For 18th year, Utah ranks No. 1 for best economic outlook. What could threaten its top spot?

Yahoo

15-04-2025

The Utah Capitol and its North Building construction is pictured in Salt Lake City on Thursday, April 10, 2025. (Photo by Spenser Heaps for Utah News Dispatch)
Utah's top-ranking state Republicans called a news conference in front of the governor's mansion on Tuesday to celebrate yet another year of Utah ranking No. 1 for its economic outlook, according to a new report released by the pro 'limited government' think tank American Legislative Exchange Council (ALEC).
To Gov. Spencer Cox, House Speaker Mike Schultz and Senate President Stuart Adams, Utah taking the report's top spot for 18 years in a row validates how Utah's GOP-controlled Legislature has been managing the state, not just decades into the past, but also to this day.
By nurturing a business-friendly climate with low personal and corporate tax rates along with 'family friendly' policies, they said Utah is continuing its nearly two-decade streak of setting an example for other states to follow.
Alongside its No. 1 economic outlook ranking, Utah also ranked No. 3 in the nation in the ALEC report for 'economic performance' based on its gross domestic product growth, domestic migration and non-farm payroll employment growth.
It's a ranking not all Utah leaders agree with, however, as some Democrats point to working class Utahns' struggle to afford to live in the state.
Utah tops ALEC's list of states with the best economic outlook, again
To Cox, Utah's secret sauce is state leaders' 'forward-thinking nature' on economic, business and tax policy that fosters growth over decades — work that he said isn't easy or 'sexy' in today's polarized political landscape. And it's work that takes years, sometimes decades, to have an impact.
'As I talk to my colleagues around the country, this is really rare,' Cox said. 'It's very unique. The incentive structure around elections is to only look forward maybe two years or four years at most in our state. And that is true of most states.'
The governor said there's a 'pull' to focus today's legislation in reaction to national hot-button issues. Without naming names, he said he spoke with a fellow governor from 'a state that is very close to ours' who said 'the biggest problem I have with my Legislature right now is they only care about right now.'
'One of the reasons that a lot of states aren't doing the policy work that our Legislature is doing is because it's hard and it's boring,' he said. 'There are not a lot of great social media memes about policy work that was done 40 years ago, (like) truth and taxation stuff. This stuff isn't sexy. It's not fun. You don't see immediate results the next year, it's just not made for today.'
Utah isn't immune to that 'pull,' Cox acknowledged. Political 'toxicity' is among the concerns he named that could threaten Utah's economic ranking, which he said could 'turn us into every other state, where we just focus on the stuff that really doesn't matter but gets the most attention.'
'I will just tell you, there are a lot of new legislators who came in not interested in this stuff,' Cox said. '(They're) really interested in a lot of other stuff that gets a lot of attention. And we have to be intentional about passing that on and making sure that every generation (of leaders), they realize that this is who we are. This stuff matters and we have to keep going.'
He also named the state's stubbornly high housing costs and energy challenges as other issues that could spell trouble — but he also expressed optimism that the Utah Legislature is working to tackle those problems, not shy away.
Cox didn't point to specific issues or legislators, but in recent years some of Utah's most attention-grabbing and controversial bills stem from national hot-button issues. Last year, the Legislature approved transgender bathroom restrictions and anti-DEI measures in higher education and public entities. This year, Utah became the first state in the nation to enact a broad flag ban in schools and government-owned buildings and the first to ban adding fluoride to public water. Cox supported and signed the fluoride ban, but allowed the flag ban to become law without his signature.
An ALEC-backed bill, however, was among the most controversial to win approval from the 2025 Utah Legislature: HB267 which bans public sector unions from collective bargaining. In a Feb. 19 post, ALEC deemed the bill's sponsors 'policy champions' for their effort to 'increase government accountability to state taxpayers.' But a referendum effort is underway to overturn the law. Wednesday, the Protect Utah Workers Coalition is expected to deliver its signatures in its bid to put the referendum on the ballot.
For its annual 'Rich States, Poor States' rankings, ALEC — a nonprofit that convenes state legislators and corporations to draft model legislation that is 'dedicated to the principles of limited government, free markets and federalism,' according to its site — said its economic outlook rankings are a forecast based on state standings in 15 policy variables.
'Generally speaking, 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,' the 2025 report says.
Utah ranked high for its lack of an estate or inheritance tax, a low state minimum wage of $7.25, its status as a right-to-work state, and average workers' compensation costs of $0.86. It also won points for 'recently legislated tax changes' (lawmakers this year cut taxes for a fifth year in a row, totaling $1.4 billion over time), its flat corporate and income rate of 4.55%, and a relatively low property tax burden of $23.54 per $1,000 of personal income, among other policies.
