Governors Plead for Washington to Clean Up Fiscal Mess

Bipartisan group wants federal leaders to remember fiscal chaos means big problems for state budgets.

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A bipartisan group of governors called on leaders in Washington to quickly resolve the looming unresolved fiscal issues—including outlining federal spending cuts and raising the federal debt ceiling—so states can continue on their path to economic recovery.

Concerns about cost-shifting have long been a bipartisan concern for governors, but the uncertainty of massive federal spending cuts leaves states struggling more than usual. Most state budgets, unlike the federal budget, must be balanced – and the blueprints can easily be blown up if they make the wrong assumptions about federal spending choices.

Oklahoma Gov. Mary Fallin, a Republican and vice-chairman of the National Governors Association, said during a 'State of the States' speech delivered Wednesday at the National Press Club that the fiscal dilemma threatens to throw recovery efforts off-track, even as 30 states have now returned to 2008 revenue levels.

"How Washington deals with those issues will have an immediate, direct effect on our states and certainly could have grave implications to our states, especially our budget," she said.

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Democratic Delaware Gov. Jack Markell, chairman of the group, added that states have cut $337 billion spending over the last five years.

"In total, the actions that we have taken have made states more productive, more efficient; but at times our people have suffered, and we just can't afford to wait when it comes to moving the needle on jobs and business growth," he said.

Markell said because the recent tax measure passed by Congress was not a 'grand bargain' addressing trillions in planned spending cuts and the debt ceiling, states trying to build their own budgets have been left to flounder.

"(It) only postponed scheduled spending cuts that would have reduced federal grants to the states, entitlement and tax reform also were not addressed," he said. "And if the debt limit is not increased soon, there will be disruptions in federal spending, there will be disruptions in capital markets that could greatly impact state operations, and until these issues are resolved, states will not be able to make fully-informed financial plans that will address the needs of our citizens."

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But the governors made clear that while they support deficit reduction in general, how it is achieved is also important.

"States need to be treated as partners, not underlings," Fallin said, outlining what governors have already told Congress and the White House.

"Federal reform should produce savings for both the federal government and the states; deficit reduction should not be accomplished by shifting those costs down to our states and imposing unfunded mandates," she said. Finally, Fallin added, "If states receive federal cuts, then Washington should not demand the same level of service without providing the same level of funding."

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