Transcript and the Fiscal Cliff - State of Rhode Island General Assembly

The Federal Agenda:
and the Fiscal Cliff
Chris Whatley,
Washington Director
Overview
 Will
Washington fill the gap?
 The health reform dilemma
 What about jobs?
Stimulus redux…
Pressure is mounting to pass legislation in the
short-term to address the unemployment
crisis. Washington’s response would be
significantly smaller than the stimulus, but
could include a mixture of spending measures
and tax cuts, likely in the range of $200-400
billion in size. Much of the funding could
come from unused TARP funds.
Prospects for Fiscal Relief…
There is a growing crescendo of support from
economists, labor leaders, and others for
additional fiscal relief for the states. The public
response to the stimulus has been
underwhelming, but state and local “jobs saved”
have been the biggest driver among the among
the 640,000 jobs created or saved by the
Recovery Act to date.
How much help…
There is unlikely to be enough political will to
provide the magnitude of state fiscal relief that
was included in the Recovery Act, but it is
increasingly likely that enhanced Medicaid
payments (FMAP) will continue for an additional
6-18 months beyond the end of 2010. This
could deliver $100-$300 million in additional
fiscal relief to Rhode Island through FY2012.
The health reform dilemma…
States may trade short-term fiscal relief for
long-term obligations. The bill passed by the
House includes $23.5 billion to extend
enhanced FMAP through the end of FY2011
(six more months), but states will have to
cover over $50 billion ($33 billion net) in new
costs over the next ten years. States also
lose the ability to reduce Medicaid spending
in the face of future budget crises.
Looking to the Senate…
All eyes are on the Senate as nothing else can
move until health reform is voted out. While
the Senate has not included enhanced FMAP
in their bill, Senate leaders seem committed
to extending FMAP through separate
legislation. Compared to the House bill the
Senate version would cost states $25 billion
over ten years. It also includes much more
flexible maintenance of effort rules.
What about jobs…
While the stimulus may have blunted the
recession and saved the jobs of hundreds of
thousands teachers, police officers, and other
public employees, there is wide
disappointment in the level of job creation in
the private sector and a growing political
imperative to act.
Tracking green jobs…
The Recovery Act included over $100 billion
to promote energy efficiency and renewable
energy. The Center for American Progress
estimated that these investments could yield
over 2 million “green jobs”. However, only
13,000 such jobs have been created through
stimulus funds as of the end of October with
none of them in Rhode Island.
Green jobs in New England…
Connecticut = 37
Maine = 147
Massachusetts = 112
New Hampshire = 38
Rhode Island = 0
Vermont = 24
The coming jobs bill…
1) Infrastructure Funding – Proposal to frontload a shortterm transportation bill with up to $200 billion in spending.
2) Small Business Loans – Proposal to use $50 billion from
remaining TARP funds to spur small business lending.
3) State Fiscal Relief – $23-$70 billion in enhanced FMAP.
4) Employment Tax Credits/Work-Share Credits
5) Public Works Employment
6) Unemployment/COBRA Extensions
7) Additional Energy Efficiency Funding?
Taking the long view…
If the Recovery Act and any new jobs
legislation are going to deliver more than just
a temporary shot of adrenaline into the
economy, state and local leaders will need to
work together to use multiple streams of
federal funds to implement broader economic
development strategies.
Promising sectors…
1) Green Economy/New Energy – While jobs have been
slow in coming most spending has yet to happen. In
addition to formula funds and loans, the Recovery Act
includes over $20 billion in competitive grants for the sector.
2) Knowledge Economy – Over $18 billion in competitive
grant funding through the stimulus. Governors have begun
to set goals for the amount of funding their states will win.
3) Exports – American exports are rising at a rate of 17% rate
while RI exports are rising at 29%. According to the World
Bank investments in export promotion yield $40 in new
exports for every $1 in public investment.
The River Walk and the
Research Triangle…
For further assistance
contact CSG Washington
Chris Whatley
Washington Director
Tel (202) 624-5460
Email: [email protected]
www.STATERECOVERY.org