Gov. Fallin, Obama discuss fiscal cliff's state impact
BY WAYNE GREENE World Senior Writer
Wednesday, December 05, 2012
12/05/12 at 6:57 AM
Federal budget problems can't be solved by simply shifting all the costs to the states, Gov. Mary Fallin and delegation of fellow governors told President Barack Obama Tuesday.
"We accept that there will be fewer federal resources in the future," Fallin said in a conference call after the White House meeting. "We governors believe that we have a real stake in the federal debate over fiscal issues and policies. ... We do have to balance our budgets. We can't print money in our various states."
While the states can accept some federal budget cuts, Fallin said it is wrong for the states to bear a disproportionate share of the costs.
Fallin, vice chairwoman of the National Governors Association, and five other governors from the association's executive committee met with Obama, Vice President Joe Biden and Treasury Secretary Timothy Geithner and later held a meeting with Speaker of the House John Boehner and Senate Majority Leader Harry Reid to discuss the dangers of the fiscal cliff.
"We talked about the uncertainty for the nation and how businesses are holding back on spending and investment decisions, and we are concerned about how our local economies are going to perform," Fallin said. "It's going to be hard for us as governors to make decisions about our budgets and programming if we don't know what to expect from Washington D.C., from Congress and the administration."
The fiscal cliff is the term applied to a series of tax increases and deep budget cuts that go into effect Jan. 1 unless Congress and the White House can come to an agreement on taxes and spending.
"We think it's important to add certainty back to our national economy," Fallin said. "Just to tell us basically what the rules of the game are so we can move along with the process."
In addition to Fallin, the delegation included Delaware Gov. Jack Markell, Arkansas Gov. Mike Beebe, Minnesota Gov. Mark Dayton, Utah Gov. Gary Herbert and Wisconsin Gov. Scott Walker.
The Obama administration has insisted on tax rate increases for high wage earners. House Republicans have offered tax policy changes, including lower deductions, but have resisted any rate increase and have insisted on deeper cuts to domestic spending, especially on entitlement programs.
The governors - three Democrats and three Republicans - didn't take any public stance on that debate but tried to bring a common agenda of state concerns to be kept in mind.
Fallin outlined a series of principles that the governors brought to Obama.
Savings for the federal budget have to be savings for state budgets too; they can't simply be efforts to shift costs from the federal budget to the state budget, she said.
"We believe that federal reforms should provide savings for both the federal government and our states," she said. "We believe that shared responsibility for implementing and running state-federal programs should also mean shared savings."
Fallin said she also emphasized the need not to sneak cost increases to the states in the form of unfunded mandates or maintenances of effort requirements that limit the budget flexibility of states.
"Deficit reduction should not be accomplished by merely shifting the costs to the states or imposing unfunded mandates," she said. "Deficit reduction cannot be solved by the states alone. Spending cuts should recognize value and avoid disproportionate reductions to state programs."
Instead, she said, it is important that states be given flexibility to look for efficiencies in programs, such as Medicaid, that are jointly funded and managed by the state and federal governments, she said.
Delaware Gov. Jack Markell, chairman of the governors association, said state government finance is still delicate after the national recession. In fact, nearly half of state governments budgets remain lower than they were before the recession, he said.
Utah Gov. Gary Herbert said while his state is faring pretty well at the moment, a national trip over the fiscal cliff could be disastrous.
Currently, the state anticipates having about $420 million more in tax revenue to spend on key state programs next year, but if the federal government fails to deal with the pending tax and spending issues, economists say that will turn into a $500 million budget hole, he said.
Fallin said each state faces unique circumstances with the fiscal cliff but none of them benefit from chaos or lack of action.
The governors need to maintain a "seat at the table" in future discussions to protect the interests of the states, she said.
Oklahoma and the fiscal cliff
If automatic federal spending cuts and tax hikes go into effect Jan. 1:
- Oklahoma agencies would lose at least $137 million in funding - including $50 million in education funding and $40 million in health and human services funding - and perhaps as much as $200 million (Office of Management and Enterprise Services).
- Oklahoma would lose about 8,000 defense-related jobs (Aerospace Industries Association).
- A median-income Oklahoma family of four, earning $63,100, could see its income taxes rise by $2,200 (National Economic Council).
- Oklahomans would spend $2.2 billion less, leading to a decline in state gross domestic product of about 1.5 percent (U.S. Council of Economic Advisers).
Original Print Headline: Fallin gives fiscal input
Wayne Greene 918-581-8308
wayne.greene@tulsaworld.com
Associated Images:
President Barack Obama and Oklahoma Gov. Mary Fallin (center) meet with the National Governors Association executive committee regarding the fiscal cliff Tuesday at the White House in Washington. Treasury Secretary Tim Geithner is seated at right. CHARLES DHARAPAK / Associated Press
National Governors Association Vice Chairwoman Oklahoma Gov. Mary Fallin (center) talks to reporters outside the White House in Washington on Tuesday following a meeting between the NGA executive committee and President Barack Obama regarding the fiscal cliff. Shown here are: Utah Gov. Gary Herbert (left), Minnesota Gov. Mark Dayton, Wisconsin Gov. Scott Walker, Fallin, Arkansas Gov. Mike Beebe and NGA Chairman and Delaware Gov. Jack Markell. PABLO MARTINEZ MONSIVAIS / Associated Press
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