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Governors warn against U.S. budget cuts

By Dan Balz
Washington Post Staff Writer
Saturday, February 26, 2011; 8:25 PM

Leaders of the National Governors Association called on Congress and the Obama administration Saturday to avoid doing anything that could further strain their fragile economies, warning that the states are already overburdened and that additional demands could threaten the broader recovery.

"This is a critical time, where the states are facing $175 billion shortfall in the next two years," Washington Gov. Chris Gregoire (D), the NGA chairman, said at a news conference at the start of the annual gathering. "Anything Congress does to undermine economic recovery would be very troublesome to us."

With battles over budgets and public-employee union powers raging in Wisconsin and several other states, the governors sought to set aside partisan wrangling and issue a common message that what Washington does in the coming months will have far-reaching consequences. Congress has made clear in recent days that it intends to sharply reduce spending on a variety of domestic programs, many of which would impact the states, and many GOP freshmen are insisting on even deeper cuts than their leaders.

Gregoire and the NGA's vice chairman, Nebraska Gov. Dave Heineman (R), who also appeared at the news conference, have had discussions with congressional leaders to convey their concerns about the cuts.

In the past two years, to keep their budgets in balance, states have slashed spending by $75 billion, and some have raised taxes. But they face more shortfalls in the current and coming fiscal years as they deal with the continuing effects of the deep recession.

Although the threat of a government shutdown next week receded Friday, even the prospect of such an occurrence could have significant consequences for the states, the governors said.

Whatever happens in the short run, governors know that the partisan divisions over federal spending will continue to be a potentially destabilizing force on their own budgets. Noting that many states have depleted their reserve funds, Arkansas Gov. Mike Beebe (D) said, "It will definitely impact every state" if there is a government shutdown now or later this year.

The annual winter meeting of the governors comes at a time of considerable focus on the states. The standoff in Wisconsin, where Gov. Scott Walker (R) is seeking concessions from public-employee unions on benefits and is trying to drastically curtail collective-bargaining rights, has drawn national attention. Conflicts in Ohio and Indiana over labor issues have added to the mix.

Those battles have threatened to intrude on the deliberations among governors while they are in Washington. But tensions were largely absent on the opening day of the governor's three-day meeting.

The governors met privately over lunch Saturday afternoon for what several of them described as a get-acquainted session. There are 29 new governors since the last election, with many in attendance here, and considerable time was spent on introductions rather than policy deliberations.

Several governors said there appeared to be some bipartisan agreement on the desire for more flexibility from the Health and Human Services Department to deal with the new demands on the states for expanding Medicaid under President Obama's new health-care law.

Beebe said there was "a lot of consensus on Medicaid" among the governors on the desire to be able to manage the programs themselves. "What the federal government can do for us is not money, it's flexibility," said Maine Gov. Paul LePage (R). "Let us run our states with the resources we have."

Gregoire and Heineman are determined to forge greater consensus, whether this weekend or in coming months, as the governors grapple with federal mandates, declining revenues and the slow recovery.

The governors appeared mindful of the fact that, while the economy appears to be recovering, progress is slow and uncertain. "We are fragile," Gregoire said as she talked about the need for Congress to move with an eye toward the states. "We don't need a hiccup now."

NGA leaders also sought to tamp down talk of federal action to provide states with the authority to declare bankruptcy, arguing that states are not seeking such authority and that even discussion of the subject could have a harmful effect on state financing.

balzd@washpost.com

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