{"id":687,"date":"2026-05-25T15:11:16","date_gmt":"2026-05-25T15:11:16","guid":{"rendered":"https:\/\/americanmovershub.com\/?p=687"},"modified":"2026-05-25T15:11:16","modified_gmt":"2026-05-25T15:11:16","slug":"opinion-when-washington-cuts-back-utah-will-be-in-a-stronger-position-than-most","status":"publish","type":"post","link":"https:\/\/americanmovershub.com\/?p=687","title":{"rendered":"Opinion: When Washington cuts back, Utah will be in a stronger position than most"},"content":{"rendered":"
\n

The fact that our federal budget is on an unsustainable path is quite well known. But how America\u2019s fiscal trajectory will impact state budgets is less often discussed. State employees, local students and people who rely on Medicaid or other state-run welfare programs all have a stake in this.<\/p>\n

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Thankfully, Utah is in a better position than most, ranking as the ninth most prepared state for the eventuality of Washington tightening its belt. It\u2019s also one of the few states making official preparations.<\/p>\n

State governments today are, broadly speaking, more dependent on funds from Washington than ever before. In the decade following World War II, federal grants to the states accounted for just a small percentage of total federal spending. Today, they account for almost 20 cents on the dollar. Most states now get about one-third of their revenues this way.<\/p>\n

According to historical budget data from the Office of Management and Budget, federal grants to states now exceed $1.2 trillion annually and are set to grow further. , by far the largest amount is spent on Medicaid (57.4%).<\/p>\n

Assuming that all this money will keep flowing is naive. Interest payments on the debt are set to be the single-largest federal budget item by 2048 \u2014 more than Medicare, Social Security or anything else. No viable tax increase can cover this. No politician can wish away the accounting. State governments should be at least assessing, and ideally preparing, for the possibility of a reduction in federal funding.<\/p>\n

Utah begins in a strong position. Many states only have enough assets to back 50% or 60% of the long-term pension and benefit commitments that have been promised to state employees. Utah has enough assets to back 94% of these promises.<\/p>\n

Similarly, while most states rely on the federal government for well over 30% of their revenues, federal funding makes up less than 27% of Utah\u2019s state revenue. Utah also has a relatively low tax burden, meaning if policymakers need to fill a budget gap left by a Washington fiscal retreat, they will have more space to raise additional revenues.<\/p>\n

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One area where Utah remains exposed is its lack of rainy-day reserves. It currently has enough to continue funding state operations for just 34 days. Texas has 90 days in reserves. Next-door neighbor Wyoming has 320 days in its rainy-day fund. In a scenario where the federal government reduces federal aid by 20% or 30%, 34 days isn\u2019t going to buy much time to fill the funding gap.<\/p>\n

Encouragingly, Utah state policymakers are taking even more proactive steps. During the 2026 legislative session, lawmakers , which directs the state\u2019s legislative fiscal analyst to report the portion of each budget stress test that relates to federal funds. The Federalism Commission, created in 2011 to pursue research and legislation that addresses a range of federalism issues, is then tasked with reviewing those findings and, when appropriate, recommending legislation to improve Utah\u2019s preparedness.<\/p>\n

The bill also requires the creation and maintenance of a public dashboard showing the state\u2019s dependence on federal funds. Finally, it requires the state to model economic scenarios that can inform contingency planning.<\/p>\n

This is exactly the kind of forward-looking exercise that every state should be undertaking. Federal funds will not dry up overnight, but responsible budgeting requires asking hard questions before the money disappears, not after.<\/p>\n

Utah\u2019s relatively strong fiscal position should not be an excuse for complacency. Even states on solid fiscal footing will face difficult tradeoffs if Washington significantly reduces aid to the states. But a comparatively low dependence on federal funds, strong pension funding and willingness to begin stress testing right away place the state in a far better position than many of its peers. Its leaders understand that fiscal resilience matters.<\/p>\n

In an era of growing federal fiscal strain, Utah\u2019s proactive approach is admirable \u2014 and unusual.<\/p>\n

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The fact that our federal budget is on an unsustainable path is quite well known. 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