GOMB Response to the FOR Proposition #3 Utah Decides Healthcare Act

The Argument FOR Proposition #3 claims the Governor’s Office of Management and Budget (GOMB) found the Utah Decides Healthcare Act of 2018’s proposed Medicaid expansion program to be fiscally sound. This is a false claim. The Governor’s Office of Management and Budget (GOMB) has not commented on the fiscal soundness of the initiative.

The Utah Decides Healthcare Act of 2018 statewide initiative proposes to expand Medicaid coverage to the full optional Medicaid expansion population (ineligible adults with incomes between 0-138% of the federal poverty level). The initiative also proposes to raise the state sales tax rate from 4.7% to 4.85% and to use the revenues to help fund the program. GOMB is legally required to estimate the fiscal impacts of laws proposed by state initiatives. The office estimated that in fiscal year 2021 the Utah Decides Healthcare Act of 2018’s provisions would increase taxes by $90 million and increase state Medicaid costs by $77 million. However, these estimates do not constitute an evaluation of the fiscal soundness of the initiative.

GOMB did not conduct the analysis required to determine the fiscal soundness of the initiative. Its fiscal impact statement included language explicitly cautioning that the initiative could be fiscally unsound. The statement reads, “Beyond FY 2021, costs could outpace new revenue depending on actual cost and revenue trajectories. Estimates could vary with changes in federal law, federal funding, tax payer behavior and Medicaid recipient behavior, among other factors.”

An evaluation of fiscal soundness would consider a broad range of factors beyond the dollar amount of anticipated tax increases and cost increases in a single year. A meaningful fiscal soundness analysis would address a multi-year time horizon, the stability of funding sources, economic impacts of the proposed tax increase, the costs and benefits of the initiative proposal relative to current law and to other proposals, and the likelihood and consequences of program expenditures exceeding available future funding, just to name a few.

The Argument FOR Proposition #3 blatantly mischaracterizes GOMB’s fiscal impact statement and willfully ignores express communication about the limited scope and use of the fiscal impact estimates. GOMB has not concluded that this initiative program is fiscally sound. To the contrary, GOMB explicitly warned in its fiscal estimate that Proposition #3 could be fiscally unsound in future years.