OPINION : Utah
Financial Ready Utah: Peace in Preparedness
"Action is a great restorer and builder of confidence. Inaction is not only the result, but the cause, of fear." --Norman Vincent Peale
At its 125th anniversary celebration in May 2012, the American Institute of CPAs launched a government fiscal responsibility initiative called "What's at Stake." I returned to Salt Lake from that meeting encouraged that the AICPA would be willing to take such a bold step, but overwhelmed by the sheer magnitude of the fiscal problems. The question that tormented me: "When we're talking about trillions of dollars, what can I possibly do?"
After discussions with local chambers of commerce, municipal governments, state legislators and fellow CPAs, we resolved to form Financial Ready Utah. Our goal: to credibly answer the question "what can I do?" for every individual, family, business, and community in our state. Action restores confidence, inaction foments fear.
What Can My State Legislature Do?
Before we could effectively propose solutions in our state, we needed to first scope the problem. In 2011, Representative Ken Ivory sponsored HB 138, Federal Receipts Reporting. This required state agencies to report federal dependencies in their budgets and to establish contingency plans in the increasingly likely event that federal funds are diminished. This laid the groundwork for several pieces of legislation.
Federal Funds Fiscal Risk Commission (SB 70) - With the budget sequester and likely future federal reductions in funds to states, we need to begin preparing now. What are some of the likely scenarios? Which programs will be most impacted? This commission was created to look at the probability and magnitude of any number of "financial earthquakes" and develop plans to address those risks. Better to prepare now than to wait for an emergency legislative session and deal with things reactively.
Adjustments to the Budget Process (SJR 7, SB 138, HB 195) - In projecting income and sales tax revenue, our state performs detailed sensitivity analysis and carefully reviews assumptions. For federal funds, which are the single largest source of revenue for Utah, we have historically just assumed that funds would show up without fail. It's clear that this is no longer a safe assumption. As part of the budget process, we need to adequately plan for the potential of reduced federal funds. This applies to everything from the legislature's budget proposals to the way that the adequacy of rainy day funds is calculated.
What Can My Community Do?
Most government services on which we rely happen at the most local level. Cities, counties, and school districts are largely tasked with public safety, educating our children, caring for the poor and infirm, and providing for basic infrastructure needs. These political subdivisions are especially vulnerable to federal fund reductions at the state budget level. What happens there rolls downhill.
At the state level, one first step was to pass SB 158 to increase the Rainy Day cap to allow municipalities more flexibility in dealing with contingencies. This is only a first small step. Next steps will require much more courage and a broad coalition of support.
To begin building that support, we created the Financial Ready Utah Resolution (SCR 7) which calls on concerned citizens and political leaders at all levels to begin to credibly address our massive fiscal imbalances. Our vision is for individual citizens to take this resolution to a city council, school board, PTA, chamber of commerce, or other community meeting and ask these various groups to pass some version of it. This has already happened in a handful of cities, counties, school boards, and chambers of commerce around the state. Imagine how empowering this is for citizens to share their voice in this way. This is how government is supposed to work.
What Can I Do?
Our governments are ultimately just a reflection of the values of individual citizens. If we want our governments to be fiscally responsible, as households, we need to set the example. This means producing more than we consume and saving the difference. It means getting out of debt and learning to live within our means. Great peace comes from personal financial preparedness.
Earthquake preparedness is a big deal in Utah. Utilizing disaster preparedness networks throughout the state, we have started a campaign to educate individuals and families about the importance of personal and community financial preparedness. This is not about looking for a distant federal government to solve the problems. This is about each of us taking responsibility for the fiscal sustainability of our households and our communities.
Let's stop waiting for Washington to solve our problems. We all know that fiscal crises are looming. Fight fear and uncertainty by taking actions to prepare now and build confidence in our communities. Encourage others to do the same. That confidence is just as contagious as the fear spread through a failure to act. Discover the peace that comes from preparedness.