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Governors Meet in D.C. Amid Deficit Crisis

Governors at the annual NGA meeting take their message to the president and Congress asking for federal relief and changes to Medicaid system.

WASHINGTON, D.C. -- Governors at the 2003 winter meeting of the National Governors Association in Washington, D.C., this week are clearly focused on the states' combined $80 billion deficit.

Kentucky Gov. Paul Patton (D), NGA president, made a clear call for federal subsidies to help states handle the imminent crisis.

Calling the situation "this worst fiscal crisis since WWII," Patton said serious funding cuts are inevitable and will eventually impact the nation's economy.

"The state fiscal crisis will be a major drag on the national economic recover," he told his colleagues, adding that support from the federal sector will be critical. "This crisis is not about budgets, it's about people."

Patton said services such as health, safety and education are on the chopping block in most states where deficit spending is constitutionally prohibited.

More than 50 governors from states and U.S. commonwealths and territories attended the meeting that includes visits to members of Congress and time with the president. Patton made it clear that many members would carry the message of fiscal relief to Capitol Hill in the hope that support for states would be made part of any federal economic stimulus package.

Although Patton said there was bipartisan agreement about the importance of federal assistance, Sen. Larry Craig, D-Idaho, a featured speaker at Sunday's session, offered a different point of view.

He called the current proposal before Congress a "war time budget" that contains enhanced demands on the federal government for extraordinary spending. In addition, he said states had already received nearly unprecedented fiscal support.

"Uncle Sam has not been a Scrooge to state governments," he said, noting that states have received "the highest level of support since the 1980s," mostly in the form of grants and aid. In 2002, 17 percent of the federal budget was earmarked for state programs, he added. He predicted that money from the new Homeland Security Department would further benefit states.

Craig also blamed spending during the "boom times" of the 1990s for the current crisis. He said state spending rose precipitously and, when the downturn hit, states were forced to deplete any surpluses they had.

Research from the NGA, however, paints a different picture. State spending during the more affluent period of 1995 to 2001 increased 6.5 percent, and most of the hikes in spending were related to education and Medicaid, the NGA's research found.

"The truth is that governors and legislatures were quite responsible during that era when the strong economy produced growing state revenue," Gov. Patton said in written remarks.

Although Craig placed responsibility for the shortfalls in the halls of state governments, he praised states for leadership in other areas.

"State government is the great incubator of new ideas and change," he said. "You lead and we follow."

Gov. Gary Locke later expressed his disagreement with Craig's approach as he talked with reporters. He cited the pressures put on states after the extraordinary events of 9-11, saying that states had conducted business in a fiscally responsible manner. He also questioned the sincerity of the Bush administration in conducting meetings this week with governors.

He said the "ground rules" required that all questions to the president be submitted in advance, in writing -- including the script for the "toast" at the evening's dinner at the White House.

Although state deficits dominated the opening day of the conference, governors also focused on education, specifically the "No Child Left Behind Act," and retooling the Medicaid system to relieve states of some of the financial burden of that costly program.