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As the recession hit Utah full force in 2009, total state government revenues plummeted by 43 percent — but state spending increase anyway by 9 percent thanks largely to federal stimulus grants, according to a new U.S. Census Bureau study.
What happened in Utah was typical of states nationwide, according to the "2009 Annual Survey of State Government Finances," released on Wednesday.
As a group, states' total revenue dropped by 31 percent between fiscal 2008 and 2009, but their spending increased 12.5 percent.
The Census noted that the largest part of the revenue loss both in Utah and other states came from declines in "social insurance trust revenue." Those are for such things as unemployment compensation, public employee retirement and other insurance.
In good times, those trusts amass money for future use. But as the recession deepened, they were spending more than they raised. For example in Utah in 2008, such trust funds brought in $2 billion more than they cost. But in 2009, they lost nearly $4.3 billion, the Census study said.
With that, the Census said total revenue from all sources in Utah dropped from $15.4 billion in fiscal 2008 to $8.8 billion in 2009.
The study said Utah reported drops in most local revenue sources —but it did have an increase in state liquor revenue during those tough times, up 3.9 percent from $217.9 million to $226.3 million.
Meanwhile, for example, Utah state taxes (including sales, income and licensing taxes) decreased by 11.2 percent from $6.1 billion in 2008 to $5.4 billion in 2009.
Despite the revenue losses, spending by states nationwide still grew, fueled by an $814 billion economic stimulus plan pushed by the Obama administration — which sent billions in federal grants to states and helped prevent predicted cuts in education and welfare.
Overall, federal grants to states increased by 12.9 percent in 2009 to $477.7 billion, the Census study said. In Utah, they increased by 12 percent, from $3.44 billion to $3.85 billion.
Of note, the study also reported that Utah is one of 15 states that spends more than 40 percent of its general revenue on education. They were led by Georgia (46.1 percent), followed by Utah (45.6 percent) and Alabama (45.3 percent).
The study also showed that the recession cut into lottery revenues nationwide.
For the 42 states with lotteries (Utah does not have one), their combined ticket sales dropped from $52.7 billion in 2008 to $52.3 billion in 2009.