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"Sequestration: The Last Straw?" presentation by Karen Kunz, West Virginia University, presented during "Sequestration's Impact on State Budgets" plenary session, 2013 ABFM Annual Conference, October 3, 2013
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SEQUESTRATION: THE LAST STRAW?Karen Kunz
West Virginia University
States are still grappling
with the effects of the
recession
The end of an ARRA:
The American Recovery & Reinvestment Act of 2009
Earmarks to States, 2000-2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
In $billions
* Estimate
The last straw?
Housing crash
Stock market crash
Earmark moratorium
End of ARRA
Continuing resolutions
And on top of all that…
SEQUESTRATION
The big picture• Infrastructure
• Community Development
• Pensions
From: the New America Foundation http://newamerica.net/publications/policy/the_infrastructure_deficit,
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
Infrastructure Community Development Environment
Decreases in earmarked funding by category, FY 2000-2009 (in $millions, adjusted for inflation)
Transportation funding
The Highway Trust Fund is not included in sequestration, however….
• general fund transfers resulting from MAP-21 cut by $471 million
• Transit program new start capital grants, supported from general fund revenue, cut by $156 million
• FHWA emergency relief funds cut $136 million (8.2%)
• TIGER grants reduced by $41 million.
Source: Associated General Contractors of America, http://news.agc.org/2012/09/25/sequestration-impacts-on-transportation-funding/
The current five-year [transit] capital needs in Northeastern Illinois alone are $10 billion, yet the recent Illinois Capital Bill provides only
$2.7 billion for the entire state
As critical as the condition of Illinois’ infrastructure is, it is
unlikely that the state will be able to allocate additional
resources to fix the problems in the foreseeable future. This
is because the growth in spending for pensions, Medicaid,
and debt service will out-pace the anticipated growth in
Illinois’ resources.
In Illinois
Community development
• CDBGs and other block grants
5% reduction in 2013, loss of $230 million
• Housing
loss of $404 million
10% loss of funds for homeless assistance
5% reduction in funds for public housing
Source: CBPP, http://www.cbpp.org/cms/?fa=view&id=3892
We’re living longer…
Yet state pensions are more underfunded than ever
• Public employee pensions underfunded $980 billion• On average, state pensions are only 48% funded, not the
70% estimate of many states
State and local government funding gap: $3,1 trillion• $2.3 billion in assets - $5.4 trillion in obligations = 3.1
trillion gap
The good news
There is one bright spot…
The Affordable Care Act
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