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State Budget Crisis: Alice Rivlin Stresses Need For Intergovernmental Relations

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Former Federal Reserve Vice Chairwoman Alice Rivlin
Former Federal Reserve Vice Chairwoman Alice Rivlin

WASHINGTON -- Increased communication between the federal government and states is being emphasized as one of the ways to solve the budget crisis threatening state governments.

The State Budget Crisis Task Force -- a privately funded study of state finances founded by former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch (D) -- recommends reviving a federal agency dedicated to intergovernmental relations in order to allow state and local leaders to weigh in on federal fiscal policy. The task force, which issued a report Tuesday, said that state governments are facing growing fiscal pressures including a $4 trillion shortfall in pension and health care costs, declining tax revenues and growing debt burdens, which could force austerity-based cuts leading to a dire impact on social service and public safety programs.

Former Federal Reserve Vice Chairwoman Alice Rivlin, a member of the budget crisis task force, told The Huffington Post that the former Advisory Commission on Intergovernmental Relations served as a forum for state and federal leaders, along with providing research on fiscal issues. Rivlin once worked as an economist for the commission.

"How do you gauge the comparative fiscal condition of governments?" she said.

Rivlin, a former budget director in the Clinton Administration, said with issues such as the federal budget deficit and cuts mandated under sequestration there is more of a need to study the impact of cuts on state governments. Rivlin and Ravitch both said that any cuts out of Washington have an impact on the states, including those to federal grants. In addition, cuts to various industries - including defense - have an impact on state revenues according to the report.

"The agency played a useful function," Rivlin said during a Tuesday press conference. "That function should be recreated with another name."

The commission was created during the Nixon Administration with prodding from former Sen. Daniel Patrick Moynihan (D-N.Y.), then Nixon's urban affairs adviser. The commission, which was defunct in the 1990s, consisted of members of Congress, the Cabinet, mayors, governors and state legislators. While an archived website for the commission exists as of 1996, Rivlin said she does not recall the agency being active during her time as budget director.

The agency was abolished primarily because of its size during budget cuts in the 1990s, she said. "It was a small agency," said Rivlin. "They were cutting back on small agencies without strong constituencies."

The top leaders of the National Governors Association agree with the need for increased communication. Delaware Gov. Jack Markell (D), the new NGA chairman, told HuffPost on Tuesday that he believes governors can provide input to federal leaders on the impact of cuts on state finances.

Oklahoma Gov. Mary Fallin (R), the new NGA vice chairwoman, told HuffPost after her election Sunday -- but before the budget report came out -- that she wants to make increased federal-state communication a goal while in her new post. She noted that she would like to see more communication on state economic "threats," particularly sequestration, deficit reduction, aerospace and revenue sharing.

"It is important that we all stand tall," Fallin said of governors.

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