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Utah begins preparing for the day if/when federal funds less available

Utah begins preparing for the day if/when federal funds less available

Dustin Hurst
February 24, 2014
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February 24, 2014
[post_thumbnail] Ken Ivory, a state representative in Utah, is leading the fight in that state in its preparations for the day that federal funding for the state may be reduced.

The question facing the states and cities across the country might not be if, but when.

When is the federal government’s cash stash going to run dry?

Leaders in Idaho’s neighbor to the south, Utah, are slowly preparing for when things go south with federal finances. Spurred on by the tumult in Washington, D.C. ,through the past 18 or so months with the fiscal cliff, the sequester and the government shutdown last October, Utah is building a plan to become more independent of the federal government.

It’s not an easy task. The feds fund about 45 percent of the state’s government operations, a number many Utah legislators feel is far too high. In Idaho, 36 percent of the general fund comes from the federal government.

In 2011, the Utah Legislature passed the first piece in a plan to evaluate how much federal money flows to state agencies and prepare those departments in case of cutbacks.

If the cutbacks come, Utah’s government agencies will be ready and able to handle the stress, leaders say.

While critics of the plan might argue that the idea of federal money running out is farcical and overcast with a decidedly Republican red hue, leaders there insist it’s only an effort to deal with reality when that day of reckoning comes for Congress.

State Rep. Ken Ivory, R-West Jordan, told the Reason Foundation why he asked his colleagues to pursue this course. “To think that as a nation, we’re perpetually pretending that we can print prosperity; it simply defies reality,” Ivory warned. “We’ve got to prepare, because no matter what happens at the federal level, we still have to educate children, we still have to take care of sick and poor people, we have to take care of roads and public safety.”

Though the immediate prospect of losing millions in federal funds due to a government shutdown no longer bears down on the states, some experts think state leaders should still do all they can to follow Utah’s lead in preparing for a federal fiscal catastrophe.

“Although it does seem that the federal government will endlessly borrow more money, there will be a time when that is no longer feasible,” Joe Luppino-Esposito of State Budget Solutions told IdahoReporter.com. “Something will have to give in Washington, and it is doubtful that Congress will give up any of its own spending programs when it can cut back on states first. That's why they need to be prepared.”

Preparedness for a coming reality is the theme that proponents share. Connor Boyack, president of the Libertas Institute in Utah, told IdahoReporter.com that the exercise is modeled after how a family or business would run its own finances. “Just as it's important for individuals to prepare against a future day of hardship, it's necessary for government to do the same,” Boyack wrote.

Boyack, a leading voice for the limited-government movement in Utah, suggested that Financial Ready Utah will help public workers to consider a multitude of plausible fiscal scenarios.

“Utah has taken the step to begin this process and encourage government employees at all levels to think about this future eventuality,” he wrote. “This mental exercise alone will be helpful to prepare everybody for when this day arrives, and initiate processes right now that will minimize the chaos that will inevitably result.”

Others are latching on to the movement. Luppino-Esposito’s State Budget Solutions continually prods states to follow Utah, warning that failing to do so will only lead to deeper hardships when the federal government can no longer make good on its fiscal promises.

Ivory said that he’s received inquiries about this brainchild from myriad city and state officials from across the country.

Idaho has, at least for a brief moment of time, given some thought to federal budget reductions. Gov. Butch Otter walked the path of possible scenarios in the run-up to the fiscal cliff, though he hasn’t said much on the topic since that fiscal crisis subsided.

In the last decade, federal funding has increased massively, fueled by huge growth in higher education and health and welfare program spending. In 2003, Idaho received and spent about $1.23 billion in federal cash, used to fund education, roads and health and welfare programs. In 2014, the state budgeted $2.35 billion in federal dollars, an increase of just more than 80 percent.

According to a recent poll of 500 state residents conducted by the Idaho Freedom Foundation, 91 percent said they believe it’s vitally important for the state to be ready for federal cutbacks.

Note: IdahoReporter.com is published by the Idaho Freedom Foundation.

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