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Archive for Sunday, November 24, 2002

States need break from federal mandates

November 24, 2002

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It was an ordinary couple days on Stateline.org, the invaluable Web site that covers developments in the state capitols. Which means, of course, that the news was filled with doom and gloom.

California Gov. Gray Davis, a Democrat, began his second term by learning that the budget deficit next year will likely be double the $10 billion he had anticipated.

Arkansas' newly re-elected Republican Gov. Mike Huckabee surprised the state by proposing a $250 million a year increase in the sales tax to balance his budget.

Delaware Gov. Ruth Ann Minner asked the state's school districts to rebate $10 million in local aid funds to help fill a $95 million hole in her budget.

Connecticut's Republican Gov. John Rowland, who had vetoed a surtax on millionaires earlier this year, acknowledged that next year "everything is on the table."

In Iowa, tuition at state colleges and universities was raised 20 percent. Montana will run out of money months before the current fiscal year ends, budget analysts warned. North Carolina lawmakers and Gov. Mike Easley were sued for diverting $205 million in highway funds to ease the budget pinch. And so it went through the whole alphabet, from Alabama to Wyoming.

It's all part of what Ray Scheppach, the executive director of the National Governors Assn., calls "the worst crisis in state finances since World War II." Revenues have crashed in the past two years while costs for Medicaid and other human service programs have soared.

The liberal Center on Budget and Policy Priorities, in a report documenting the crisis last week, argued that it was time for states that cut taxes in the boom years of the 1990s, to restore them. That step could ease the budget crunch by $40 billion a year, author Nick Johnson said.

The conservative American Legislative Exchange Council, in a paper by William Eggers of Deloitte Consulting, recommended across-the-board spending cuts. But raising taxes on families whose own budgets are tight is politically difficult and economically dubious when jobs are scarce. And the easy spending cuts were made this past year; further reductions will affect vital programs and services.

What is really needed is cooperation from the federal government. Richard Nathan, the expert on intergovernmental relations at the State University of New York-Albany, says it is time for emergency revenue-sharing " a direct cash transfer from the Treasury to state coffers.

With the federal budget in the red, that seems highly unlikely. A state plea for the feds to pick up a larger share of the joint federal-state Medicaid program was rebuffed by the White House and Congress earlier this year.

Now, state and local officials are reduced to pleading with Washington just to stop adding to their woes. When Congress and the Bush administration ordered a phaseout of the estate tax in 2001 and an acceleration of business depreciation write-offs in 2002, both actions reduced state revenues from levies tied to federal tax obligations. Dozens of states had to scramble to untie their tax codes from the IRS.

But Washington still acts as if the health of states and cities does not matter. In the aftermath of 9-11, Congress and the president promised $3.5 billion to help pay for training and equipment of the "first responders," firemen, police, rescue workers, who would be called on to deal with another terrorist attack. After all the rhetoric, Congress adjourned last week without authorizing the money " "a colossal failure" of responsibility, according to the National League of Cities.

It is selfish and shortsighted for federal officials to turn their backs on their counterparts in state and local government. President Bush and Congress need to step up to their responsibilities.

l

I was in error in my last column in including a provision favoring Texas A&M as the home for a new homeland security lab on the list of objectionable last-minute additions slipped into the House version of the bill creating a Department of Homeland Security. The provision may still be objectionable, but it was debated in both the Science Committee and in the ad hoc committee headed by Rep. Dick Armey, where it was passed on a party-line vote. But Armey, who is retiring this year, was not the author of the special-interest language. That dubious honor goes to his fellow-Texan and successor as majority leader, Rep. Tom DeLay.




" David Broder is a columnist for Washington Post Writers Group.

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