For ninth straight year, ALEC ranks Utah's economic outlook top in nation

The American Legislative Exchange Council (ALEC) has ranked states’ economic outlooks for nine years.

And for the ninth year, Utah has earned the top spot in the nation.

The American Legislative Exchange Council (ALEC) has ranked states’ economic outlooks for nine years.

And for the ninth year, Utah has earned the top spot in the nation.

ALEC’s “Rich States, Poor States” index rankings — also known as the ALEC-Laffer State Economic Competitive Index — also placed Utah third among states for economic performance.

ALEC considered 15 equally weighted metrics to determine the economic outlook ranking, including tax rates, tax burden and labor statistics. One item highlighted is Utah’s gross domestic product (GDP). Utah experienced cumulative growth between 2004-2014 of 61.9 percent, ranking No. 4 in the nation.

“By adhering to fiscally conservative principles, we consistently rank No. 1 for economic performance and that benefits all Utahns,” Gov. Gary R. Herbert said.

Supporting the tax considerations from ALEC, Utah consistently places in the Tax Foundation’s top 10 for “Business Tax Climate,” ranking ninth in the nation for 2016. The low tax burden plays a critical role in Utah’s strong economic outlook.

“Our outlook is healthy, but we have work ahead of us to keep Utah as the best state for business,” said Val Hale, executive director of the Governor’s Office of Economic Development (GOED). “Workforce development programs and rural outreach assistance are a few of the economic issues we are proactively working on to keep Utah on top.”

The cover of the 59-page ALEC report is adorned with an artistic silhouette of Salt Lake City.

Among the variables used to determine the economic outlook ranking, Utah was second in personal income tax progressivity, seventh in average workers’ compensation costs, eighth for the number of public employees per 10,000 population, 10th for both top marginal corporate income tax rate and state liability system survey, 13th for “remaining” tax burden (other than property and sales tax burden), 14th for number of tax expenditure limits, 17th for property tax burden, 18th for top marginal personal income tax rate, 26th for debt service as a share of tax revenue, 29th for sales tax burden, and 42nd for recently legislated tax changes.

The report’s economic performance ranking is a backward-looking measure based on a state’s performance on three important variables: state gross domestic product, absolute domestic migration and nonfarm payroll employment, all of which are highly influenced by state policy. The ranking details states’ individual performances over the period 2004-14 based on that economic data.

In addition to having the fourth-ranked GDP, Utah was 15th in absolute domestic migration and third in nonfarm payroll.

The report indicates that, generally, states that spend less — especially on income transfer programs, and states that tax less, particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.