WASHINGTON – Their states on the brink of financial catastrophe, governors pleaded Saturday for the divided federal government to avoid doing anything that would hamper the tenuous economic recovery back home.
Their message to Washington: Prevent a government shutdown, abstain from spending cuts that dramatically will affect states and end even preliminary discussions about allowing states to declare bankruptcy.
“Anything that Congress does that will undermine our recovery is quite troublesome to us,” said Washington Gov. Christine Gregoire, head of the National Governors Association, as she opened the bipartisan group’s winter meeting. “We’re asking for cooperation.”
“We don’t need a hiccup now in our recovery,” she added. “We are fragile.”
States have made $75 billion in budget cuts and raised taxes by $33 billion over the past two years to make up for budget shortfalls caused by the recession.
Governors drained reserve cash funds and oversaw several rounds of severe budget cuts, so much so that Republicans and Democrats alike now are focused on how to completely remake state governments.
The overall economic situation in states is improving.
“Recovering, not recovered,” as Massachusetts Gov. Deval Patrick, a Democrat, put it.
High unemployment persists. Even more dire budget situations are to come.
Over the next two-and-a-half years, states face an estimated $175 billion more in budget gaps that they have no choice but to fill. The hole is caused partly because an initial infusion of cash from President Barack Obama’s economic stimulus law, as well as extensions of that money, will dry up in June. States received $103 billion in Medicaid money and $48 billion in education dollars to soften the recession’s blow.
Gregoire and the NGA’s vice chairman, Gov. Dave Heineman, R-Neb., recently met with House and Senate leaders as well as Health and Human Services Secretary Kathleen Sebelius, and asked them to be mindful of how the loss of the money, as well as further spending cuts, could hurt states.
The warnings come just as the Commerce Department reported that state and local responses to the fiscal crisis were undercutting the national recovery, slowing economic growth. Governors said the report only proved their point.
“For two years, governors have said when we cut we impact the recovery,” Gregoire said. “We know we have to make the cuts, but we can ill afford to have Congress on top of that cutting us more because the result will slow the recovery in our home states and in the nation.”
Arkansas Gov. Mike Beebe, a Democrat, noted that unlike the federal government, states are required to balance their budgets. Noting the painful cuts, he said, “We don’t have any choice.”