Federal spending in Utah is up, but it's increasing at a slower rate than in any other state in the country, according to a new study by the Utah Foundation.

The trend is not all bad, considering where the government mon-ey is going, said Mike Chris-ten-sen, executive director of the private, nonprofit organization.That wasn't the foundation's first impression after running the numbers and finding that Utah ranked dead last in a listing of the average annual percentage change in federal spending per resident by state from 1988 to 1997.

Federal spending in Utah was up just over 2 percent over the nine-year period, compared with a national average increase of 4.42 percent. Kentucky topped the list, with 7.22 percent more federal dollars.

"We looked at this and said, `We're getting killed,' " Christensen said. "Utah has been hurt more by this shift from national defense to health-care than any other state in the country."

True, Utah has seen the federal dollars spent on defense spending drop dramatically in the past decade. Federal defense contracts alone have plummeted from more than $883 million in 1990 to $433.4 million in 1997.

At the same time, however, the amount of money going toward federal health-care programs for the poor and elderly has not kept pace with the rest of the nation.

And that, Christensen said, should be considered a positive for the state. "Utah would have to get older and poorer to benefit," from the shift in spending, he said. "I'd rather be a younger and richer state."

Similar population statistics have put six Western states among the bottom 10 states in the Utah Foundation survey. "A lot of that again is demographics," Christensen said.

"It's not like Congress decided all of a sudden to punish the Western states," he said. "It's important to understand the change. It's also important to understand there's probably little that could have been done."

That's because the nation's priorities have been changing since the Vietnam War era. Then, the emphasis was on defense and Utah's share of federal expenditures was well above the national average.

The Utah Foundation reported that federal defense expenditures fell from 52 percent of the federal budget in 1960, to just 23 percent in 1980. There was a turnaround during the Reagan administration.

But with the end of the Cold War, the reductions resumed. By 1997, defense expenditures hit a post-World War II low, just 17 percent of the federal budget, according to the report.

The cuts have been deep in Utah: the Tooele Army Deport saw most of its responsibilities transferred out of state; the Defense Depot in Ogden was closed in 1997; and Hill Air Force Base has lost workers.

At the same time, spending on two federal health-care programs, Medicare for the elderly and Medicaid for the poor, has increased significantly. Introduced in the 1960s, they accounted for about 4 percent of the federal budget a decade later.

In 1997, that number was up to about 19 percent. Between 1990 and 1997, the programs grew from about 15 percent of all federal expenditures in the states to more than 21 percent.

Or look at it this way: Medicare and Medicaid are responsible for more than one-third of the $426 billion increase in federal expenditures in the states since 1990.

A third trend cited by the Utah Foundation is a slowdown in the growth of federal expenditures in the states. From 1990 to 1991, spending jumped 9.4 percent. But from 1996 to 1997, the rate was down to 2.5 percent.

Utah's strong economy has helped ease the state's past dependency on the federal government, the report found. And that's another plus, Christensen said.

"We're one of the most diversified economies in the nation right now. We didn't used to be. Back in the '70s . . . we were a federal island," he said. "Even though we have certainly lost federal dollars in the 1990s, it's not something to get upset about."

The Utah Foundation is a private, non-profit organization established to study state and local government in the state as well as the relation of taxes and public spending to the economy.