November 28, 2014

Federal Cuts Add to Difficulties For States, Cities

  • The federal budget is an expression of our country's values. Where we choose to spend and at what levels, how and who we tax, and the borrowing we...

The State Budget Crisis Task Force says some federal deficit-reduction efforts have aggravated structural problems in the budgets of state and local governments that they have done little to address.

Former Federal Reserve Chair and Concord Coalition board member Paul Volcker co-authored the task force’s final report with Richard Ravitch, a former lieutenant governor of New York. They urged state and local governments to deal with their budget problems, but also suggested that federal policymakers focus more attention on how their deficit-reduction efforts impact other levels of government.

The report recommends that Congress create an office, possibly attached to the Congressional Budget Office, to monitor and analyze how federal policies could affect state and local budgets.

In this year’s State of the State address, National Governors Association Chair Mary Fallin of Oklahoma spoke about some of the issues raised in the task force report, stating that federal policies should not shift overly burdensome costs to the states.

State and local policymakers, like their federal counterparts, must address the structural imbalances in their budgets to protect taxpayers now and in the future. Officials at all levels of government must work together to implement sound policies that improve the fiscal health of the states and the country.