And like the 14th Century French apothecary and seer, state Rep. Ken Ivory’s fiscal predictions may be seen by some as catastrophic.
Actually, Ivory, R-West Jordan, is being praised by his GOP House colleagues as one reason Utah still has a AAA bond rating and is more prepared than most other states in facing the federal “fiscal cliff,” and the loss of tens to hundreds of millions of dollars in Washington, D.C., financial help.
In fact, GOP Gov. Gary Herbert and lawmakers from both political parties are saying that while the 2013 Legislature will adopt a balanced budget at adjournment March 14, Herbert will have to call the Legislature back into a special session sometime late spring or early summer to re-balance the $13 billion spending plan for next fiscal year after Congress decides how much money to give the states.
Why the praise for Ivory?
In the 2011 Legislature, Ivory passed HB138. The bill, with 32 House GOP co-sponsors, requires a number of things, chief among them that state agencies must determine, by dollar and by percent of budget, what would be lost if federal monies/grants were reduced by 5 percent and by 25 percent.
That first report came back to lawmakers in November 2011.
The updated report came November 2012.
You can read the report for fiscal year 2012, which ended last June 30, here.
Scroll down to page No. 1 to start viewing the charts that show, program by program, what effects a 5 percent and a 25 percent cut in federal money will have.
In two weeks, Ivory and several other GOP legislators will call a press conference to announce a package of bills for this session that will take what he calls “the next important step” in getting Utah state government ready for what are certainly-coming large federal spending cutbacks.
“We have a plan for earthquake preparedness,” Ivory told UtahPolicy.
“Now we have to create a fiscal crisis preparedness program. And that is what we are going to do,” the constitutional scholar said.
“We will call it: Financially Ready Utah.”
Any number of leading Washington, D.C., experts are saying that America’s greatest national threat is not a nuclear bomb Iran, nor a crazy North Korea, nor international terrorists, but our own national debt and the trillion dollar deficits we keep racking up in Congress.
“With hundreds of millions of dollars no longer coming from Washington, how are we going to educate our children? Take care of our sick and poor? And provide for roads and public safety?” asks Ivory.
A new “sustainability commission” will be put together – the membership still being decided – made up of legislators, leading Utah businessmen, certified public accounts and civic and church leaders, he says.
Now, with HB138’s two-year history of what could be the impact of federal cuts on state programs, “we move from the quantitative to the qualitative,” says Ivory.
“We must look at the risk. Assess that risk. And come up with ways to mitigate that risk.”
Not all of the “slack” of losing significant federal monies can be picked up by Utah state government, he adds.
“It must be a community effort” – charitable organizations will have to look at helping out – from running soup kitchens to housing the poor and homeless, for example.
The latest FRRR shows that, in total, 34.4 percent of our state budget is given to us from the federal government.
Using different measuring sticks, one national CPA firm evaluated federal programs in all 50 states. It said that 45.3 percent of Utah monies are dependent on Congress.
Either way, says Ivory, now is the time for Utah policymakers to seriously begin considerations on how to deal with losing one-third or more of our funding sources.
Nothing will be taken off the table – even the possibility of state tax increases, he says.
An archconservative talking about even the possibility of a tax hike?
You know this federal funding issue must be very serious.
Some numbers from the latest state report:
-- Public Safety, 19.4 percent of overall budget is federal funds; a 5 percent cut in federal funds would cost $2 million, a 25 percent cut is $10 million.
-- Transportation, 22.4 percent is federal funds; a 5 percent cut is $22 million and a 25 percent cut is $112 million.
-- Environmental Quality, 36.2 percent of budget is federal funds; a 5 percent cut in federal funds is $888,000, 25 percent is $4.4 million.
-- Heritage and Arts, 36.4 percent is federal funds; a 5 percent cut is $1.9 million, a 25 percent cut is $9.6 million.
A few state departments, like Health and the National Guard, would be devastated by significant federal money reductions.
-- Health’s federal monies (most coming in Medicaid payments for the disabled and poor) make up 64.4 percent of the state budget; a 5 percent cut costing $76 million, a 25 percent cut $381 million.
-- National Guard is 92.4 percent funded by Congress; a 5 percent cut is $22 million; a 25 percent cut is $11.3 million.
Many Utahns may think that we fund public education with the state’s personal and corporate income taxes and by local school district property taxes. And they would be right.
But in recent years more and more federal money has been creeping into public education funding – a lot with No Child Left Behind (Republican President George W. Bush’s program).
-- The state Public Education’s budget is 16.8 percent federal monies; 5 percent would cost $24 million and a 25 percent cut would be $122 million.
The 41 individual school districts also get federal funds. In total, they get $285 million in federal cash, or 8.4 percent on average.
But some districts, mainly rural districts or urban districts with a number of poor or disadvantaged students, get a greater percent from the feds.
Garfield School District gets almost 15 percent in its budget from federal monies; Salt Lake City gets 12.3 percent; San Juan district 26.3 percent.
A property-tax rich district like Park City gets only 4 percent of its monies from the federal government, the latest report shows.
Charter schools also get federal funds, on average 6.1 percent. But, again, some charter schools serving a distinct type of student get considerably more federal funds.
The Reagan Academy, named after you-know-who, the anti-federal government president, gets 10.8 percent of its budget from the federal government.
-- And Utah’s public colleges and universities aren’t immune, either.
The new report shows that the University of Utah’s fiscal 2012 budget was 12.1 percent federal funds.
Utah State University is 30.2 percent; Weber State University, 17.1 percent; Southern Utah University, 17.2 percent; Utah Valley University, 23.1 percent; Salt Lake Community College, 23.7 percent; Snow College, 16.5 percent; and Dixie State College (which is moving to university status and certainly can’t afford any funding cuts), is 25 percent federal funds.
The UCAT institutions (mainly trade and technical training) are in total 7.8 percent federally funded, the new report shows.
The ripple effect through not only Utah state government, but the state’s economy as a whole, of losing federal funds are real and close at hand, warns Ivory.
“To not engage in a candid risk assessment” of how much Utah state government and its subsidiaries are dependent on federal funds “ignores our long term duty to our citizens,” said Ivory, “and our stewardship responsibilities.”