Resolution to Reduce the State’s Dependence on Federal Funds

Resolution to Reduce the State’s Dependence on Federal Funds

Summary

Increasingly, states are relying to a greater degree on federal grants and subsidies to cover programs in the states’ budget.  Gridlock in Congress, however, has put the reliability of those funds in jeopardy, risking the possibility that states may budget for federal funds that never arrive.  In order to ensure the continuation of state programs and minimize disruption in the event of a federal appropriations lapse, states must reduce their dependence on federal funds for day-to-day operations.

Model Resolution

WHEREAS, the Legislature of the state declares that the nation’s fiscal recklessness poses a great, clear, and present threat to America’s future;

WHEREAS, David Walker, former Comptroller General of the United States warns, “The most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility”;

WHEREAS, the federal government is now in its fourth year of not passing a budget;

WHEREAS, the national debt has now surpassed $17 trillion, more than $140,000 per household;

WHEREAS, annual deficits have exceeded $1 trillion for each of the last four years, and unfunded obligations for social programs now exceed $85 trillion, with no apparent Congressional resolution on the horizon;

WHEREAS, it took 200 years for the United States to accumulate the first trillion dollars in debt and only 286 days to accumulate the most recent trillion;

WHEREAS, $85 billion per month of the national debt and annual deficits are now offset through Federal Reserve operations such as “quantitative easing” and “operation twist”;

WHEREAS, states receive between 24 percent and 49 percent of their general revenue from federal funds, and on average rely on the federal government for 36 cents of every dollar spent in state budgets.

WHEREAS, in its recently released audit of the federal government’s financial statements, the Government Accountability Office declared, “Over the long term, the structural imbalance between spending and revenue will lead to continued growth of debt held by the public as a share of GDP {gross domestic product}; this means the current structure of the federal budget is unsustainable”;

WHEREAS, this fiscal scenario is by all accounts unsustainable for the nation as well as for our state;

WHEREAS, in May 2012, the American Institute of Certified Public Accountants, in its review of the federal government’s most recent annual financial statements, warned, “The U.S. is not exempt from the laws of prudent finance. We must take steps to put our financial house in order. The credit rating agencies have recently issued renewed warnings of U.S. credit downgrades unless substantive reforms are made. Our current fiscal policy results in mortgaging our nation’s future without investing in it, leaving our children, grandchildren and future generations to suffer the consequences. This is irresponsible, unethical and immoral”;

WHEREAS, restoring fiscal sanity and sustainability is at the heart of jumpstarting economic growth and fostering a business climate where companies can grow and begin to hire; and

WHEREAS, absent credible actions to address this fiscal irresponsibility, uncertainty will continue to dominate business decision making and economic recovery will languish:

NOW, THEREFORE, BE IT RESOLVED that the Legislature of the state, the Governor concurring therein, wholeheartedly support a comprehensive state management process to assess the immediacy, severity, and probability of risks from any reductions of federal funds to the state and how the state will marshal its resources, both human and capital, to prioritize and provide the most essential government services.

BE IT FURTHER RESOLVED that the Legislature and the Governor strongly urge local, state, and national representatives to take immediate and sustained action to eliminate deficit spending and secure economic self-reliance to the state and to the United States.

BE IT FURTHER RESOLVED that the Legislature and the Governor strongly urge the President of the United States and the United States Congress to pass a budget each year and adopt a credible and sustainable plan to balance those budgets.

BE IT FURTHER RESOLVED that the Legislature and the Governor strongly urge the state’s towns, cities, and counties to adopt and implement comprehensive financial risk management measures as soon as possible.

BE IT FURTHER RESOLVED that copies of this resolution be sent to the Attorney General of the United States, the President of the United States, the Majority Leader of the United States Senate, the Speaker of the United States House of Representatives, and members of the state’s congressional delegation.

Approved by the ALEC Board of Directors January 9, 2014.

Keyword Tags: 2013 SNPS, Federalism, Tax and Fiscal Policy Task Force

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