WASHINGTON INSIGHT

Mr. Ridings Goes to Washington

R. Kevin Clark
Editor, APWA Reporter

Just as Jefferson Smith did 63 years ago in Frank Capra's classic Mr. Smith Goes to Washington, APWA President Richard Ridings was in Washington, D.C. to make an impact on officials in our nation's capital.

On Tuesday, December 11, Ridings met with representatives from the Federal Highway Administration (FHWA) and the Federal Emergency Management Agency (FEMA). Joining Ridings from the APWA staff were Peter King, Executive Director; Jim Fahey, Director of Government Relations; and Andrea Fisher, Manager of Government Relations.

The first stop for Ridings was at the offices of FHWA, where he met with Mary Peters, Federal Highway Administrator; Susan Binder, Acting Director of the Office of Policy; and Joe Toole, Director of Professional Development. Topics of discussion included renewing APWA's partnership agreement with FHWA; the possibility of expanding educational opportunities between the two organizations; and the reauthorization of the Transportation Equity Act (TEA-21).

During the meeting, Ridings emphasized that our current funding levels are not nearly enough to maintain our basic infrastructure, let alone expand upon it. He also stressed the importance of continued investment in transportation. "Transportation has often been taken for granted, overlooked, and grossly underfunded for the needs that are there," he said. As discussed in recent issues of the APWA Reporter, communicating the need for a strong infrastructure is one of Ridings's top priorities during his presidency.

Concerning the reauthorization of TEA-21, Mary Peters mentioned that the key points involve protecting the funding firewalls and protecting the minimum guarantees that are provided by the legislation. These TEA-21 measures ensure that all motor fuel tax revenues paid to the Highway Trust Fund are invested fully in the transportation system. Peters also noted that one of her top priorities as Federal Highway Administrator is mobility.

Later that afternoon, Ridings and the APWA staff went to FEMA's offices and met with Michael Brown, Acting Deputy Director and General Counsel. They were joined by Larry Nadeau, Director of Public Works, Saco, Maine, and Chair, APWA Emergency Management PET Committee.

During the meeting, Ridings discussed the importance of public works professionals in emergency management. As he explained, when a disaster occurs it is public works professionals, along with police and firefighters, who are there as First Responders; and they remain long after the disaster to perform cleanup, and to get utilities and other services back on-line for the public. Brown agreed, noting that many people don't appreciate the role of public works in emergency management. "It seems so obvious," he said. "But public works professionals are overlooked and underappreciated for their efforts."

Nadeau discussed the activities of the Emergency Management PET Committee and their goals and objectives for the year. He also mentioned the possibility of developing a training session at FEMA's National Emergency Training Center in Emmitsburg, Maryland that would specifically focus on public works professionals and their emergency management responsibilities. This training session would be in addition to the sessions currently provided concerning the emergency management response of police and firefighters.

This was the first of several meetings planned between Ridings and key policy makers in Washington to deliver APWA's message of the importance of public works and investing in our nation's infrastructure.

States struggle with decreasing revenues

Heather McTavish
Government Relations Coordinator
APWA Washington, D.C. office

Though U.S. economists have only recently declared our economy in a recession, state financial directors began seeing signs of a downturn months ago, even before September 11. A combination of a dramatic fall in state revenues, soaring health care costs, and homeland security concerns have contributed to state budget shortfalls. According to the National Conference of State Legislatures (NCSL) report on State Fiscal Outlooks in FY 2002, "the warning signs of state fiscal problems began emerging late last year when sales, personal income and corporate income tax collections slowed and failed to meet projected levels." With the decrease of revenues, and the events of September 11, states will have no choice but to cut program expenditures and raise taxes significantly if the federal government does not step in. As economists look towards the future, the outlook for change is bleak.

The survey conducted by NCSL gathered results from legislative fiscal directors in mid to late November. It covers the revenue and expenditure information through the first several months of FY 2002, state plans to address budget shortfalls, and the budget outlook for the rest of the year.

