The nation's governors begin their annual midwinter meeting here today burdened by record revenue shortfalls in most of their states and bracing for the uncertainties contained in the national fiscal strategy to be unveiled by President Bush Monday.
White House officials briefed leaders of the National Governors' Association (NGA) yesterday on the broad outlines of Bush's plan to turn $15 billion in federal programs over to the states. Washington Gov. Booth Gardner (D) and Missouri Gov. John D. Ashcroft (R) said they were assured the plan would increase their ability to manage federal programs flexibly without further straining state budgets.
"It is an idea at this juncture," said NGA Chairman Gardner, who discussed the proposal with White House Chief of Staff John H. Sununu, budget director Richard G. Darman and domestic policy adviser Roger Porter for about an hour yesterday. "They're still building their car as they head down the road."
NGA Vice Chairman Ashcroft said he expected the federal government to follow through with funding for the new federal-to-state block grants for at least five years, and that the governors had received "a definite assurance of longevity" on the funding issue. Both said they expected congressional opposition to the proposal, which would strip federal lawmakers of some appropriations power.
The question of who will pay the tab for the federal programs transferred to the states has become a key issue for the governors at a time when most of them are struggling to avoid raising taxes. A survey released yesterday by the National Resource Center for State Laws and Regulation, a business lobbying group, showed that half of 300 state legislators surveyed feel they will have to raise state taxes and fees to balance their budgets.
State leaders are most concerned about expensive long-term health care costs and the pressure they feel from coverage mandated by the federal government that has added to the cost of administering programs such as Medicaid.
In state of the state speeches delivered during the last few weeks, several governors have sounded a common tone of pessimism driven by the war and recession.
"The days of drinking that free bubble up and eating that rainbow stew are gone," new Georgia Gov. Zell Miller (D) told his state's General Assembly.
"A deficit has taken control of our lives, coloring all else as it climbs beyond comprehension, sapping our confidence, humbling our visions," said Connecticut Gov. Lowell P. Weicker (I), who has a $1.5 billion budget gap to close.
Last week, the governors of New York, Rhode Island and Massachusetts, with shortfalls of nearly $10 billion, told their legislatures it is time to lay off state workers, raise mass transit fares and other fees and auction off state vehicles. In Rhode Island, Gov. Bruce Sundlun (D) has proposed a 20 percent income tax increase.
At least 28 states are in significant budget trouble this year, according to the governors' association, with a total of $9.6 billion in potential deficits reported for the fiscal year ending in June. A more recent telephone survey of 40 states conducted by aides to New York Gov. Mario M. Cuomo (D) indicated shortfalls could reach $33 billion for the coming fiscal year.
For new governors, some of the early budget rhetoric has involved laying partisan blame on their predecessors.
"We favored soccer stadiums over child nutrition," said Minnesota Gov. Arne Carlson (R), who succeeded Democrat Rudy Perpich. "Community centers and swimming pools over classrooms, while we transferred record levels of debt to our children."
In Rhode Island, Sundlun, who followed Republican Edward D. DiPrete, is planning to lay off 600 state employees and raise the gasoline tax by five cents. "We're paying for DiPrete mismanagement, pure and simple," he said.
But Pennsylvania Gov. Robert P. Casey (D), who is beginning his second term in office, is blaming the economic downturn in the Northeast for the $731 million gap between revenue and spending the state must close this year.
"Unfortunately, the budget problem caused by this recession will be much worse next year," Casey said in his State of the Commonwealth address last week. "Things are going to get much worse before they get better."