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Sequestration: The Last Straw? (Karen Kunz, 2013 ABFM Conf)

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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, 2013 ABFM Conf)

  1. 1. SEQUESTRATION: THE LAST STRAW? Karen Kunz West Virginia University
  2. 2. States are still grappling with the effects of the recession
  3. 3. The end of an ARRA: The American Recovery & Reinvestment Act of 2009
  4. 4. Earmarks to States, 2000-2010 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* In $billions * Estimate
  5. 5. The last straw?
  6. 6. The big picture • Infrastructure • Community Development • Pensions
  7. 7. From: the New America Foundation http://newamerica.net/publications/policy/the_infrastructure_deficit,
  8. 8. $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Infrastructure Community Development Environment Decreases in earmarked funding by category, FY 2000-2009 (in $millions, adjusted for inflation)
  9. 9. 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/
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. The good news There is one bright spot… The Affordable Care Act

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