Utah Legislature OKs another round of tax cuts, totaling $1.4 billion in 5 years
Adams, the state's Senate president, also pointed to a newly published report by the University of Utah's Kem C. Gardner Policy Institute that shows Utah's median household income of $98,336 ranked the state highest in the U.S. when adjusted for price parity.
'I mean, how can you get better than being the No. 1 economy with the best personal income?' Adams, R-Layton said. 'You have families making a lot of money. And that is way cool. They can send their kids to college.'
Though critics often point to Utah's bottom-of-the-nation rankings when it comes to per-pupil education spending, Adams said the state has been increasing public education spending, including a boost to teacher pay this year that legislative leaders say put Utah among the top states in the Mountain West with the highest starting salaries for teachers.
'We're cutting taxes and paying teachers more. How do you do that without a strong economy? … Not many states can do both,' Adams said. 'It's a great day, not only for the state of Utah, but it is a really good day for those that want to have personal wealth and be able to take care of their families.'
Not everyone agrees that ALEC's rankings are a holistic indicator of Utah's performance as a state. One of the state's top Democrats, House Minority Leader Angela Romero, D-Salt Lake City, issued a statement on Tuesday arguing that ALEC's report 'provides a concerningly biased evaluation of economic success in our state.'
'Rather than accounting for factors that affect regular working people and families, the index praises Utah for its low minimum wage and tax cuts in favor of corporations,' she said.
That's problematic given that wages have not kept pace with cost of living, Romero said. She added that economic uncertainty under President Donald Trump's second administration could bring more stress for businesses and working-class families.
'Rising housing costs, increasing prices on basic necessities, and stagnant wages have left countless Utahns struggling to make ends meet in the very communities they've called home for generations,' she said. 'On top of that, federal layoffs and our current economic uncertainty have forced businesses to make difficult decisions, resulting in even more financial stress for working families across the state. All of this compounds a growing sense of fear and frustration.'
Romero added that 'although we celebrate these rankings, we must not allow them to cloud over our shortfalls.'
'Utah has consistently ranked among the lowest states for women's equality, and is regularly listed among the ten worst states for workers, with particularly poor outcomes in wages, collective bargaining rights, and labor protections,' she said. 'As a state, we must protect the economic outlook for all Utahns, not only a select few.'
For years, though, Utah's conservative leadership has applauded ALEC's rankings as a gold standard.
Schultz, the House speaker, said ALEC's ranking shows Utah's success is 'rooted in the principles that work: low taxes, reasonable spending, and a business-friendly but most importantly a family-friendly environment that fosters innovation and upward mobility.'
'It's capitalism, it's competition,' Adams said. 'It's trying to make things better. I have 16 grandkids. Talk about vision. I want those 16 grandkids to have better upward mobility, to have a better life than I have. … That's what we do in Utah. Competition is a great thing, and I look forward to other states pushing us.'
In that spirit of competition, Cox, Adams and Schultz chuckled when Jonathan Williams, ALEC president and co-author of the report, noted that one state is on the rise and could be giving Utah a run for its money in coming years: Tennessee.
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'We saw Tennessee this year move from No. 12 to No. 2, and now is nipping at the heels of Utah,' he said.
Tennessee ranked high for its lack of a personal income tax, no estate tax, its low property tax burden, and 'personal income tax progressivity,' which the report defined as the difference between average tax liability per $1,000 at incomes of $50,000 and $150,000.'
Utah leaders have repeatedly said they want Utah to get rid of its income tax — but that would require a major tax overhaul legislators have not yet tackled, and a drastic change to how the state funds public education, which is required under the Utah Constitution to be funded through income tax revenue. In the meantime, though, lawmakers continue to gradually cut the income tax rate.
Speaking about Utah's competition with other states, though, Cox said he's happy to see Tennessee surface as a healthy competitor. 'They deserve it. I love what they're doing out there.' He added that the state is 'copying many things that are happening in Utah, and I couldn't be more proud.'
He added Utah leaders 'reject the zero-sum mindset. We do not believe that our economy is a zero-sum game, that if someone else wins, we lose. That's not how we look at it.'
Still, the governor indicated Utah will continue to look for ways to keep its No. 1 ALEC ranking.
He half-jokingly said at the end of Tuesday's news conference, 'We're going to take care of Tennessee. Don't worry.'
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