The Fiscal Responsibility Act of 2023 has been reached as a deal to suspend the federal debt ceiling, following negotiations that passed the House and Senate. The legislation holds federal discretionary spending constant for fiscal year 2024 and provides a 1% increase for fiscal year 2025.
Because the bill does not prescribe specific reductions to programs to maintain these spending levels, the potential impact on Utah's budget depends on which programs are targeted by future legislation. A sequestration clause is included as a failsafe, which would impose a 1% blanket reduction to all discretionary spending categories if Congress fails to pass individual appropriations bills by the end of 2023.
The legislation includes a provision to pull back approximately $28 billion in unobligated COVID-19 relief revenue from various stimulus bills. However, funding will not be withdrawn if it has been obligated by a federal agency, even if it has not been fully spent by state or local governments. Notably, the ARPA State and Local Fiscal Recovery Fund and the ARPA Capital Projects Fund are not included in the list of targeted funds. Utah is currently reviewing how these changes compare to pandemic stimulus grant awards made to the state.
The bill also introduces changes to the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program.
Regarding SNAP, expanded work requirements could make certain able-bodied individuals between ages 50 and 54 without dependents ineligible if they do not work or volunteer at least 80 hours per month. Conversely, the bill removes work requirements for veterans, unhoused individuals, and former foster children, which may increase the number of eligible beneficiaries. While any reduction in eligibility would not directly impact state revenues, it could lead to marginal administrative costs for the program.
Changes to TANF involve adjusting the benchmark year for demonstrating caseload reduction from 2005 to 2015. Utah has seen a significant decline in its credited caseload, dropping from over 9,000 in 2005 to roughly 2,000 in 2022, which reduced the state's work-participation standard from 50% to 0%.
It remains unclear how the new benchmark year will affect Utah's budget or eligibility. A reduction in federal block grants could occur if the new benchmark increases the work-participation standard and the state fails to meet the threshold through a corrective action plan.
