UTAH STATE BUDGETEARMARKS, DEBT AND TRANSPORTATION

Presentation by

Natalie GochnourAssociate Dean, University of Utah

Chief Economist, Salt Lake Chamber

February 3, 2014

Jan-00

Aug-00

Mar-01

Oct-01

May-02

Dec-02Jul-0

3

Feb-04

Sep-04

Apr-05

Nov-05

Jun-06Jan-07

Aug-07

Mar-08

Oct-08

May-09

Dec-09Jul-1

0

Feb-11

Sep-11

Apr-12

Nov-12Jun-13

1000000

1050000

1100000

1150000

1200000

1250000

1300000

DOT.COM/9-11Recession

Great Recession

Utah lost 100,000 jobs

Source: Utah Department of Workforce Services

Utah Job Count

Source: Utah Legislative Fiscal Analyst, 12/17/2013

UTAH EARMARKED SALES TAX REVENUE

Source: Governor’s Office of Management and Budget

UTAH NET GENERAL OBLIGATION DEBT PER CAPITA

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$710$640 $623 $550 $476 $434

$571

$868

$1,157$1,283

$1,161

Source: 2013 Comprehensive Annual Financial Report, Utah Division of Finance, Oct. 23, 2013, p. 228-229

UTAH OUTSTANDING GENERAL OBLIGATION DEBT

Source: Governor’s Office of Management and Budget

Delaware Utah

Marylan

d

Virgina

Missouri

North Caro

lina

Indiana

Iowa

Median (A

ll Stat

es)

Median AAA

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%8.2%

6.8%

5.7%5.3%

4.5%3.6%

2.0%

0.9%

4.9% 4.9%

Source: Utah Legislative Fiscal Analyst, 12/17/2013

UTAH’S DEBT SERVICE RATIO COMPARED TOOTHER MOODY’S AAA-RATED STATES

FIVE-YEAR BUDGET POSITIONFY13-FY17

Education Fund General Fund Transportation

($10,000,000,000)($5,000,000,000)

$0 $5,000,000,000

$10,000,000,000 $15,000,000,000 $20,000,000,000 $25,000,000,000 $30,000,000,000 $35,000,000,000 $40,000,000,000

$619

,897

,000

.00

$339

,946

,000

.00

($4,

907,

532,

000

.00)

$18,

477,

453,

000

.00

$37,

326,

416,

000

.00

$11,

070,

061,

000

.00

$17,

857,

858,

000

.00

$36,

896,

470,

000

.00

$15,

977,

593,

000

.00

Budget Posi-tionCash InflowCash Outflow

Source: Utah Legislative Fiscal Analyst, 12/17/2013

Debt; 52%

Projects;

48%

$717 m

TRANSPORTATION INVESTMENT FUND EXPENDITURESFY14

Source: Utah Legislative Fiscal Analyst, 12/17/2013

BORROWING FOR PROJECTED OUTFLOWSEstimated Outstanding Debt & Constitutional Debt Limits

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

$0$1$2$3$4$5$6$7$8$9

$10

0

0.5

1

1.5

2

52%

74%87% 82% 80%

71% 61%51%

43% 37% 31% 25% 19%

Constitutional Debt Limit Available Debt 85%Existing Debt New Debt with Trend Expenditures

Billions

Source: Utah Legislative Fiscal Analyst, 12/17/2013

BENEFITS PRINCIPLE OF TAXATION

• Those who benefit the most from the transportation network should pay the most for its continued operation.

• Efficient – matches supply with the demand• Curb overuse• Reduce wear and tear• Reduce traffic congestion• Combat air pollution

• Ex. Someone driving 40 miles to work each day should pay more for roads than somebody who works from home.

Share of State & Local Road Spending

Covered by User Fees

Source: Tax Foundation and American Petroleum Institute

Mississippi

New Mexico

Missouri

North Dakota

Vermont

Utah

Louisiana

Wyoming

South Dakota

Alaska

U.S. Average

- 10.0 20.0 30.0 40.0 50.0 60.0

33.1 33.1

31.6 29.8

29.0 28.8

25.4 24.5

21.5 10.5

50.4

Percent of Spending Covered by User Fees

U.S. Average and Bottom Ten States: 2011

Utah ranks 46th lowestFor user fee contribution

Motor Fuel Tax Comparisons

Source: Tax Foundation and American Petroleum Institute

Wyoming

Arizona

Colorado

Utah

Idaho

Nevada

California

- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0

14.0

19.0

22.0

24.5

25.0

33.1

48.7

Cents Per Gallon

As of January 2013

19971998199920012002200320042005200620072008200920102011201215

20

25

30

35

40

28.7 28.8 28.3 28.5 28.8 29 29.530.3 30.1

31.2 31.532.9

33.9 33.835.6

U.S. Passengers Cars: Miles Per Gallon

Source: US DOT, Summary of Fuel Economy Performance

AVERAGE FUEL EFFICIENCY

• Buying power of motor fuel tax has declined 45% since 1997.

• The 24.5 cents is now equivalent to 16.9 cents in inflation-adjusted terms. (Adjusted using CPI-U)

BUYING POWER

Source: Salt Lake Chamber calculations