After “Fiscal Cliff” Deal, Sequestration Poses Serious Threats to States

The nation let out a collective sigh last week when a deal was made just hours before the country went toppling over the so-called “fiscal cliff.” Although the agreement passed by Congress and signed by President Obama provides temporary reprieve, it also left much to be desired. While the agreement ultimately reflected the public’s mandate to raise taxes on the super-rich, it also failed to define those who make between $250,000 and $400,000 as “wealthy,” extending all of their Bush-era tax rates permanently. This misclassification contradicts public opinion and will result in a dramatic loss in revenue, setting a dangerous precedent. Perhaps the most threatening decision made was to make no decision at all on across-the-board spending cuts, known as sequester, for another two months. These automatic spending cuts pose a serious threat to states and localities.

With state revenues still recovering from the recession, most states continue to suffer from severe budget shortfalls. In addition to inadequate revenue streams, declining federal aid imposes an added threat to states. Last year, the Budget Control Act (BCA) set caps to “discretionary spending” including nearly $900 billion in cuts to states and localities. If sequestration goes into effect in March, federal aid to states will be cut by nearly 10 percent, on top of the cuts already imposed by the BCA. Already heading toward historic lows, cutting federal grants would shift more costs to the states for public services such as education, maintaining clean waterways, improving public transit systems, job training and placement, disaster relief, law enforcement and public safety. It is the states who educate our children, build our bridges and roads, protect the public safety, and care for our sick and ailing. Absorbing these costs would likely reduce the effectiveness of programs designed to protect our nation’s most vulnerable and stimulate the economy.

Without adequate funding, states risk reneging on the commitments they have made to the public, needlessly hurting families and putting the brakes on economic growth in the process. Under sequestration, state education funding to K-12 schools would be cut by $4 billion, making it harder to provide the quality education needed to thrive in a 21st century economy. Reduced investment in infrastructure would cause roads and bridges to begin to deteriorate. Cuts to the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), one of the most effective social programs, will mean fewer low-income pregnant women, infants, and young children will have access to nutritious foods.

With the federal fiscal fight now destined to continue to play out through the early part of 2013, state legislators, citizen activists, and progressives across the nation should stand together to insist that any future deal does not needlessly cut essential programs disguised as “discretionary spending.”