So what is this structural imbalance?

Feb 2, 2011 by

When it comes to dealing with the major problems in the state budget, sometimes the jargon can hold us back from really understanding the issue. Here’s an example: structural imbalance. A radio show host was recently asked what he thought about the structural imbalance and his response was “it is something that would put his listeners to sleep if we mentioned it on the radio.”

So here it is in a nutshell:

Structural balance refers to the matching of ongoing expenditures with ongoing revenues. If revenues equal or exceed expenditures, structural balance is achieved. If expenditures exceed revenues, structural imbalance occurs.

Before the Great Recession, Utah achieved structural balance. The fiscal 2006 surpluses were $241 million. For fiscal year 2007 that ended last June, surpluses were $308 million in the two main tax funds, the General Fund and the Education Fund.

In 2011 state revenues do not equal or exceed expenditures. In fact, the state is an estimated $313 million dollars short of achieving structural balance and that does not include the high growth areas of the budget such as medicaid, public & higher education.

House Majority Leader Brad Dee explained the structural imbalance in these terms:

What would you do if your take home pay was less than your mortgage? More than likely you would find additional income or reduce your household expenses. As a state we are not exempt from the laws of prudent finance. I am not in favor of increases to our income through tax increases. It leaves only the alternative, reducing our expenses.

In her opening remarks of the 2011 legislative session, House Speaker Rebecca Lockhart recognized the structural imbalance as one of the key issues to be addressed this session. Utah prides itself on being the best managed state, we aren’t able to print more money (although if the Sound Money Act passes we can mint our own coin) so balancing our budget and ensuring our on-going revenues match our on-going expenses is why you will be hearing structural imbalance throughout the 2011 legislative session.

1 Comment

  1. Thanks for the explanation, guys. How about just calling it: balancing the budget?

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