Lessons from The Beehive State
The Utah state budget is far from flush. The Salt Lake Tribune laments, as legislators do, a $313 million “structural deficit” in Utah. Having a “structural deficit” essentially means the state is spending more than it takes in. Most states have this problem, Idaho included.
As noted here yesterday, the Brookings Institution’s Mountain West Project has identified a variety of reasons for the fundamentally unbalanced nature of western state’s budgets. The reasons range from tax policies that gave away the farm in the form of tax breaks during flush times to antiquated tax structures – like Nevada’s – that overly rely on tourism and home building.
As for Idaho, some have long argued that the state’s tax structure, essentially unchanged since the sales tax was put in place in 1966, no longer reflects an economy built around high tech, services and recreation. If you buy that argument it begins to explain why Idaho, even given the deep cuts in state budgets over the last three years, is likely to continue – post-recession – to have revenue problems. That is a structural deficit.
Still, even with its underlying budget problems, Utah looks pretty good right now having avoided much of the fallout from the burst housing bubble and having in place a sound approach to budgeting and managing state government. And, by comparison to most of her neighbors, Utah is ahead of the game in addressing its structural problems.
Utah lawmakers so far are resisting further dips into the state’s rainy day fund and the state’s overall approach to budget and policy making continues to earn kudos from independent analysts.
In 2008, the Pew Center on the States called Utah “the best managed state” in the nation. Utah got a A- (so did Washington) in the sober, technical Pew study. Idaho, by contrast was back in the pack with Wyoming with a B- grade. Nevada, Montana and Oregon got gentlemanly C+ grades.
One reason Utah scored so high in this analysis was the management systems instituted during the governorship of Jon Huntsman. Huntsman, who recently resigned as U.S. ambassador to China in order to reportedly launch a Republican presidential bid, instituted a number of wonkish, but effective management approaches that impressed the Pew folks.
Here’s some of what was said: “Utah manages all facets of state government well, emphasizing long-term goals and performance outcomes. The executive and legislative branches work together effectively to align expenditures with the strategic direction of the state. Utah has also changed the organizational structure of agencies in order to ensure success, embedding human resources and information technology staff in every state agency to better assist with long term management needs.”
The Pew study concludes with this about Utah: “In sum, routine, evidence- and process-driven review has enabled one Mountain West state to catch an incipient structural deficit early and act intentionally to rectify it before it becomes entrenched.”
Words to budget – and make policy – by.