Looming federal budget cuts could hurt in Utah
Washington • Once again, the federal government is approaching a fiscal disaster, and this time it could cost Utah millions in revenue, force thousands to take furloughs and possibly reverse or slow any economic recovery the state has seen in recent months.
DÃ©jÃ vu, indeed.
The pending crisis is reminiscent of the fiscal cliff fiasco America faced only three months ago but this time it could stick, and it could hurt.
"It's obviously cause for serious concern," says Natalie Gochnour, chief economist of the Salt Lake Chamber of Commerce. "We are a very federally dependent state and that stems from our long established defense industry in our state, [that] we're a public-lands state and we have the IRS facility in Ogden and other centers of federal workers."
Come Friday, the federal government will be forced to pare down spending until Congress acts otherwise. The automatic, across-the-board cuts include: $42.7 billion for defense, $28.7 billion in domestic programs, $9.9 billion in Medicare cuts and $4 billion in other mandatory cuts, according to the Congressional Budget Office.
Close to home, Utah is looking at potentially millions in cuts, especially at Hill Air Force Base where civilian workers would be forced to take furloughs one day a week for 22 weeks. And that's in addition to other potential cuts to contracting and purchasing.
The IRS employs 4,100 workers in Utah, many at its Ogden office, and most could face potential furloughs as well. An IRS spokesman declined to comment on the impact.
The Federal Aviation Administration says it may have to close the air traffic control facilities at the Ogden-Hinckley and Provo Municipal airports.
Lines at the Salt Lake International Airport could get stretch out longer as the Transportation Security Administration reduces staffing because of the cuts. Reductions at NASA could hit Utah's gross state output by $100,000 or more.
Visitors to Utah's five national parks, as well as monuments, could see fewer rangers, shuttered campsites and hiking areas as well as shorter hours for visitor centers. The Interior Department estimates some 300 onshore oil and gas leases wouldn't be issued in the West, including Utah. Counties with large public land areas many in Utah could see a $1.9 million slash in the federal payment-in-lieu-of-taxes check.
The Environmental Protection Agency warns it may have to reduce funding to air quality monitoring operations, likely leading to the shutdown of some sites.
Utah's universities could see some $26 million in cuts for federal research and development. Head Start in Utah could take a $3.5 million hit.
The state's public schools could see $6.8 million less in Title I grants and another $6.1 million bite out of special education programs, according to Democrats on the House Appropriations Committee.
"Clearly, if sequestration is allowed to be put into place with whatever percentage, there would be a reduction in federal dollars available, which could impact programs and may affect staffing to some degree," says Bruce Williams, assistant superintendent for business and operations at the Utah State Office of Education.
Williams says the budget impacts may be delayed for Utah schools until after June 30, the end of the state budget year, but there's "no doubt about it" that if the budget cuts continue, the effect would be felt, especially with low-income schools.
State officials expect to have updated numbers Monday on how much their budgets will be impacted by the automatic cuts, known as sequestration.
Senate Rules Committee Chairman John Valentine estimated last week a cut of $40 million in direct federal funds, though he said the state could fill that hole.
"If you live by federal funds, you die by federal funds," Valentine said. "We would have to make adjustments. And it would have some hurt, but we could make those adjustments."
Added Sen. Jerry Stevenson, "It's like having a bad tooth pulled."
Not for some of the nearly 30,000 federal workers in the state, some of whom could see smaller paychecks.
"Unfortunately, that tooth that's being pulled affects the livelihood of the men and women in this state," says Dale Cox, president of the Utah chapter of the AFL-CIO. "A lot of these people are hard-working, middle-class Americans who can't afford to lose 20 percent of their income. They're just getting by now."
Congress returns to session this week, though it's unlikely to act to stop the automatic cuts by Friday's deadline. While Utah's members of Congress have acknowledged the hit Utah could take, they have also noted that perhaps it will spur movement to make cuts to the bloated federal budget.
"I'm for sequestration," Sen. Orrin Hatch told Utah lawmakers last week. "We've got to face the music now, or it will be much tougher later."
Not that it won't be tough now, too.
Next to North Dakota, whose oil and gas boom has kept unemployment low and its economy flourishing, Utah enjoys one of the top growing economy in the nation. The state's unemployment rate of 5.2 percent is far lower than national rate of 7.8 percent
A study by George Mason University last year showed the automatic budget cuts could cost Utah some 1.6 percent of the state's gross product.
Some Utahns might feel a pretty immediate blow from Congress' inaction, while for most it will be a "slow boil," meaning the indirect effect may take time to see.
"Certainly if you're on the federal payroll, you could see some very direct impact," says Gochnour, the chamber's economist. "For the average Utahn, it will become increasingly apparent how much of a problem it is to lose this funding."
Lee Davidson contributed to this story.
Top use of federal funds in Utah
$1.357 billion • Medicaid
$470 million • Unemployment insurance
$441 million • Highway planning, construction
$432 million • Supplemental nutrition assistance (formerly food stamps)
$369 million • Research and development
$250 million • Student financial assistance
$157 million • Special ed
$125 million • Child nutrition
$4.768 billion • Total federal funding to state, including universities and colleges
Source: Utah State Auditor's Office, 2012