Following Wall Street and Detroit, the nation’s governors have joined the growing line on Capitol Hill—begging Congress to save their states from looming fiscal shortfalls. The National Governors Association sent a letter to Congressional leaders asking states to be included in the next economic stimulus package.
New York Governor David Patterson made the plea in person before the House Ways and Means Committee yesterday: “As part of a comprehensive second economic stimulus package, states need direct and immediate fiscal relief.”
But not all governors are looking for a federal handout. South Carolina Gov. Mark Sanford offered Chairman Rangel’s committee a different view—begging Congress not to give states more federal dollars. Instead, he called for greater freedom and flexibility from federal mandates.
In his testimony, Governor Sanford warned that a federal bailout would only fuel further out-of-control state government spending:
Essentially, you’d be transferring taxpayer dollars out of the frying pan – the federal government – and into the fire – the states themselves. I think this stimulus would exacerbate the clearly unsustainable spending trends of states, which has gone up 124 percent over the past 10 years versus federal government spending growth of 83 percent…
…State debt across the country has also increased by 95 percent over the past decade. In fact, on average every American citizen is on the hook for $1,200 more in state debt than we were 10 years ago. There seems to be no consequence, and indeed a reward, for unsustainable spending growth by states. In effect, sending $150 billion more to states would produce another layer of moral hazard – already laid bare at the corporate, individual and federal levels in recent years.
Rather than a bailout, Governor Sanford urged Congress to give state greater freedom and flexibility from government mandates and regulation:
Give us more flexibility. Give us more in the way of control over the dollars we already have and less in the way of costs. Give us more options, not more money with federal strings attached.
Among the costly mandates Governor Sanford referenced was No Child Left Behind. Designed to help improve learning opportunities for students, NCLB comes with a heavy compliance burden. According to the Office of Management and Budget, NCLB increased the annual paperwork required of state and local governments by 6,680,334 hours (or $141 million). That means it would take one person a miserable 762 years to complete just one-year worth of NCLB compliance!
The result of this red tape is that more dollars are consumed by the bureaucracy and less is actually available for use in the classroom.
There is a better approach. Governor Sanford and leaders in other states should call on Congress to adopt policies like the A-PLUS Acts, which would let states opt-out of No Child Left Behind and receive their share of funding in a block grant with less regulation. Doing this would give state and local leaders the freedom and flexibility to use scare tax dollars on local initiatives to improve opportunities for disadvantaged children.
Giving states more flexibility in how federal funds are used makes more sense than another federal bailout.