Utah Fiscal and Economic Preparedness

Appendix A Utah Fiscal and Economic Preparedness

Between 2009 and 2020, Utah and the nation experienced the longest, sustained economic expansion in history. Utah created over 400,000 jobs, and unemployment dropped to a historic low. Utah used this time to build up significant reserves that can help to support the economy and mitigate impacts to critical public services like education, public safety, transportation, and public health and social safety-net programs.

The fiscal toolkit diagram at the right shows state budget experts’ recommended sequencing of resource use in an economic downturn. The temporal budget balance (matching ongoing expectations with more reliable revenue sources and using onetime windfalls for spending of limited scope) is the first resource that should be tapped; formal rainy-day funds are the last.

Utah’s official rainy-day funds (budget reserve and disaster recovery accounts), “working” rainy day funds (cash appropriated for buildings and roads that can be replaced with borrowing), and unemployment insurance trust fund balance were at record levels at the beginning of 2020. These reserves are in addition to immediately available options like reprioritizing current budget allocations and drawing on operating reserves. Portions of the balances presented at the right are encumbered; details will be provided in future reports.

The “Big Three” credit rating agencies – Fitch, Moody’s, and S&P – affirmed Utah’s fiscal stability and preparedness with AAA credit ratings on May 8, 2020.

Utah’s Fiscal Toolkit

$0 $200 $400 $600 $800 $1,000 $1,200 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 P CY20 P $ millions Unemployment Insurance Trust Fund Balance

- Fitch Rainy Day Funds

Utah, 2.5% U.S., 3.6%

0.0% 2.0% 4.0% $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions Value at Risk Economic Volatility Temporal Balance Cashow Management Spending Reductions Working Rainy Day Funds Operating Reserves Revenue Enhancement Rainy Day Funds Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (P) FY21 (P) $ millions Encumbered Source: Office of the Legislative Fiscal Analyst “The state is well-positioned to address an economic downturn, given its broad control over expenditures, revenue raising capacity, and maintenance of sound reserves.”

“S&P Global Ratings believes Utah’s strong credit fundamentals will allow the state to navigate through the economic uncertainty and challenges brought about by the COVID-19 pandemic.”

- S & P

“Utah’s Aaa rating reflects the state’s tradition of strong conservative fiscal governance that is expressed in frequent revenue forecast adjustments, structurally balanced budgets, a willingness to make both spending and revenue adjustments when necessary, and accumulation of ample reserves.” - Moody’s

Source: Utah Governor’s Office of Management and Budget and Utah Office of the Legislative Fiscal Analyst $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions Cash - funded Buildings and Roads Rainy Day Unemployment Insurance Trust Fund Balance $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions $245 $294 $420 $469 $528 $542 $570 $684 $803 $894 $932 Other General Fund Education Fund $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions Cash - funded Buildings and Roads Rainy Day $0 $200 $400 $600 $800 $1,000 $1,200 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 P CY20 P $ millions Unemployment Insurance Trust Fund Balance $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions $245 $294 $420 $469 $528 $542 $570 $684 $803 $894 $932 Other General Fund Education Fund Source: U.S. Department of the Treasury

Unemployment Insurance Trust Fund February Balance

$245 $294 $420 $469 $528 $542 $570 $684 $803 $894 $932 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions Rainy Day

$0 $200 $400 $600 $800 $1,000 $1,200 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 P CY20 P $ millions $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (P) FY21 (P) $ millions Encumbered Cash-funded Buildings and Roads Cash - funded Buildings and Roads Unemployment Insurance Trust Fund Balance $128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $0 $200 $400 $600 $800 $1,000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 P FY21 P $ millions Source: Utah Governor’s Office of Management and Budget and Utah Office of the Legislative Fiscal Analyst

$128 $49 $161 $263 $401 $554 $455 $473 $741 $713 $804 $200 $400 $600 $800 $1,000 $ millions Encumbered $459 $293 $352 $493 $657 $820 $940 $1,007 $1,073 $1,122 $1,168 $0 $200 $400 $600 $800 $1,000 $1,200 $ millions 17