This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
A little-known financial report was published last month that illuminates Utah's real fiscal situation, and it isn't heartening.
The Utah Division of Finance's Comprehensive Annual Financial Report, the "2010 CAFR," reveals the true scope of Utah's darkening financial picture. The perspective from the Change in Funds schedule found in Appendix 4 describes a state not only hit hard by the recession, but also suffering from ill-advised tax cuts by the Legislature at the top of the economic boom.
This schedule raises real questions as to whether this state is indeed the "Best Managed." It raises questions about whether the Legislature and the governor are putting this state in financial jeopardy by creating more billion-dollar structural deficits.
It further raises the question whether our leaders are mortgaging our future in order to provide a first-class highway system, to the detriment of Utah's education system.
According to this report, the state ran a near $400 million revenueexpenditure deficit in fiscal 2008, followed by two $1 billion deficits in fiscal 2009 and 2010.
This means that incoming revenue was less than expenditures for the last three years running. This is the "structural" deficit that budget analysts keep referring to.
These deficits were caused by cutting personal income taxes at the top of the economic boom, poising state government for big deficits if the economy collapsed. In order to pay for those deficits, other fund balances were drawn down or massive borrowing filled the gaps. (See my op-ed "On cutting state government short," Salt Lake Tribune, Jan. 11, 2009.)
This is not what legislators see on reports from the governor's budget office or the Legislative Fiscal Analyst's office. They see reports where appropriations match spending year after year, giving them the impression that they are balancing the budgets.
But this is the advantage of the CAFR report, which is sent to the very bond and investment advisers where Utah borrowed another $1.2 billion last September.
In addition, the CAFR report poses this question: Why are these so-called conservatives putting the state into so much debt without new sources of revenue to fund it? They don't seem to be willing at this point to restore taxes back to levels in 2007 to prevent further deficits.
Have they been setting us up for the current hue and cry to significantly cut public and higher education again, this time by 7 percent to 10 percent?
This is the beauty of the "CAFR 2010" report. It highlights exactly where the Legislature has increased funding (transportation) while slowly starving our systems of public and higher education.
It appears that some in the Legislature are following an ill-advised strategy of the conservative Cato Institute to "strangle the beast," or big government, at the expense of a successful long-term economic development strategy which would fund and create a first-class education system in the Beehive State.
Doug Macdonald, president of Econowest Associates, Inc., was the executive director of Utah Issues and the chief economist of the Utah State Tax Commission.