The culprit is a significant federal budget deficit -- perhaps as high as $200 billion -- stemming from the recession, mounting costs linked to the anti-terrorism efforts and the Bush tax cut.
"Between those two projects ... it is very clear that domestic discretionary spending is going to be squeezed -- and squeezed seriously," said Washington Post columnist David Broder, the panel's moderator, at the annual National Conference of State Legislature's fall conference in Washington, D.C.
States are seeking help from the federal government to deal with aggregate budget deficits that could top $60 billion this year. The recent election, in which Republicans took back the U.S. Senate and added to their majority in the U.S. House, complicates state fiscal-relief efforts, Broder said.
"Republicans on Capitol Hill feel almost as confident now as when they shook Democrats in 1994, and they can now proceed with their long-term project of reducing the scale of the federal government on the domestic side," he said.
This means that major state priorities -- such as an increase in the federal government's share of total Medicaid spending and more federal dollars for major transportation projects, student testing and election reform -- could lose out to the concerns of fiscal conservatives.
That may be the case, countered a senior Republican Senate staffer, but the political situation on Capitol Hill is murkier than it may appear from the election results.
"Given the current situation of the majority leader for the U.S. Senate, I think some of his leverage is going to be weakened," said Bill Hoagland, staff director for the Senate Budget Committee.
Hoagland referred to the firestorm that followed Senate Majority Leader Trent Lott's, R-Miss., recent comments supporting Sen. Strom Thurmond's, R-S.C., failed 1948 presidential campaign, in which he ran as a segregationist.
Hoagland said another factor that could persuade conservatives to loosen their purse strings is the narrow majority Senate Republicans will face come January. They will hold just a 51-49 majority.
This may force Republicans to push a relatively moderate fiscal agenda for fear of losing a centrist member or two to the Democrats, he said.
Republicans lost their majority in May 2001 in just that manner when Sen. Jim Jeffords, I-Vt., left the Republican Party to become an independent, partly over differences with conservatives on education funding.
Lott is unlikely to court such a scenario again, said Hoagland, and as a result, the fiscal concerns of state lawmakers -- which tend to be bipartisan concerns -- will have traction on Capitol Hill.
Hoagland noted a few areas of likely action when Congress convenes in January:
- An extension of unemployment benefits;
- Full funding of the $3.5 billion in anti-terror money promised to first-responders;
- Partial funding of election-reform efforts;
- Continued funding of transportation programs at current levels, despite a scheduled drop due to lower gas tax receipts.
But more direct and substantial fiscal relief for states seems unlikely. Hoagland was not optimistic about proposals to increase the federal government's spending on Medicaid and he made no mention of other fiscal relief proposals, such as revenue sharing or large block grants.
Utah's Speaker of the House, Marty Stephens, may have been speaking for generations of frustrated state lawmakers when he said states should not be subject to federally mandated programs.
"Simply fund the mandate," said Stephens. "If [the federal government] doesn't have the money to fund these mandates, stop passing the program."
