Archive for the ‘Public Administration’ Category

We have been inundated with breaking news, commentary, and predictions regarding the recent congressional/white house deliberation on raising the debt ceiling.  Whether or not you watched with interest or tuned out the coverage, the results of this debate and the agreement reached will have considerable consequences that will be felt by everyone in due time.  In summary, the bi-partisan package calls for a trillion dollars in spending cuts over the next ten years to balance the trillion dollar debt ceiling rise.  This sounds simple and reasonable enough on face value.  In action, however, determining where these cuts will be made and who they will ultimately affect will be decided by a divided Congress that contrasts over the parties’ separate ideological platforms.

There are certain stalwarts of the annual federal spending that remain somewhat untouchable in our current political climate. These cost centers typically include national defense and security, social security, Medicare, Medicaid, and Children’s Health Insurance Program (CHIP), benefits for Federal retirees and veterans, and so-called safety net programs.  Together these cost centers comprise 88% of annual federal spending.  The remaining 12% include an array of public services that help maintain our roads, protect our environment, and ensure safety practices.  This 12% equals to roughly $4.2 billion in annual spending and is arguably the most nonessential of the spending categories.  Even if these programs were cut entirely, however, it would amount to only a small fraction of the promised 1 trillion in cuts.  So where will the other $994 billion be cut?

One probable candidate for spending reductions is grant funding, in the form of both federally administered grants and what is commonly referred to as a pass-through.  A pass-through is federal funding that is appropriated to states to either support state-level programs and/or reallocate to smaller units of government.  Federally administered grants and pass-through state funding represent around $400 billion in funding annually and are the primary sources of grant monies for local units of government.  As such, their potential reduction has significant ramifications.

A second viable candidate for spending cuts is the earmark, a monetary amount designated by a Congressional Representative for a particular project and tacked on to appropriations bills for approval.   In fiscal year 2011 alone, over 40,000 earmarks requiring over $131 billion in funding were requested.  In the last two years, earmarks have been given increasing attention as several efforts have been made to eliminate their existence in Congress altogether.    As Washington’s purse strings tighten and the political parties draw their lines in the sand, earmarks will surely come under fire again and reduce significantly.   While the legitimacy of earmarks is sometimes suspect, it is also true that the benefit they provide to communities and jurisdictions throughout the United States is undeniable.  Earmarks are one of the few, and arguably only, major sources of funding available to agencies for high cost projects.  The result of reducing and/or eliminating earmarks in the next several fiscal years is that local units of governments have one less source of funding available to support costly and oftentimes critical projects.

The combined expense of public service programs, pass-through funding, and earmarks is approximate to the trillion dollar in cuts promised.  If these areas are indeed reduced the real victims will be local units of government. Public safety providers and public administrations will feel the sting of the trillion dollars in cuts more than federal agencies and state governments, as ultimately money trickles down.  The less money there is to start with, the less money will reach the bottom rung of the governmental ladder.  In essence, the next decade will be a trying time for local and regional governments as they seek funding to replace aging infrastructure, manage changing needs, and remain responsive to their citizens’ needs.  While these predicted reductions are at this time only speculation, it is now more important than ever for local governments to think outside the box and seek new sources in terms of funding.