Top 5 Issues for 2016: Federal Affairs

CSG Director of Federal Affairs Andy Karellas outlines the top five issues in federal affairs policy for 2016, including fiscal uncertainty, federal regulations and intergovernmental coordination, unfunded mandates, and the Trans-Pacific Partnership Agreement. 

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Fiscal Uncertainty
State and local governments rely heavily on federal appropriations and authorization processes to pursue grant programs and fulfill key policy objectives. Almost 30 percent of all estimated state expenditures came from federal funds in fiscal year 2013. Uncertainty, inaction or delays associated with appropriations in Congress continue to cause uncertainty and make it more difficult for state and local governments to manage fiscal resources and to plan strategically. Congress has not approved all 12 appropriations bills on time since 1996, and it has relied on the use of stopgap continuing resolutions, also known as CRs, and omnibus bills to provide federal appropriations. The pattern of patchwork funding and the recurring threat of government shutdowns have made it difficult to predict the flow of funds to state and local governments.

Federal Regulations and Intergovernmental Coordination
The federal government regularly issues a variety of rules and regulations that have a direct economic impact on states. Many of these regulations were processed with limited consultation with state and local officials. Absent the Advisory Commission on Intergovernmental Relations, which was closed in 1996 and was the framework for the state and federal relationship in the rule-making process, both federal and state leaders must identify opportunities to
increase their coordination and improve the intergovernmental relationship.

Election Year Politics and Presidential Transitions
Heading into a presidential election year, many policy experts do not expect Congress to take on major legislation or policy initiatives. The inaction or delay of certain policies could cause strain among some state and local governments and their stakeholders. Moreover, thousands of political appointees will transition away from their respective federal agencies and offices, which could result in a delay of certain programs or a complete change of course.

Minimizing Unfunded Mandates
An assortment of new rules and regulations issued at the federal level can have a direct economic impact—including major rules that cost more than $100 million. The federal government frequently issues these regulations—or mandates—without quantifying and evaluating the potential costs. Moreover, the federal government often does not provide additional funding to cover new regulations. According to the White House Office of Management and
Budget, these “unfunded mandates” cost states, cities and the general public between $44 billion and $62 billion each year.

The International Trade Agenda and the Trans-Pacific Partnership Agreement
The passage of Trade Promotion Authority provided President Obama with the ability to conclude the negotiations on one of his major trade initiatives— the Trans-Pacific Partnership agreement, or the TPP. The TPP is a multilateral trade agreement that was negotiated with 11 other nations, with the goal of increasing trade and investment between partner nations. Under the Trade Promotion Authority, Congress can approve or reject the trade agreement in
an up- or down-vote, which will tentatively occur later in 2016. Exports of U.S. goods to TPP nations totaled $698 billion in 2013, or about 45 percent of total U.S. exports. A 2012 analysis by the Peterson Institute for International Economics estimated that a TPP agreement could generate nearly $124 billion in new U.S. exports to those nations.

Top 5 Issues for 2016: Federal Affairs