WASHINGTON — The federal budget wars are creating uncertainty in the states, Gov. Mary Fallin said Wednesday as she urged Congress and President Barack Obama to treat states as partners in the deficit-reduction effort, rather than “underlings.”
In a speech in Washington for the National Governors Association, Fallin said the budget-cutting decisions made by Congress and the president in the next few months will have an “immediate, direct effect” on states. It will be hard to set a state budget, she said, when the numbers could change in the middle of the upcoming legislative session because of cuts made in Washington.
“It doesn't help us when we're trying to plan the different services we need to deliver in our state,” she said.
Fallin, a Republican and vice chair of the National Governors Association, delivered a state of the states address at the National Press Club with Delaware Gov. Jack Markell, a Democrat and chair of the governor's association.
Markell, Fallin and other governors met with Obama at the White House in December to express their concerns about the automatic tax hikes and budget cuts that were set to take effect early this month.
The “fiscal cliff” deal reached last week dealt with income tax rates for the long term but only delayed the effect of automatic budget cuts for two months. On top of that, a fight is expected within weeks over raising the nation's debt ceiling.
Markell said Wednesday, “If the debt limit is not increased soon, there will be disruptions in federal spending; there will be disruptions in capital markets that will greatly impact state operations. And until these issues are resolved, states will not be able to make fully informed financial plans that will address the needs of our citizens.”
Fallin said spending cuts will be “necessary and inevitable,” but she said Congress and the president should be guided by some basic considerations for the states:
• Federal reforms should produce savings for both the federal government and states.
• Deficit reduction should not be accomplished simply by shifting costs to states or imposing unfunded mandates.
• States should be given increased flexibility to create efficiencies and achieve results.
• Congress should not demand the same level of service without providing the same level of funding.
“States need to be treated as partners, not underlings,” Fallin said, adding that shifting program costs to the states wouldn't be a sign of a good partnership.
Fallin and Markell focused mainly on broad areas of agreement. But some questions illustrated the marked differences between their states' politics.
“Each state is different,” Fallin said, in one way or another, several times on Wednesday.
On gun control, Markell said he was preparing legislation to address mental health services, school security and guns.
Fallin said Oklahoma officials had also addressed school security and mental health. “But I would also say in the state of Oklahoma — this is me speaking personally — that we certainly do respect our Second Amendment rights,” she said.
And on health care reform, Markell said his state had decided to expand its Medicaid program with federal money and to use a state-federal partnership to set up a health insurance exchange for residents to purchase coverage.
He said expanding the Medicaid program was not a partisan issue in Delaware but “an issue of math.” The state can provide coverage to many more people with a higher reimbursement rate from the federal government, Markell said.
Fallin has rejected the Medicaid expansion money, saying it would cost too much after the federal government reduced its share, and decided that the federal government must set up the health care exchange.