The survey found that with tax revenues falling short of forecasted levels, many states have trimmed spending. Actions taken by Governors while most legislatures are not in session include budget cuts, spending holdbacks, freezes on travel, and the postponement of capital projects. The report, released in December, found:

  • Forty-three states and the District of Columbia with revenues below forecasted levels in the opening months of fiscal year (FY) 2002;

  • Thirty-six states implementing or considering budget cuts or holdbacks to address fiscal problems, including Colorado, Idaho, Missouri, New Jersey and Utah.

  • Twenty-one states where spending is exceeding budgeted levels;

  • Seven states where overspending in program areas is likely;

  • Kentucky, New Jersey, Pennsylvania, South Carolina and Washington to be part of a group of 24 states likely to tap "rainy day" funds to balance their FY 2002 budgets;

  • Twenty-two states that have implemented belt-tightening measures including hiring freezes, cancellations of capital projects and travel restrictions. California, Illinois, Kansas, Maryland, Nevada, North Carolina, Rhode Island and Virginia are considering hiring freezes or restrictions. Colorado, Maryland, New Jersey and Virginia have delayed or cancelled capital improvement projects;

  • Six state legislatures will convene or have convened in special sessions to address budget problems. Several others are considering special sessions. Connecticut and Iowa have already held special sessions in an effort to address budget shortfalls. Alabama, Arizona, Florida, Hawaii and Nebraska have sessions planned. Louisiana and Oregon have considered special sessions as a possibility.
The National Governor's Association (NGA) in conjunction with the National Association of State Budget Officers also released a survey on the bleak future of state economies sighting the problem as "$15 billion and growing...unprecedented state responsibilities for homeland security are exacerbating serious fiscal conditions." According to the survey, 35 states face a total budget shortfall of more than $25 billion for this fiscal year—the worst since 1992. In order to balance budgets, states face the dilemma of cutting spending or increasing taxes as the only logical solution.

NGA found states to be addressing revenue shortfalls in different ways:

  • Florida, having just ended its second special session this year with a vote, has cut $1 billion from its $50 billion budget—mostly from schools, social services and similar programs.

  • Arizona, deep in debt and trying to erase its deficit of $1.6 billion over two years, has cut social service programs and funding to prisons. Arizona also instituted a six percent cut to nearly every state agency except public safety and schools. In an effort to cut spending, the state has eliminated the Commission on Indian Affairs, a liaison between tribes and the state.

  • New Jersey Governor-elect Jim McGreevey is considering having the state borrow up to $2 billion from the state's federal tobacco settlement to help ease an almost $2 billion shortfall.

  • Minnesota Governor Jesse Ventura has considered taxing goods and services that are not currently taxed. He is said to be considering cutting spending in all areas before pushing for a tax increase.

  • Ohio may be allowed to participate in a lottery that could bring an estimated $41 million each year. Officials want to borrow from both the state's savings account and tobacco settlement money.

  • Illinois has cut $450 million from its budget, causing huge losses in school construction money which will leave over one hundred schools without adequate funding for projects.

  • Tennessee, facing a $300-$400 million shortfall, has cut almost $110 million in state services by delaying much-needed repairs to state buildings and facilities. Tennessee has also shut down state-run parks in an effort to save dollars.
State fiscal conditions continue to deteriorate. Nearly every state is facing revenues that have fallen far below original estimates, resulting in net budget shortfalls estimated to be as high as $25 billion. This figure represents more than three-quarters of what states earlier predicted their fiscal 2002 ending balances would be. While this widening gap between revenues and expenditures increases, states are making serious fiscal adjustments by cutting enacted budgets, delaying projects, utilizing rainy day funds, and increasing taxes. Without an investment from the federal government or significant support, state budgets are likely to continue to decline well in FY 2003 and beyond.

To contact Heather McTavish, please call 202-408-9541 or send e-mail to hmctavish@apwa.net.