Utah's Budget

An important part of successfully riding out a storm is to be prepared before the storm hits. Obviously. During the boom years, there was great pressure on the Legislature to grow government. We did – actually, by a lot. But, to great opposition, we also took some fiscally-responsible actions that did not grow programs; specifically, we cut taxes, we appropriated cash toward capital projects, and we socked away money in rainy-day funds.

Governments get themselves in trouble during the good times, by building programs that can’t be sustained during economically bad times or flat times – leading to cuts and serious economic dislocations. As Sen. Hillyard reports, the State of Utah is doing okay. So far. We’ll see where the economy will head from here, but citizens and business owners can take some comfort in the fact that the State’s budget is holding together well for the time being.

You’ll notice that I said it is difficult to sustain programs in economically flat times. With Utah’s tremendous growth, we have to appropriate additional tens of millions of dollars every year, if we want to merely maintain level funding for programs. Think of increased student numbers and Medicaid and CHIP enrollees, for example, not to mention cost escalations and inflation.

One additional observation. Because it is always tough to move away from the status quo, governmental fat typically is cut only when it has to be. Sad, but very true. So, economic downturns invite/force Legislatures to get even tougher on prioritizing spending decisions. This is one reason why it is such a shame that the federal government has no qualms about running massive deficits; there never is a strong push to cut/reform fat governmental programs. Instead, making Enron look responsible by comparison, the federal government avoids tough decisions and foists pain on future generations.