Many states are having all kinds of budgeting issues these days, and Utah is no exception. Despite approving $400M worth of cuts that will soon go into effect, Utah is facing a $450M budget shortfall, a figure that far exceeds the $420M rainy day fund. This disconnect between the savings and shortfall reflects our own poor personal budgeting in which we do not truly prepare for the down times.
Part of the problem is that Utah, like so many states, is happy to spend rather generously during good times. The growth in government spending has outstripped the rate of population growth plus inflation for a number of years. (Granted, we can account for some of this via income growth, but that isn’t the entire story.) Unfortunately, these spending habits catch up rather rudely when a recession hits. Lawmakers are then scrambling to undo the new and increased spending that they had approved just a few years prior.
I’d like to say that this is a habit unique to government, but it reflects our own personal inability to properly manage our money. The rate of national savings has been in the low double-digits for decades; we spend during fat times and scrimp during lean times, but we don’t pack away money to even out the inevitable dips. The wise use of money dictates that we spend only what is necessary during good times and save the rest for bad times to even out the dips. If that’s good advice for individuals, isn’t is good advice for government?
I’d like to see Utah start tempering its desire to inflate spending during boom years, instead packing away more money in the rainy day fund to avoid huge cuts in recessions. In addition to this, the state would be earning interest on the savings and have cash on hand to pay for projects outright, thus avoiding the use of bonding and the paying of interest. However, until we improve our own personal money management and cure our addiction to credit, we probably will not be able to expect the same of our government.