Utah ranks 39th in federal funds reliance — it still may be concerning for policymakers 

The Utah Capitol is pictured with downtown Salt Lake City behind it on Friday, Jan. 26, 2024. (Photo by Spenser Heaps for Utah News Dispatch)

How much does the federal government spend on programs such as Medicaid, food assistance and housing in Utah? Last fiscal year it was about $7 billion out of the state’s full $26 billion budget. 

That, according to a Kem C. Gardner Policy Institute data analysis, was 27% of Utah’s budget, making the state rank 39th among all other states for its share of federal funds in the state budget, according to a news release.

“Federal funds comprise a significant portion of Utah’s state budget,” Phil Dean, chief economist at the Kem C. Gardner Institute said in the release. “These funds vary over the business cycle, generally increasing during economic downturns as spending on cyclical programs like Medicaid and SNAP (food stamps) increases, then decreasing as economic conditions strengthen.”

The share is just a little below the nearly 28% average recorded in Utah since 2006, and six percentage points below the 33% national average. 

The state uses 50% of that federal money to fund Medicaid. About 24% goes to other social services, housing and community development; 12% to public and higher education; 8% for transportation and infrastructure and 6% to other expenses.

In comparison to other states, that’s a low share. But, it still may be concerning for the state amid tumultuous budget negotiations in Congress. Congressional Republicans have floated plans to slash the size of the federal budget, in part to fund the extension of a 2017 tax cut passed under the first Trump administration, including possible cuts or limits on Medicaid.

When then State Auditor John Dougall released a compliance audit of the 2023 fiscal year, in which federal funds were 26.5% of the state’s budget, he warned that Utah “continues to have a heavy dependence on federal financial assistance, which amounted to $9.7 billion in federal expenditures and $662 million in loans, loan guarantees, endowments, and nonmonetary assistance.”

Dougall then cautioned Utah officials to consider the risks of “such significant dependence on a single funding source with such dysfunction,” according to KSL.