10th Amendment

Utah and the Fiscal Cliff

Most of the talk in Washington and in the news media lately has been regarding the notorious “Fiscal Cliff,” a combination of a raise in taxes and across-the-board spending cuts. The term Fiscal Cliff was coined to demonstrate the supposed “deep” cuts in the budget deficit which the Congressional Budget Office estimates will lead to a mild recession in 2013. The 10% cuts they speak of are really just cuts in the projected increases in spending. The real cuts are actually much less than 10%.

Unsurprisingly, an 11th-hour deal was struck and more spending and higher taxes are now on their way. Despite this bitter-tasting result, it’s instructive to pause and consider our reaction to the possible, ever-so-slight decrease in federal spending. Elected officials around the state loudly warned about the effects the Fiscal Cliff would have on Utah. Layton mayor Steve Curtis went so far as to say it would be a “catastrophe” for his city which he says relies heavily on Hill Air Force Base. The Governor’s office estimated that the Fiscal Cliff would have caused a $550 million drop in revenues for next year’s budget. That equates to about a 4% drop in revenues for the state of Utah.

As a state, we should use the recent “Fiscal Cliff” episode as a catalyst to commit ourselves to become more self-sufficient and less dependent on the federal government to run our operations here in Utah. Currently a whopping 28% ($3.2 billion) of state revenues come from the federal government. A large chunk of that money ($2.4 billion) is earmarked for “Social Services” such as Medicaid.

We can start now, in this upcoming legislative session, to wean ourselves off of federal dollars. It’s better to do it now than to wait until the multi-trillion dollar federal budget bubble bursts with it sudden cuts to Utah’s own budget. Conventional wisdom suggests that Utahns are prepared, industrious, and self-reliant. It’s time that the government follow suit.