Why it matters: Getting the most from every tax dollar

Editor’s note: this post was authored by Juliette Tennert, budget director & chief economist in the Governor’s Office of Management and Budget.

If you have spent any time exploring our website you know that GOMB is focused on improving government services to ensure that every dollar invested by Utah taxpayers yields the greatest benefit. While this focus is certainly influenced by our core values of fiscal accountability and stewardship, it is also a necessity given the ever-growing demand on limited resources.

Since 2000, Utah’s population has grown by more than 650,000 people—equivalent to adding the combined current population of Utah’s five largest cities (Salt Lake City, West Valley, Provo, West Jordan, and Orem).  Average annual population growth over this time was 2.0 percent—more than twice the national rate of 0.9 percent and second only to Nevada’s rate of 2.5 percent. The 3.7 percent average annual growth rate in the state’s two largest revenue sources (sales and income taxes) over this time period reflects a virtuous cycle of economic and population growth as well as major tax cuts and two economic recessions.

Economics 101 tells us that inflation erodes purchasing power. So, when comparing actual revenue growth to the growth in demand on that revenue, we must consider the impacts of inflation. While our 1.2 percent inflation-adjusted annual growth in major revenue may be the envy of other states, significant challenges are apparent when we compare this growth to the needs of an ever-growing population. For example, Utah has experienced an average annual growth of 6.2 percent in Medicaid enrollment, 2.0 percent in public education enrollment, 1.8 percent in our prison population, and 1.8 percent in motor vehicle registrations since the year 2000.

You don’t have to have an accounting or economics degree to realize that without bending the curve on the cost of service delivery, it will become more and more challenging to sustain our fiscal health and ensure that the state’s needs are being met. Combined with unlimited ideas on how to spend money, the pressure on our limited resources will continue. As state agencies work to continuously improve services while also lowering costs, GOMB is committed to providing decision makers with relevant measures and policy analysis in support of the best-informed decisions regarding the allocation of our precious taxpayer dollars.