For the last few decades, federal dollars increasingly propped up state budgets. That raises two major questions: how long will the funding last? Are states prepared for the inevitable cuts in federal funding?
States rely on the federal government for between a quarter and half of their funding. Mississippi relies on the federal government for the most, with 49 percent of its general revenue coming from the federal government. Alaska relies on this source of revenue the least, but federal funds still make up 24 percent of the state budget.
It’s no secret that the federal government is in financial trouble. The national debt has grown to $16.5 trillion and continues to climb. As federal aid to states is already drying up, the fiscal future of the nation is more uncertain than ever. For the most part, states are completely unprepared.
Not all states are ignoring the issue, however. Utah is a bright exception. Financial Ready Utah is a nonpartisan organization created by Utah’s Certified Public Accountant (CPA) community and comprised of over 30 member organizations that has responded to the financial challenges with real solutions.
In a press conference today, Financial Ready Utah released a package of bills aimed to make the state financially ready for future uncertainty. Representative Ken Ivory and Senator Deidre Henderson are two of the prominent state leaders in the movement to prepare Utah for the fiscal challenges facing the nation.
Financial Ready Utah’s plan includes a risk assessment to reduce federal funds that will estimate the amount of future federal funding coming into the state. As well, they are developing methods to reduce federal funds and measures to respond to the decrease in federal dollars. Those measures include both a contingency plan and increasing the amount in the rainy day fund.
At the core of the organization is the belief that decisions are made best locally and without intrusion by the federal government.
Currently, 40 cents of every dollar Utah spends comes from the federal government. Given the current trajectory of the federal government, this type of budgetary dependency cannot continue and residents of Utah understand that. Today, Rep. Ivory remarked, “This is unsustainable. We are going to act and not be acted upon.”
The organization’s leadership understands that the challenges they face must be met with tough solutions. Rather than pass the burden onto future generations, they are making difficult decisions today and seeking to solve local problems locally. As Rep. Ivory stated earlier this week, “In Utah, we pride ourselves on fiscal responsibility.”
The challenges facing state budgets their reliance on federal funding will only grow worse. Other state and local governments would do well to heed the foresight and initiative taken by Utah’s citizens, business leaders and state officials to address fiscal problems and reduce federal dependency.
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