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SOURCE State Budget Crisis Task Force
WASHINGTON, Jan. 14, 2014 /PRNewswire/ -- Co-Chairs former Lt. Governor of New York Richard Ravitch and Paul A. Volcker, former Chairman of the Board of Governors of the US Federal Reserve System, released the Final Report of the State Budget Crisis Task Force today after nearly three years of study, analysis and debate.
The Task Force outlined a troubling picture of the unsustainable and now perilous fiscal position of many states and their local governments across the country. As symbolized by this event being held in the Rayburn Office Building and surrounded by the Halls of Congress, the implications are national. Understanding and action by the federal government as well as the states will be required to support needed reforms.
"What is at stake," said Co-Chair Ravitch, "is the strength of our educational institutions, of our infrastructure, our health care and judicial system, and the safety and security of our homes and streets – all of which in our federal system are heavily dependent upon the management and financial integrity of our states and their political subdivisions."
Co-Chair Volcker added that, "We need only look to Detroit where debt was leveraged time and time again with no ability to pay, to see that reforms in financial reporting and oversight by states and localities are prudent and necessary. The ultimate victims of unsustainable, patchwork budgeting and overextended finances are the citizens dependent upon essential public services."
The Task Force, an independent, non-partisan group of experienced participants in government, has not itself set out positions with respect to particular public policies and programs. What it does insist upon is that political and policy discussions and decisions must be made on the basis of honest, reliable budget estimates and easily accessible, comprehensive, and transparent financial data.
To that end, the Task Force recommends several specific approaches for financial planning and reporting:
Building on these proposals, the newly-founded Volcker Alliance, consistent with its mission to improve government performance, will press for implementing action by states and cities. Co-Chair Volcker notes that, "The Task Force Report has highlighted serious problems that demand attention. Open, honest budgeting and financial reporting are essential elements for responsible and effective decision-making, and for maintaining trust in every level of government. The Alliance, as its name suggests, will be working with other interested parties, certainly including knowledgeable representatives of state and local governments."
More broadly, the challenge before the states has clear implications for the federal government. There is little evidence today that the Congress and Executive Branch consider the impact of its decisions on the other levels of government in setting policy and spending levels for the federal government. The reality is that all three levels of government serve the same people and have a responsibility to ensure that the unintended consequences of their fiscal actions do not unnecessarily complicate or disrupt or even thwart the effective implementation of state responsibilities.
The Co-Chairs said, the federal government needs to be more cognizant of the effects its actions have on the fiscal condition of the states and localities by:
The 2012 Report of the State Budget Crisis Task Force (www.statebudgetcrisis.org) drew national attention to the eroding fiscal condition of states. To address the declining fiscal condition of states, over the past several months the Task Force hosted four National Dialogues focusing on the most urgent areas of concern including: Transportation Infrastructure, Pensions, and Medicaid, as well as the broader implications for the federal structure of American governance. Each Dialogue convened experts to discuss options for new organizational arrangements, consultative processes, or legislative mechanisms that can promote a cooperative approach between the federal and state governments in dealing with challenges that require reconsideration and reform.
Task Force Advisory Board Members include: Chairs: Richard Ravitch, Paul A. Volcker
Members: Nicholas F. Brady, Joseph A. Califano, Jr., Phillip L. Clay, David Crane, Peter Goldmark, Richard P. Nathan, Alice M. Rivlin, Marc V. Shaw, George P. Shultz.
Task Force Advisory Board Members offered the following:
Joseph A. Califano, Jr., Secretary of the Department of Health, Education, Founder and Chairman of the National Center on Addiction and Substance Abuse at Columbia University
"In accommodating their financial difficulties the states should be particularly attentive to the needs of the most vulnerable in our society and to reducing the vast income inequality that has grown like Jack's beanstalk over the past two or three decades."
David Crane, Former Special Advisor to Governor Arnold Schwarzenegger, and current lecturer on public policy at Stanford University. Formerly he served on the University of California Board of Regents and the boards of the California State Teachers Retirement System
"This report should be read by everyone who cares about future generations. Its principal recommendation -- that states adopt accrual-based budgeting -- will stop governments from reporting surpluses when they have deficits and elected officials from putting off until tomorrow what they should do today."
Peter Goldmark, Jr., Former Budget Director, New York State
"State and local finance is the neglected child of American public finance. The feds ignore it and too many state and local officials play games with it. The result is that what should be one of our strongest forces for growth and investment is blocking fiscal recovery and slowing the American economy down."
George Shultz, Former U.S. Secretary of State, Secretary of the Treasury, Secretary of Labor, and director of the Office of Management and Budget. He was chairman of President Ronald Reagan's Economic Policy Advisory Board and is now the Thomas W. and Susan B. Ford Distinguished Fellow at the Hoover Institution.
"The facts presented need to be widely absorbed so that needed actions will be taken and, though difficult, will receive broad support."
The crisis in the underfunding of state and local government defined benefit pension systems and recommendations for relieving the crisis will be the subject of a presentation by the Nelson A. Rockefeller Institute of Government in the The National Press Club's Holeman Lounge, 529 14th St. NW, 13th Floor, Washington, D.C., January 16th from 1-2:30 p.m. To attend, obtain a copy of the embargoed report and arrange interviews with the report's authors in advance of the January 16thevent, contact Robert Bullock, deputy director of the Rockefeller Institute, at (518) 443-5837 or at Robert.firstname.lastname@example.org.
The Task Force has published the following documents:
The Task Force greatly appreciates the support of the following, which recognize the value of the Task Force's work but should not be considered endorsers of its recommendations:
Contact: Kate Philips
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