Nation's Governors Focus Energy on Federal Deficit Reduction

Entering the new year, the nation’s governors are focused on having a role in the federal conversations around deficit reduction and comprehensive tax reform, according to the vision laid out by Delaware Gov. Jack Markell and Oklahoma Gov. Mary Fallin at the National Governors Association’s inaugural State of the States address Wednesday.
by | January 9, 2013
 

Entering the new year, the nation’s governors are focused on having a role in the federal conversations around deficit reduction and comprehensive tax reform, according to the vision laid out by Delaware Gov. Jack Markell and Oklahoma Gov. Mary Fallin at the National Governors Association’s inaugural State of the States address Wednesday.

“As much as we do in our states, our economies are tightly linked to the national economy,” said Markell, the NGA chair for 2013. “As a result, our states’ prosperity depends, in no small measure, on the ability of our public servants in Washington to come to terms on a path forward.”

They’re tackling those issues on two fronts. Markell was among the group of governors that met with White House officials and Congressional leaders last month as they negotiated over the tax increases and spending cuts that comprised the fiscal cliff. Though tax cuts were avoided for most Americans, the spending cuts—known in Washington as sequestration—were merely postponed until March.

Another round of deficit reduction deal-making will begin in the coming weeks, as the Obama administration and House Republicans seek to avoid those cuts, which most agree could have a detrimental effect on the sluggish economic recovery. When negotiations commence, any and all options could be on the table, which means Medicaid funding, education grants and other aid to states could potentially be reduced. That would put an even greater strain on state budgets, which are just now recovering from the brutal impact of the economic downtown.

So, Markell and Fallin said, the NGA and its members will continue to meet with federal policymakers as those conversations take place. Their message will have four parts: any deal should result in savings for the federal government and state governments; there should be no cost-shifting or other unfunded mandates to states; states should have more flexibility to pursue potentially cost-saving reforms; and the federal government should limit the maintenance-of-effort conditions placed on federal funding.

“Essentially, all of these points can be boiled down to two words: flexibility and partnership,” said Fallin, the NGA vice chair for 2013. “We need the flexibility to take care of the unique needs of our citizens and the unique challenges facing our states. States need to be treated as partners, not underlings, as we work to implement good public policy.”

On tax reform, which could still see action in Congress as part of further deficit reduction after becoming a popular topic during the presidential campaign, Markell announced that the NGA was convening a task force to look at the broad range of tax issues. Pennsylvania Gov. Tom Corbett and Kentucky Gov. Steve Beshear will lead it. Their mission will include assessing potential business impacts of reforming the income tax code, such as eliminating deductions, as well as advocating for Congress to revive a version of the Marketplace Fairness Act, which would ensure that online sales are taxed like traditional transactions.

The governors also outlined other issues that would be occupying their members in 2013. The NGA has launched a new website dedicated to sharing best practices on health policy. A new cybersecurity task force has been established to examine risks and opportunities for states in that field. Markell said the NGA education committee was formulating a comprehensive strategy to push Congress to reauthorize No Child Left Behind. And in the wake of Hurricane Sandy, the governors will be back efforts to establish a nationwide broadband network for public safety communications.

But, as has been the case since the economy went south, executive offices around the country will be focused on keeping their checkbooks solvent and bringing jobs back to their borders. But they need certainty from the federal government to do those things, Markell said.

“The uncertainty from Washington and the reality of shrinking federal support hurts both our economies and our budgets. The implications federal decisions will have on states must be addressed,” he said. “Every governor wants to be the jobs governor. We cannot afford to wait when it comes to moving the needle on jobs and business growth.”

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