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| In a Crisis, Rethinking Fiscal Federalism |
| By economix.blogs.nytimes.com |
| Published: 06/30/2009 |
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In a Crisis, Rethinking Fiscal Federalism By Harold Pollack and Ed Kilgore Harold Pollack researches public health at the University of Chicago School of Social Service Administration, where he is faculty chair of the Center for Health Administration Studies. Ed Kilgore is managing editor of The Democratic Strategist. He was previously vice president for policy at the Democratic Leadership Council and a federal-state relations liaison for three governors of Georgia, and served as communications director and legislative counsel for United States Senator Sam Nunn. The Los Angeles Unified School District will cancel most summer programs this year because of California’s budget woes. The state’s entire welfare-to-work system may also be on the chopping block, cuts that could deny health coverage to 900,000 children. Although California’s budget woes and political hijinks hit the front page, that state is not alone. The Center on Budget and Policy Priorities reports that 47 states are projecting deficits, whose total may approach $200 billion. Illinois legislators, for example, are searching for some alternative between a July 1 “doomsday budget” containing deep service cuts and a 67 percent income tax increase. Media accounts present each state’s difficulties in light of its distinctive politics and economic circumstances: the budget-crippling ballot initiatives in California, the culture of corruption in Illinois, the liberal health policies of Massachusetts. It’s fun to ponder the local flora and fauna, but the real problems lie underneath: the frayed partnership between states and the federal government. States and localities are the invisible — if not always silent — partners in national domestic government. Together or separately, they administer and partially finance almost every public service. America faces critical decisions about health care, the environment, transportation, No Child Left Behind. It’s impossible to tackle any of these large national priorities without considering how reforms would be put in place in state capitols, county commissions and city halls. The basics of American federalism are often forgotten in Washington, most recently during the stimulus debate, when Republicans and some centrist Democrats railed against “excessive” funds provided to state and local governments to avoid cutbacks and layoffs. These basics may be forgotten again in the wake of California’s fiscal meltdown, which has generated self-righteous clucking about that state’s irresponbility, with little reflection about the basic services for 12 percent of the American population now at risk. There has been less reflection about how changing realities of public finance are undermining traditional roles of local, state and federal government. Take health care, for example. States and localities are intimately involved in delivering, financing, administering and monitoring health services, and are responsible for wide national variations in access and quality. Serious health care reform at the federal level must address two intertwined realities: First, Medicaid is killing state and local budgets. Second, legally and fiscally constrained states lack the capacity and administrative tools to spend health care monies well. Adjusted for inflation, state and local health expenditures have more than tripled since 1980 and continue to grow. The ranks of the uninsured have swelled, and include increasing numbers of immigrants and Americans with costly needs. Local safety-net providers traditionally bear much of the resulting burden. It is not surprising, then, that states and localities are groaning under the load, or that they are cutting services at precisely the moment of greatest need, when elementary macroeconomics suggests that service cutbacks most harm the overall economy. Other policy domains yield similar stories. Many states are far ahead of Washington in limiting carbon emissions. States and localities hold 91 percent of jail and prison inmates, while state and local police officers vastly outnumber their federal peers. States and localities spend the lion’s share of public funds expended for education as well. In these areas and more, effective policy requires much more careful attention to the capacities, preferences and interests of state and local governments. They are where the rubber meets the road in setting public policies. Although current circumstances may require increased federal support for states and localities, the times also demand serious measures to ensure that states and localities don’t abuse or waste federal funds, or simply reduce their own efforts. Similarly, while states could use more flexible federal funding to respond to local circumstances, states’ resistance to federal mandates is sometimes disingenuous, particularly when these mandates serve crucial priorities, like homeland security, or when mandates protect readily-marginalized groups, like measures to promote fair elections and civil rights. Read more. If link has expired, check the website of the article's original news source. |
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