SALT LAKE CITY — Despite the worst economic crash in modern American history, Utah and Idaho increased their tax revenue compared to pre-pandemic years.
A study published by Pew Research using data from the Urban Institute found that the Beehive State ranks second in the nation for its tax collections increase, only coming up behind its neighbor, Idaho.
According to the data, Idaho led the country with 11% more tax revenue as of February 2021 compared to the year before the pandemic and recession. Utah gained 8.7% more tax revenue than its pre-pandemic year. The data was reported in early May and reflects tax collection revenue as of February 2021.
Utah and Idaho top the list of 29 states that managed to take in as much or more revenue in the year since the pandemic began compared to the one before.
A boom in online sales
"The interesting thing that's happened in Utah is, going into the pandemic we had the best economy in the nation," Utah State Tax Commission Chairman John Valentine said. "Coming out of the pandemic, we haven't really hardly lost a beat."
The gains, Valentine said, are largely attributable to online sales.
"As you can probably guess, we had very large increases in our remote sales, those coming in from places like Amazon and Walmart.com and all the various other kinds of online type of retailers," Valentine said. "They've had a boom in Utah."
Some industries still struggling
However, even as some parts of the economy soar, others are struggling. Valentine noted that tax collections in Utah in the hospitality, oil, mineral and gas sectors are all still well under their pre-pandemic revenue.
These struggles mirror a national trend. The research report found tax revenue losses still outpace gains in 18 states, with oil-producing states like Alaska and North Dakota, and states with high levels of tourism like Florida, Hawaii and Nevada among the deepest and longest-running tax revenue declines since the pandemic began.
Even states in the green, like Utah, still have to focus stimulus money on helping to stabilize the industries and communities hit hardest by the recession.
"Probably the last to stabilize will be hospitality, because both business and leisure travel have been off," Valentine warned. "So much of Utah has portions of its economy that really rely upon tourism. Some of our rural areas — especially gateway communities to the national parks — really suffer, but they seem like they're really coming back quickly."
"It's a little slower for the business part, so I see downtown — hotels, for example — being a little slower to recover based upon the revenues that we're seeing," Valentine added.
The biggest difference between states that are still struggling with revenue and those that have rocketed back to pre-pandemic revenue is how they can spend their incoming federal stimulus.
"As we get infrastructure funds from the federal government, we can really put them into infrastructure. We can put them into roads and bridges and to rail, and to water, into air quality and to solid waste. We can actually use them directly in infrastructure," Valentine said. "Some states are going to have to be very careful because they won't be able to put it directly into those kinds of capital expenses."
Coming out of the pandemic, We haven't really hardly lost a beat.
–John Valentine, chairman of the Utah State Tax Commission
Instead, struggling states will focus their stimulus spending on attempting to break even and begin growing.
The Utah Legislature recently held a special session to determine how to apportion the state's stimulus. A breakdown can be found here.
Total collections from the federal government are poised to erase the losses of the pandemic, with total tax receipts 0.01% for March 2020 through February 2021 in comparison with the same months one year prior, preliminary data across 49 states shows.
"This means that for states collectively, cumulative tax revenue since the onset of COVID-19 reached pre-pandemic levels for the first time, though without adjustments for inflation," the Pew Research report says.
The next step in economic recovery, the report notes, is outgrowing inflation and creating sustainable growth beyond its pre-pandemic levels.