Federal cuts could mean another lean Utah budget year

Utah's economy may be on the mend, but state lawmakers delivered sobering budget news on Tuesday.

State agencies with new funding needs will have to foot the bill with existing resources, budget committee leaders declared in morning hearings.

Utah tax revenue collections have rebounded since the 2009 recession, but deficit-reduction talks in Washington could mean deep cuts to hundreds of federally-funded programs, putting pressure on states to plug gaps, explained Social Services Subappropriations Chairwoman Rep. Ronda Menlove, R-Garland.

"We're trying to be optimistic, but realistic," she said.

The depth of the cuts and where they'll land are unknown due to the stalemate in Congress. If Republicans prevail in their push to reform entitlement programs, health safety nets such as Medicare and Medicaid could take a hit. Failure to broker a deal, on the other hand, will trigger "sequestration," a slew of across-the-board cuts, ranging from 5 to 9 percent of some state agencies' budgets.

Much has been reported about how the March 1 sequester could hurt military spending and its implications for national security.

But it will also put the squeeze on a spectrum of state programs — more than 100 at the Utah Department of Health alone, said the agency's Deputy Director Robert Rolfs.

Some are small grant programs that, without federal subsidies, would lapse, said Rolfs.

But among the more "dire" cuts would be those to core public health programs that track disease outbreaks and provide early intervention to children with birth defects, vaccinations for low-income children and screening and treatment for cancer and HIV-AIDS, Rolfs said.

At risk at the Department of Workforce Services are affordable housing programs and aid to the homeless, veterans and refugees, said John Talcott, the agency's chief financial officer.

Funding for such programs could fall 7.6 to 8.2 percent, he said. But he noted, "as an agency, we're in pretty good shape...we have some reserve funds to cushion the blow."

Disability Determination Services, a program that evaluates disabled residents' eligibility for federal Social Security and other disability benefits, falls under the Utah State Office of Rehabilitation and is 100 percent federally funded.

With the uncertainty about sequestration and pending federal budget cuts, Don Uchida, USOR's executive director, is concerned that his office could be faced with staffing cuts and service reductions.

"The bigger the cut, the more the backlogs and the fewer the people who will be there to adjudicate the clients," Uchida said. "It's pretty cut and dried, mainly cuts in staff."

Uchida's office also administers the vocational rehabilitation program, which is 78.7 percent federally funded and provides job-related training to the disabled. Under federal regulations, he is required to have an approved "order of selection" plan, which he is grateful they've not had to implement.

"Much of that credit goes to you, the Legislature, for supporting us, even during those years that we had severe budget cuts," Uchida told members of the Social Services Appropriations Subcommittee Tuesday morning.

"You supported us to the point where we really didn't have to go on to this order of selection — in other words, start a wait list," Uchida said, meaning categorizing applicants and serving those with the most significant disabilities first.

Sequestration would mean 7.8 percent cuts in the programs.

For 2013, USOR's budget includes $67 million in federal funds. The current 2014 budget request remains at that level, with $50.4 million funding rehabilitation services and $12 million funding disability determination services.