How Does a Landlocked State Attract a Global Economy?

Utah seems to have figured out how to build a solid economy in today's competitive, post-recession climate. The Beehive State is the third-fastest growing state -- population-wise -- in America, has among the fastest growing economies and an unemployment rate that is the sixth lowest in the nation. Big name tech companies like Google, eBay and Adobe Systems have opened offices in Salt Lake, Ogden and Provo. In fact, the area is so tech-focused, it's now nicknamed Silicon Slopes. The state's skilled workforce -- many of them Mormons who learned languages and entrepreneurial skills during missions abroad -- is a big draw, as is a friendly tax climate and a top rated public university.

So what's the secret to its success? Governing recently sat down with Utah Gov. Gary Herbert, who is also chair of the National Governors Association, to learn a little more about what keeps Utah's economy ticking. Utah was one of the more financially stable states in the tumultuous years during and following the Great Recession. It was one of the few states to keep its AAA credit rating. And it also has consistently and conservatively managed its finances so well that that its state treasurer proudly referred to Utah's reputation among municipal finance investors as "boring but solid."

The following interview is edited for clarity and length.



Utah has a lot going for it. Is there anything you actually worry about?

I kind of pinch myself every morning I get up [that things] are going so well. But the challenge is to continue doing the right things. It's like winning a national championship: What are you going to do for me next year? Win another one, and so on. I want to continue to be No. 1. I passed out a goals card to senior staff when I took office that said we will be the best performing economy in America, and that includes being a premier global business destination.

 
Talk about that. How does a landlocked state attract a global economy?

People have laughed and said, "You can't do that, you're Utah." But I tell you, we've turned a lot of heads. We had a lot in place. I think the [2002] Olympics helped us and let the rest of the world discover us. We're not just the Wild West. We speak 130 languages here in Utah, and one-third of all Mandarin Chinese taught in the United States is taught in Utah. We have more national parks than any other state and the majority of people who come here are international visitors. We have the 7th rated best symphony in America. We have an opera. And art is king here. When [early Mormon leader] Brigham Young arrived, the first thing he built was not a church but a performing arts center.

Utah's sales tax hike for transportation funding that passed earlier this year allows counties to seek their own tax increase. Two now have ballot initiatives for a tax hike for transportation funding. Does this mean localities, which have less financial flexibility than states, should be given more taxing power?

I think there certainly is some wisdom in allowing more flexibility for local governments. The concern I have is [ending up with] a hodgepodge of different taxing zones. Also, if you have a locality increase their sales tax, the capacity the state has is somewhat reduced. So there's a reason probably to allow some flexibility, but good tax policy, I think, is based on uniformity.