Federal Government Shutdown

Dear Majority Leader Reid, Senator McConnell, Speaker Boehner, and Representative Pelosi:

The nation’s governors call on Congress and the Administration to avoid a federal shutdown, resolve the budget impasse and put the federal budget on a sustainable and long-term fiscal path.

Over the past several years governors have made tough choices to balance our state budgets and do more with less. We worked to redesign state government while simultaneously improving the delivery of services and reducing spending. As a result of these efforts, state economies are growing and unemployment is falling.

Unfortunately, the possible consequences to state economies of a federal shutdown or not increasing the national debt limit are severe. States are partners with the federal government in implementing most federal programs. A lack of certainty at the federal level from a shutdown therefore translates directly into uncertainty and instability at the state level. That uncertainty can lead to the suspension of programs and services, increased borrowing costs or even layoffs – all actions that will weaken our economies and potentially stall the national recovery.

Congress and the Administration need to determine how best to solve federal fiscal issues. As you work to resolve your differences, governors recommend you adhere to the following principles:

• Federal reforms should be designed to produce savings for both the federal government and states;
• Deficit reduction should not be accomplished by shifting costs to states or imposing unfunded mandates;
• States should be given increased flexibility to create efficiencies and achieve results; and
• Congress should not impose maintenance of effort provisions on states as a condition of funding.

Sustainable economic growth requires certainty and predictability from all levels of government. Short-term budget solutions avoid the pitfalls of a shut down, but fail to provide the level of stability needed for long-term growth and prosperity. We look forward to working with you to avoid a shut down in the short-term while crafting long-term solutions to spur continued prosperity.

Sincerely,

Cc: President Barack Obama, President of the United States