In its February 2014 report, Managing Uncertainty, The Pew Charitable Trust lauds Utah for its proactive approach to improving the state's long-term fiscal health and managing budget uncertainty.
Managing the budget and correctly forecasting revenue is not always smooth sailing. One of the best ways for policymakers to chart a steady course despite persistent financial uncertainty, the Pew Report found, is for states to regularly examine the root causes of volatility and their impact over time --something Pew says Utah has does "more comprehensively" than any other state.
"For example, Utah analyzes changes in economic activity that affect its tax base, the interaction between the tax base and tax rate, and policy changes that affect the tax system With their regular studies, Utah lawmakers are using data-driven observations about volatility to inform their budget reserve-fund policies," according to the Pew Report.
In 2008, Utah lawmakers voted to require a joint legislative and executive study of the state's revenue volatility every three years. As a result of this analysis, Utah policymakers established separate funding targets for both of its major budget- reserve funds in 2009, and adjusted those targets again in 2012. Last year, Utah lawmakers imposed a requirement to track the volatility of federal funds as well, thus enabling the state to better manage economic and revenue uncertainty.