I was a governor during the height of the economic downturn and made difficult decisions to balance my state budget while maintaining increasingly imperative public safety nets. Importantly, I worked with stakeholders and legislators on both sides of the aisle to develop consensus budgets that redefined state government, eliminated inefficiencies and sacrificed some services and programs.
Just as my fellow governors, I know the tough choices and political risks my federal colleagues now face. As a former governor, I do not wish to be among those seeking to tie the hands of federal legislators, but endeavor to provide some insights on how the path they choose could impact states and the economy at large.
Part of the answer to the federal budget crisis must be program reductions. But those reductions can be made deliberately and intelligently – as states did during the recent economic downturn, or foolishly – in the form of sequestration. Congress and the administration should strive for a more efficient government that does not shift large funding burdens to the states or damage the economy. The sequester meets none of these goals.
It will cut funding to numerous programs intended to pay for federal regulations imposed on state and local governments. What is the recourse for state and local governments if the federal government cuts those funds? Some discretionary grants, like the clean water and drinking water state revolving loan funds, serve an important role in the federalist partnership and should not be treated the same as other federal-centric programs. Under sequestration, the funding streams for all programs are slashed indiscriminately.
States are recovering from years of reduced budgets, including a significant decline in federal grant funds. States continue to struggle to balance their budgets and now must account for the potential loss of an additional $5.3 billion in federal funds due to sequestration while also paying for a projected 3.4 percent increase in Medicaid. States are willing to do their part to help avert a federal budget catastrophe, but Congress and the administration should ensure that the shared sacrifices from reductions in federal spending are shared at the federal level and not simply passed on to the states.
In addition to reducing the size of our state governments, we made important tax changes. Federal decision-makers must do the same. I encourage them to begin talking with governors now about how these changes will impact states and the best, most cost-effective way to mitigate possible impacts to still-struggling state economies.
To solve the nation’s fiscal crisis, members of Congress must work together to redefine the federal government. They should follow the example set by the nation’s governors and compromise on an alternative to sequestration that responsibly and fairly reduces the federal deficit.
Douglas served as governor of Vermont from 2003 to 2011. He is now a member of BPC’s Governors’ Council.