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Budget 101 — A historical perspective and beating back the bad press

On today’s Edition of the DorobekINSIDER

Long after the economy rebounds, states will face financial problems that include rising health care costs and underfunded pensions, a task force of budget experts said. The group, led by Richard Ravitch and Paul Volker, found that states face long term challenges — Medicaid spending is crowding out other needs; federal deficit reduction is reducing the amount of federal money coming to states; and local governments are under stress too. States also have unfunded retirement promises that have yet to be dealt with.

While the extent varies significantly state by state, there can be no doubt the magnitude of the problem is great and extends beyond the impact of the financial crisis and lingering recession. In June 2011 Richard Ravitch and Paul A. Volcker assembled a Task Force to examine threats to near and long term fiscal sustainability in six U.S. states: California, Illinois, New Jersey, New York, Texas, and Virginia. While these states differ along many dimensions, including politics, policies, economies, and demographics, they share many of the same problems. On July 17th, 2012 the Task Force will release its findings, which highlight the following major threats confronting these and other state and local governments across the country:

  • Medicaid Spending Growth Is Crowding Out Other Needs
  • Federal Deficit Reduction Threatens State Economies and Budgets
  • Underfunded Retirement Promises Create Risks for Future Budgets
  • Narrow, Eroding Tax Bases and Volatile Tax Revenues Undermine State Finances
  • Local Government Fiscal Stress Poses Challenges for States
  • State Budget Laws and Practices Hinder Fiscal Stability and Mask Imbalances

The SEVEN stories that impact your life

  1. The General Services Administration has put a freeze on bonuses and has new hires. In a blog post, the acting GSA administratorDan Tangherlini said the agency is rethinking how we are structured and how our compensation process works, and he says he believe it is prudent to temporarily suspend new hiring and to cut executive bonuses to ensure they are aligned with the outcomes of our rigorous review. Tangherlini stepped in as administrator in April after revelations by the GSA inspector general of lavish spending at a training conference in Las Vegas two years ago. Tangherlini has also canceled numerous planned conferences and begun slashing travel budgets throughout the government by 30 percent.
  2. There is a Recovery Board Wall of Shame — and there are some new additions today. By law the Recovery Act recipients have to file quarterly spending reports. But many failed to do so. Nearly 46 percent of the Recovery recipients, it turns out, received grants from the Justice Department. For the most recent quarter, 303 reports were listed on the Recovery Board’s Wall of Shame. Of those, 139 involve grants issued by the Justice Department to cities, counties, police departments, sheriff’s offices and others. But it’s not all bad news. In fact the 303 reports on the Wall of Shame are the lowest number in the program’s history.
  3. Alaska Native Corporations are getting fewer contracts. Federal Times says experts attribute the sharp drop to new measures installed last year to curb the volume and size of sole-source contracts handed to ANCs. Those measures require contracting officers to justify contracts valued at $20 million or more that are set aside for ANCs, Indian tribes and Native Hawaiian organizations that participate in the 8(a) program.
  4. The Defense Department inspector general is warning that the Pentagon may miss its audit deadlines because of delays in system upgrades. Federal Times says the delays are in six modernization projects affecting financial management, logistics and other areas.
  5. There will soon be a newNational Science, Technology, Engineering and Math (STEM) Master Te…The President’s program would be comprised of some of the nation’s finest educators in STEM subjects. The STEM Master Teacher Corps would start with 50 STEM teachers and would be expanded over 4 years to reach 10,000 Master Teachers. These selected teachers will make a multi-year commitment to the Corps and, in exchange for their expertise, leadership and service, would receive an annual stipend of up to $20,000 on top of their base salary.
  6. A bipartisan cybersecurity bill could be voted on in the Senate next week. The Hill reports the bill will be updated to address controversial provisions of previous bills. In particular, Senator Joe Lieberman and his co-sponsors are working on changes to the information sharing and critical infrastructure sections.
  7. And on GovLoop — we are only 9 days away from our Next Generation of Government Training Summit. We’ve got more than 100 speakers lined up who are talking about everything from procurement to leadership techniques. You can still sign up. By going to our site nextgengovt.com

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