CSG Webinar: Beyond the Cliff: State Budgets and the New Congress. January 9, 2013
In the wee hours of the New Year, Congress passed the American Tax Payers Relief Act to eliminate or delay the worst elements of the so called “fiscal cliff” and, hopefully, keep the ship of state from teetering into a new recession. While the drama over the fiscal cliff may have passed for the moment, the new Congress faces another set of crisis-laden deadlines within two months that could have big implications for state budgets.
CSG’s webinar, “Beyond the Cliff: State Budgets and the New Congress” featured a discussion with top experts on the impact of the cliff compromise on the state–federal fiscal relationships as well as decisions that Congress may pursue in the coming months. The program began with a presentation by CSG’s Washington Director, Chris Whatley, on how the major provisions of the cliff compromise, including reductions in federal deductions for high earners, may impact state revenues in the short term. The presentation also touched upon risks to state general funds from upcoming debate over tax reform, with associated calls to limit deductions for state taxes, and entitlement changes, which could impact Medicaid funding.
Matt Salo, executive director of the National Association of Medicaid Directors, then noted that any effort to limit Medicaid expenditure will play out against the backdrop of an administration that is hoping all states will agree to expand their programs in line with the Affordable Care Act. The administration knows that if they sign off on any legislation that significantly cuts Medicaid spending it may encourage states to opt out of the Medicaid expansion.
Kathryn White, fiscal policy analyst for the National Association of State Budget Officers, noted that the uncertainty surround Medicaid, sequestration and tax reform in the upcoming votes in Congress is challenging states’ ability to make accurate projections. Fortunately, state revenues have begun to rebound and at least a few states have been able to husband reserves in the event that decisions in Washington lead to unexpected hits to state general funds.
Beyond the Cliff: State Budgets and the New Congress