NRPLUS MEMBER ARTICLE {W} hen it comes to lost causes, challenging Washington’s insatiable appetite to spend more from inside Congress ranks high. The Congressional Budget Office says U.S. debt will reach $50 trillion by 2033, an increase of $5.2 billion every day over the next decade. While discretionary spending is not a significant driver of the deficit or debt, U.S. House groups are threatening another government shutdown on October 1 to try and secure a few budget demands from the Biden administration. And even if the latest shutdown is averted, the 14 government shutdowns since 1981 are a reminder that states need to stop being mere bystanders to Washington’s dysfunction.
Simply put: A government shutdown should prepare states to not only police incoming federal funds but also make sure that their own budgetary processes meet constituent demands, fund public services, and support the necessary infrastructure for thriving economies, regardless of Washington’s antics.
Depending on the state, federal funding as a percentage of state revenue runs anywhere from 16 percent to 36 percent. About two-thirds of the dollars going to the states is classified as mandatory spending. So, any short-term funding delays are likely not catastrophic. Programs such as Social Security, Medicare, and Medicaid remain on autopilot during fights over discretionary spending. About 65 percent of federal workers will be paid on time and remain working.
Yet, as federal spending grows more unsustainable and unpredictable, states are increasingly at the mercy of Washington’s dysfunction because they are unprepared to deal with a crisis. Some state lawmakers have little to no awareness of where federal dollars ultimately go in their states and who controls and benefits from those funds.
Not only can states provide more legislative oversight on the federal revenue that they receive, but state legislators should mitigate dependency on an unsustainable revenue stream.
State agencies should take immediate steps to produce an accounting of all federal funding and nonmonetary costs for complying with any money that they receive.
In 2014, then Idaho governor Butch Otter signed an executive order requiring a full accounting of the 440 federal grants and 24,000 state employees funded by federal dollars. Codified by the legislature the following year, the law gives full transparency of federal funds to state agencies and legislatures, creating contingency plans for programs in the event of potential cuts to funding.
Utah, similarly, passed House Bill 138 in 2011. The legislation requires an inventory of all federal money provided to agencies and prepares contingency plans when federal funds are threatened. Indiana has a comparable law that allows for aggressive accounting and oversight of funds.
Additionally, state legislatures would be wise to hold oversight hearings that focus on the ways that their state is vulnerable to changes to disruptions of federal dollars. Furthermore, given our federal-spending trajectory, legislators should be required to approve any recipients of federal grants for agencies in their states.
While most of the freak-out over a shutdown will be politicized and media-driven, deeper questions persist about the ability of the federal government to rein in spending to tame inflation and the debt crisis. Shutdowns provide some temporary, short-term focus on the crisis, but our debt clock is more akin to a ticking time bomb.
Ideally, stronger commitments to our federalist system of government will create more accountability for the spending that represents a threat to the financial security of Americans now and in the future. States are much better served by keeping more taxpayer funds in their own sphere, bypassing Washington’s costly bureaucratic maze that fosters dependency and compliance to the whims and decrees of centralized planners.
The unwillingness of federal lawmakers to put national interest above their political pursuits is no longer surprising but should alarm us all. With the federal government having proven itself to be a very poor steward of taxpayer dollars, it’s long past time for states to take a more active role in preparing and planning their budgets to avert a likely disaster.
Wayne Hoffman, president of the Idaho Freedom Foundation, sums it up well with words that apply to all the states: “We get a large amount of money via an empty treasury. Not exactly a safe investing strategy.” Citizens themselves would be wise to look closer to home to find competence in their government — not to mention more mileage out of their hard-earned tax dollars.