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Budget and Revenue Committee

March 6, 2006

The Honorable Senator Judd Gregg Chairman, Budget Committee United States Senate 624 Dirksen Senate Office Building Washington, DC 20510

The Honorable Kent Conrad Ranking Member, Budget Committee United States Senate 624 Dirksen Senate Office Building Washington, DC 20510

Re:      FY 2007 Budget Resolution 

Dear Chairman Gregg and Senator Conrad:

There is no question that the federal deficit must be reduced and eventually eliminated.  That is the long-standing official position of the National Conference of State Legislatures and the fervent belief of state legislators throughout the country.  Although the nation’s state legislators undeniably support the goal of deficit reduction, we are increasingly troubled by the approach that federal officials have taken toward reaching that objective.  We are concerned that recent deficit reduction efforts, including the Deficit Reduction Act of 2005, have disproportionate effects on state-federal programs, that these decisions are made with little apparent regard for their consequences on state budgets and priorities, and that these steps are taken with no serious consultation with state legislators. 

Preparation of the Fiscal Year 2007 federal budget offers an opportunity to treat state officials as true partners in the daunting but essential task of reducing the federal deficit and to construct a new prototype for consultation and collaboration among members of Congress and state legislators.  As you prepare the Senate FY07 budget resolution, therefore, we ask you to meet with us to consider the consequences of this year’s budget decisions on state fiscal systems.  In particular, we urge you to use the FY07 budget resolution to accomplish the following.

1. Reduce the volume of unfunded federal mandates.  Avoid the creation of any new unfunded federal mandates.  Federal unfunded mandates reached $51 billion for FY 2004 and FY 2005 combined and will most likely be in the range of $20 to $30 billion in FY 2006.  As a first step in this effort, NCSL urges Congress to:

• Fully fund implementation of the REAL ID Act.  The budget resolution should include legislative language affirming the federal government’s commitment to fully fund implementation of the REAL ID Act.
• Fulfill Your Recent Promise and Provide Full Funding for the Individuals with Disabilities Education Act (IDEA).   Despite a recent reauthorization and commitment to establish a new glide path to reach a promised funding level, the federal government continues to shortchange children with special needs.

2. Close the gap on federal unfunded mandates or relax the requirements that create the mandates.  NCSL recommends that the FY 2007 budget resolution include language recommending joint state-federal review of programs that include unfunded federal mandates for purposes of exploring substantive and fiscal issues that would reduce or eliminate unfunded or underfunded federally-mandated activities.

3. Include language in the FY2007 budget resolution directing each of the standing committees with jurisdiction to conduct hearings and undertake studies of each intergovernmental mandatory and entitlement program to examine program services and administration. This should be done in collaboration with state and local elected officials and their national organizations. This is an appropriate and responsible way of exploring possible efficiencies within existing programs, while ensuring populations served by these programs will not be ignored or overlooked. Our experience with FY 2006 reconciliation changes to child support enforcement and child welfare programs demonstrates the shortcomings of using a process dictated by savings targets rather than policy preferences and our desire for a more collaborative process.

4. Reinstitute fiscal discipline tools and apply them to both revenue and mandatory/entitlement programs.

NCSL fully understands the challenges of crafting a budget resolution and carrying out an appropriations process that is fiscally sound. State legislators confront the same challenges each year. Our membership is fully prepared to work with you on each of the above recommendations and to strengthen the intergovernmental partnership that marks so many programs for which both levels of government are responsible.  For additional assistance and information, please have your staff contact Molly Ramsdell (202-624-3584; molly.ramsdell@ncsl.org) in NCSL’s Washington, D.C. office.

Respectfully,                                        

Senator Steven Rauschenberger Assistant Republican Leader, Illinois Senate NCSL President

Senator Leticia Van de Putte Chair, Democratic Caucus, Texas Senate NCSL President-elect

cc: Members of the Senate Budget Committee