Utah during the 1987-88 fiscal year for grants to state and local governments, salaries, wages, direct benefit payments to individuals, procurement contracts, amounted to $5,750,054,000.

This amount equals $3,400 for every man, woman and child residing in Utah and represents about 28.4 percent of the total personal income of the state.