No. 1 again: Utah's economic outlook best for 11th straight year

If the only certain things are death and taxes, Utah having the best economic outlook among states in an annual ranking comes pretty close.

For the 11th consecutive year — every year since the study began — Utah tops the economic outlook list in the “Rich States, Poor States” economic competitive index released last week by the American Legislative Exchange Council (ALEC).

The report ranks the economic competitiveness of states using 15 equally weighted policy variables. Several states’ success in increased rankings can be tied directly to the success of federal tax reform and the resources it gave to lawmakers to cut taxes at the state level, ALEC said.

ALEC said Utah ranks first due to its relatively low taxes on personal and business income, combined with the sixth-lowest workers compensation costs, eighth-fewest per capita public employees and the 12th-best tort system in the nation. Utah’s 2011 pension reform, which began a transition to a defined contribution plan, has also been a key factor in the state’s success, it said.

“Incredibly, for the 11th year in a row, Utah’s economic outlook has earned the top ranking in America,” said Jonathan Williams, ALEC chief economist and co-author of report. “Utah’s hard-working taxpayers have been the ultimate beneficiaries, as the state’s economy continues to expand. However, when you’re the leader, all eyes are on you. Lawmakers across the nation are looking to catch Utah in this uber-competitive economic race to the top.”

Utah’s top ranking reflects its people’s commitment to sound fiscal policies and conservative budgeting, according to state Senate President Wayne Neiderhauser, R-Sandy.

“The Legislature and the governor together have continued to strengthen Utah’s economy while investing over $1 billion in additional money for education the last few years,” Neiderhauser said. “While it is exciting to be consistently ranked the No. 1 state for economic outlook, the most important benefit of conservative fiscal policies is the impact on our thriving economy and the high quality of life for the people of Utah.”

The rest of the top five states for overall economic outlook are, in order, Idaho, Indiana, North Dakota and Arizona. New York was last, with the other bottom-five states being Vermont, Illinois, California and New Jersey.

In addition to the variables of workers compensation costs, per capita public employees and tort system, Utah was ranked second among states for personal income tax progressivity (change in tax liability per $1,000 of income), 10th for top marginal corporate income tax rate, 12th for “remaining” tax burden (per $1,000 of personal income), 17th for both top marginal personal income tax rate and property tax burden (per $1,000 of personal income), 21st for recently legislated tax changes, 23rd for sales tax burden (per $1,000 of personal income), and 26th for debt service as a share of tax revenue.

Available at richstatespoorstates.org, the report also noted that Utah is a right-to-work state, has no state estate/inheritance tax and has a minimum wage that is the federal floor of $7.25 per hour.

The “Rich States, Poor States” report also listed states’ economic performance, a backward-looking measure based on three performance variables highly influenced by state policies. Utah’s economic performance was fourth among states, trailing top-ranked Texas, Washington and North Dakota. Connecticut was last.

Using figures from 2006-16, Utah was fifth among states in state gross domestic product cumulative growth, 13th in absolute domestic migration, and third in non-farm payroll employment cumulative growth.

The American Legislative Exchange Council is a nonpartisan organization of state legislators in the U.S. and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think-tank members.