DOES UTAH HAVE A REVENUE PROBLEM? UTAH TAXES NOW CONFERENCE, MAY - - PowerPoint PPT Presentation

DOES UTAH HAVE A REVENUE PROBLEM?

UTAH TAXES NOW CONFERENCE, MAY 2019

GENERATIONS IN UTAH, 2017

10,000 20,000 30,000 40,000 50,000 60,000

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 Generation Z 1,064,055 34.3% Millennials 757,913 24.4% Gen X 586,530 18.9% Boomers 511,135 16.5% Silent and Greatest 182,170 5.9% Age

Note: Age topcoded at 85+ Source: U.S. Census Bureau, Vintage 2017 Population Estimates

Population

LONGEST SUSTAINED EXPANSION ON RECORD (JUNE 2019)

Source: Bureau of Labor Statistics

(6.00) (4.00) (2.00)

• 2.00

4.00 6.00 8.00

Utah job growth

Recessions Longest on record

CHANGING EXPENDITURE PATTERNS

U.S. Household Expenditures

Source: U.S. Consumer Expenditure Survey and Kem C. Gardner Policy Institut Note: Using FY 2019 Utah sales and use tax revenue forecast Not Taxabl e 49% Taxabl e 51%

1985 Household Expenditures

Not Taxabl e 59% Taxabl e 41%

2015 Household Expenditures

RISING HEALTH CARE COSTS

Source: Utah Governor’s Office of Management and Budget Note: Includes earmarks

12.5% 20.9%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Utah Medicaid Expenditures as a Percent of General Fund

AN AGING POPULATION

Source: Kem C. Gardner Policy Institute 2015-2065 State and County Projections

10.2% 13.5% 16.0% 16.9% 19.0% 20.3% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2015 2025 2035 2045 2055 2065

Utah Population 65 and Over

UTAH CENTENARIANS (ESTIMATED AND PROJECTED)

Source: Kem C. Gardner Policy Institute 2015-2065 State and County Projections

340 6,800

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000

2015 estimate 2065 projected

Population

UTAH DEPENDENCY RATIOS

Source: Kem C. Gardner Policy Institute analysis of U.S. Census Bureau Decennial Census data and Kem C. Gardner Policy Institute Note: Dependency Ratios are computed as the number of nonworking age persons per 100 working age (18-64 year old) persons in the population. Youth are less than 18 years old and retirement age is 65 years and older. 76.0 66.5 66.4 54.3 53.0 49.9 45.6 44.9 44.4 43.3 13.9 13.5 15.8 14.4 15.2 20.0 24.7 27.0 31.7 35.1

89.9 80.0 82.3 68.6 68.2 69.9 70.3 71.9 76.1 78.3 20 40 60 80 100

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060

Youth Retirement Age

TOTAL STATE EXPENDITURES GROWING FASTER THAN POPULATION AND INFLATION COMBINED

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000

Real Per-capita Total State Expenditures GF/EF Appropriations Limitation



Subjected spending limited to 1985 expenditures adjusted for population growth and inflation



Subjected spending excludes capital construction (roads/bldgs.), debt service, and public education

Source: Office of the State Auditor Source: Governor’s Office of Management and Budget, April 23, 2018.

FY 1998 FY 1999 Limit $3,738,255,000 $3,897,490,000 Amount Subject

• $3,097,841,000
• $3,270,368,000

Amt Under Limit $640,414,000 $627,122,000

Source: Utah Code Annotated Chapter 63J-3-101

ECONOMY, INCOME, CONSUMPTION, AND TAXABLE SALES

Sales Tax Base Personal Consumption Expenditures Personal Income Utah GDP $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions

Sources: Sales Tax Base: History of the Utah Tax Structure; Utah Tax Commission; https://tax.utah.gov/esu/history/history.pdf ; p. 9-10; published Dec. 2018; accessed May 2019. All Else: Interactive Data Tables, U.S. Bureau of Economic Analysis, https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1#reqid=70&step=1&isuri=1; accessed May 2019.

STATE INCOME AND SALES TAXES DIFFERENTIAL GROWTH RATES (IN MILLIONS)

Sales Tax Revenue Income Tax Revenue $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Nominal State Sales and Income Tax Revenue

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Utah GDP

Source: Interactive Data Tables, U.S. Bureau of Economic Analysis, https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1#reqid=70&step=1&isuri=1; accessed May 2019. Source: History of the Utah Tax Structure; Utah Tax Commission; https://tax.utah.gov/esu/history/history.pdf ; p. 9-10, 166-167; published Dec. 2018; accessed May 2019.

GAS TAX IS SLOWLY DYING

AUTO-RELATED SALES TAX A TEMPORARY BRIDGE TO LONG-TERM FUNDING SOURCE

Transp Fund Transp Fund plus Sales Tax Earmarks $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Transportation Funding Sources

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Utah GDP

Source: Interactive Data Tables, U.S. Bureau of Economic Analysis, https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1#reqid=70&step=1&isuri=1; accessed May 2019. Source: Office of the State Auditor

SALES TAX BASE AS PROPORTION OF PERSONAL INCOME

0% 10% 20% 30% 40% 50% 60% 70% 80%



Historical trend is downward



Future is uncertain

?

Sources: 1980-2017, 2019-2026: Governor’s Office of Management and Budget and Kem C. Gardner Policy Institute. 2018: Office of the State Auditor

INCREASINGLY FUNDING HED WITH INCOME TAX TO CLOSE THE GAP

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% General Fund Education Fund

Sources: FY 1997-2018: Governor’s Office of Management and Budget. FY 2019-2020: Compendium of Budget Information; Office of the Legislative Fiscal Analyst; https://cobi.Utah.gov; accessed May 2019.