WASHINGTON—Raising taxes, cutting prescription-drug relief, and shutting down substance-abuse centers are just some of the measures state governors have adopted to try to get a handle on a $175 billion budget shortfall expected over the next two years.
Despite the shortage of money, states will not ask for federal dollars, nor will they entertain a bankruptcy option.
“We are now as states, faced with the lifetime dilemma of decreasing revenues and increasing demands,” said Washington Gov. Chris Gregoire, chair of the National Governors Association (NGA), during the association’s winter meetings held over the weekend in Washington. Audiovisual coverage of the meeting was published on the NGA website.
According to the Center on Budget and Policy Priorities, the worst recession since the 1930s has caused the steepest decline in state tax receipts on record.
Increasing liability of employee pensions, health care costs, and deteriorating infrastructure, coupled with an increased demand for public services at a time states can ill afford it, have put an extraordinary pinch on state governments.
This July, stimulus funding, which helped keep public education and Medicaid afloat, will also run out.
Despite these realities, state governors at the NGA winter meetings were generally upbeat, if not proud, about their governing ability.
They seem to get off easier while making decisions that inflict pain on citizens, due to the fact that all states except Vermont have some version of a balanced-budget law, which legally requires them to take action rather than to allow debt to accumulate.
Budget shortfalls must be made up either through revenue increases or spending cuts, withdrawal from reserves, or support from the federal government.
Right now, governors say they are not asking for any help from the federal government. At the same time, Gregoire made it clear that governors could not afford to have Congress cutting anything further from the states.
We are recovering, but we are fragile, “so anything Congress does, whether it is a shutdown, or cuts that are going to directly impact the states, are going to be of considerable concern to us. We don’t need a hiccup in our recovery,” Gregoire said.
She also expressed serious concerns about recent hearings entertaining the idea of allowing states an option to declare bankruptcy.
“We don’t even want the subject discussed, let alone to move it forward,” she said unequivocally on behalf of the association.
The governors’ concern is the impact such a decision would have on the municipal bond markets, which allow states to borrow at very low rates to fund major investments and which are offering investors some of the best returns in history.
Allowing bankruptcy would throw the stability of the bond market into disarray and greatly impact an important financial tool available to governors.
Despite the imminent challenges of revenue increases and cuts to state services that will take effect in most states in July, the governors’ winter meetings focused on the potential of new investment and education to turn things around.
A signature initiative of the NGA is a program aimed at increasing enrollments and effectiveness of higher education. Two-thirds of tomorrow’s jobs will require advanced degrees, and we are not prepared to meet this workforce demand, said Gregoire.
The governors also signed an agreement with Zhou Qiang, secretary of the Hunan Provincial Committee of the Communist Party of China, establishing a forum for enhanced business, dialogue, and cultural exchange between U.S. governors and provincial leaders in China. The first delegation from China has been invited to visit the NGA as soon as July.
Increasingly, state governors are traveling around the world in hopes of stimulating creation of jobs back home.
“How do we prepare our countries to compete. That is what every one of my colleagues are looking at. ... The real competition for all of us is global,” said Gregoire.
Other topics discussed over the weekend included health care, sustainable energy initiatives, and cybersecurity.
Sunday night, President Barack Obama and Michelle Obama hosted the governors for a black-tie dinner.
The NGA conference will wrap up on Monday afternoon with an appearance by Bill Gates, co-chair of the Bill and Melinda Gates Foundation, who will talk about options for boosting college-attainment rates with existing resources. Meetings with Obama and his administration will also take place.
Despite the shortage of money, states will not ask for federal dollars, nor will they entertain a bankruptcy option.
“We are now as states, faced with the lifetime dilemma of decreasing revenues and increasing demands,” said Washington Gov. Chris Gregoire, chair of the National Governors Association (NGA), during the association’s winter meetings held over the weekend in Washington. Audiovisual coverage of the meeting was published on the NGA website.
According to the Center on Budget and Policy Priorities, the worst recession since the 1930s has caused the steepest decline in state tax receipts on record.
Increasing liability of employee pensions, health care costs, and deteriorating infrastructure, coupled with an increased demand for public services at a time states can ill afford it, have put an extraordinary pinch on state governments.
This July, stimulus funding, which helped keep public education and Medicaid afloat, will also run out.
Despite these realities, state governors at the NGA winter meetings were generally upbeat, if not proud, about their governing ability.
They seem to get off easier while making decisions that inflict pain on citizens, due to the fact that all states except Vermont have some version of a balanced-budget law, which legally requires them to take action rather than to allow debt to accumulate.
Budget shortfalls must be made up either through revenue increases or spending cuts, withdrawal from reserves, or support from the federal government.
Right now, governors say they are not asking for any help from the federal government. At the same time, Gregoire made it clear that governors could not afford to have Congress cutting anything further from the states.
We are recovering, but we are fragile, “so anything Congress does, whether it is a shutdown, or cuts that are going to directly impact the states, are going to be of considerable concern to us. We don’t need a hiccup in our recovery,” Gregoire said.
She also expressed serious concerns about recent hearings entertaining the idea of allowing states an option to declare bankruptcy.
“We don’t even want the subject discussed, let alone to move it forward,” she said unequivocally on behalf of the association.
The governors’ concern is the impact such a decision would have on the municipal bond markets, which allow states to borrow at very low rates to fund major investments and which are offering investors some of the best returns in history.
Allowing bankruptcy would throw the stability of the bond market into disarray and greatly impact an important financial tool available to governors.
Despite the imminent challenges of revenue increases and cuts to state services that will take effect in most states in July, the governors’ winter meetings focused on the potential of new investment and education to turn things around.
A signature initiative of the NGA is a program aimed at increasing enrollments and effectiveness of higher education. Two-thirds of tomorrow’s jobs will require advanced degrees, and we are not prepared to meet this workforce demand, said Gregoire.
The governors also signed an agreement with Zhou Qiang, secretary of the Hunan Provincial Committee of the Communist Party of China, establishing a forum for enhanced business, dialogue, and cultural exchange between U.S. governors and provincial leaders in China. The first delegation from China has been invited to visit the NGA as soon as July.
Increasingly, state governors are traveling around the world in hopes of stimulating creation of jobs back home.
“How do we prepare our countries to compete. That is what every one of my colleagues are looking at. ... The real competition for all of us is global,” said Gregoire.
Other topics discussed over the weekend included health care, sustainable energy initiatives, and cybersecurity.
Sunday night, President Barack Obama and Michelle Obama hosted the governors for a black-tie dinner.
The NGA conference will wrap up on Monday afternoon with an appearance by Bill Gates, co-chair of the Bill and Melinda Gates Foundation, who will talk about options for boosting college-attainment rates with existing resources. Meetings with Obama and his administration will also take place.
