15th straight year: Utah leads in economic outlook

Fifteen years of ranking states according to their economic outlooks. Fifteen years for Utah to top those rankings.

The annual “Rich States, Poor States: ALEC-Laffer State Economic Competitive Index” once more has Utah with the best outlook. That ranking is a forecast based on a state’s current standing in 15 state policy variables, and each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less and tax less experience higher growth rates than states that tax and spend more, according to the index.{mprestriction ids="1,3"}

Another gauge, for economic performance in the 2010-20 period, has Utah at No. 2, behind only Arizona. Those rankings consider state performance on three variables: state gross domestic product, absolute domestic migration and non-farm payroll employment.

Authors of the report, released by the American Legislative Exchange Council, believe migration patterns show that people “vote with their feet,” leaving for “opportunity states” with lower tax burdens and that value economic competitiveness.

“‘Rich States, Poor States’ teaches us that states with lower taxes, especially those that avoid personal income taxes, have seen significantly better rates of in-migration than states with high income tax rates,” said Jonathan Williams, report co-author and ALEC’s chief economist and executive vice president of policy.

“Utah has been ranked No. 1 for the past 15 years in a row. Utah has a strong track record of pro-taxpayer reforms in recent years, including the adoption of a flat personal income tax rate, pension reform for its previously endangered system, and the state’s innovative approach to property tax reform.”

“If you believe incentives matter, and I do, state policies have the effect of changing those incentives at both the state and local levels,” said report co-author and economist Arthur Laffer. “Those changes in incentives have consequences. This ranking of states is a tried-and-true formula. I think it is a great way of picking winners and giving guidance on how states should be effectively governed.”

The 15 policy variables used to rank the economic outlook of states have proven over time to be influential for state competitiveness and growth, the report authors said. The report shows that cutting taxes, paying down debt and maintaining free market policies have significantly helped states attract new residents.

“This is our 15th annual ‘Rich States, Poor States’ Report, and every year one state has come out on top: Utah,” said report co-author and FreedomWorks economist Stephen Moore. “Congratulations to Gov. [Spencer] Cox and previous governors who have done an amazing job. I just got back from Salt Lake City, and it is booming! It’s an incredibly vibrant place and they’ve got the whole formula put together very well there.”

Behind Utah in economic outlook among top 10 states are North Carolina, Arizona, Oklahoma, Idaho, Nevada, Indiana, Florida, North Dakota and Wyoming. The worst-ranked states are New York, New Jersey, California, Vermont, Minnesota, Illinois, Maine, Hawaii, Maryland and Oregon.

“After 15 years of being the highest-ranked state, we have never taken its success for granted,” said Utah Senate President J. Stuart Adams in a statement issued after the report was released. “We continue to reach for new heights and are determined never to be complacent. As a state, we buckle down during hard times, relying on our forward-thinking reserve funds and preparing for future uncertainties during good economic periods.

“Our foresight prevented Utah from the pitfalls other states recently experienced throughout the COVID-19 pandemic and sets our state on a forward projection. While some states like California, Michigan and Massachusetts were firing teachers, Utah was hiring teachers. While other states kept their students at home, we worked to have our kids back in the classroom. We also paved a way to safely get Utahns back to work, focusing on saving both lives and livelihoods.”

Those efforts, he said, led to a balancing of the largest budget in state history, tax cuts for all Utahns and historically low unemployment. “We are just scratching the surface of what our state can accomplish,” he said. “Our economic outlook has never been brighter.”

The American Legislative Exchange Council is a nonpartisan, voluntary membership organization of U.S. state legislators. The council is governed by state legislators who comprise the board of directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members.{/mprestriction}