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Utah braces for budget cuts brought on by COVID-19

Utah State Capitol
Posted at 4:32 PM, May 11, 2020
and last updated 2020-05-11 20:22:31-04

SALT LAKE CITY — Utah legislative leaders have tasked every single state agency with crafting budget proposals that include cuts.

There's a modest 2%, a heavier 5% and a deeper 10% cut.

Agencies have been coming up with proposed budgets that show where they could trim any fat, while still delivering essential government services in the middle of the COVID-19 pandemic. Lawmakers have ordered the "stress tests" as they grapple with a budget that's seen rising unemployment and a loss of tax revenues which pay for the services taxpayers use.

"There are places in our economy that have gone into a literal freefall," Sen. Jerry Stevenson, R-Layton, who oversees the budget for the Utah State Senate.

Those declining revenues mean budget cuts are more than likely. The Utah State Legislature's powerful Executive Appropriations Committee will meet this week to begin going over the state agency budgets with an eye toward a June special session to pass a revised budget reflecting those declining revenues and rainy day funds.

Sen. Stevenson told FOX 13 on Monday that with tax revenues down, unemployment up and some sectors of the economy not likely to rebound quickly, they are looking at anywhere from $1 billion to $5 billion in shortfalls, depending on how long the COVID-19 pandemic lasts. Building projects are being put on hold (potentially to be used as economic stimulus projects later) and the state is looking at cuts and spending rainy day money where federal relief money doesn't.

"I don’t think anyone anticipated we would be as severe as we are," he said of the economic and the budget situation. "But we’ll go through that process again and we will look at those things we’ve got to cut. Part of the trouble we’re running into is we’re not only seeing the cuts, the reduction in taxes, but we’re seeing a demand in government services above and beyond what we’ve seen in the past."

Some state agencies are belt-tightening where they can.

"It’s been kind of healthy because we’ve gone through and said what can we do without? What’s the cost of trying to go through those higher numbers?" Utah State Tax Commission Chair John Valentine told FOX 13 on Monday.

Utah Department of Human Services Executive Director Ann Williamson said she has already implemented some spending cuts to her agency, which oversees a number of critical services during the pandemic from child welfare caseworkers to mental health resources.

"We begin with what must we deliver on. What must the public hold us accountable to? And then what are the 'nice to haves,' or the ones 'we used to do it this way?'" she told FOX 13.

Sen. Stevenson said many state agencies have already implemented hiring freezes (except for positions deemed "critical"). Director Williamson said when she began looking at where to cut, she told her executive staff to do what they could to save jobs.

"First and foremost, I encourage them not to look at staff reductions," she said.

Utah Department of Public Safety Commissioner Jess Anderson is also trying to avoid any possible layoffs or furloughs.

"That would happen if we hit a 10% cut," he said, adding that cuts like that impact public safety.

Commissioner Anderson, who oversees the incident command center overseeing to COVID-19, said the bulk of their response to the pandemic is paid for by federal dollars. But it doesn't mean it won't hurt.

"We’ve got hundreds of people thrown at this," he told FOX 13. "That’s where you have to start to re-evaluate the criticality of the need and fulfillment of mission."

Sen. Stevenson said he believes they will not get to the point where jobs are lost.

"That’s one of the state of Utah’s greatest assets is the people that work for us and we need to make sure they’re taken care of," he said.

But each agency will have to deal with pending budget cuts and do it in a way that doesn't hurt essential government services.

"One of the problems with cutting the tax commission is you end up with a double cut in revenues. Because you not only give a cut to our agency, you end up with a loss of revenues," said Commissioner Valentine.

Commissioner Anderson said one way to help the state rebound -- is to continue to follow health guidelines of washing hands and limiting the spread of coronavirus.

"If we continue to be in good standing, we can move to yellow very quickly, which opens up the economy even quicker and faster," he said.