America faces an intergovernmental fiscal and relationship crisis

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From The Beacon, September 2012

The Great Recession and the ensuing fiscal crisis have unmasked a serious national problem that has been festering for years: the dramatic erosion of effective and cooperative federal-state-local governmental relations.

The fracturing of our system of American federalism has been years in the making. At its most basic level, federalism is defined as a system of shared governance, where several levels of government retain sovereign control over certain duties and responsibilities and cooperate in the exercise of their power to achieve an integrated, functioning system. Historically, this has meant that our national, state and local governments have worked together and not at cross purposes.

That has been the goal, mostly met, for most of our history. Of course tensions always come with power-sharing relationships, and these tensions can turn into real conflict, especially when one level of government seeks to mandate new unfunded responsibilities on another level, tries to preempt the traditional authority of another entity, or diverts or reduces resources (especially tax revenues) from another governing body, either directly or indirectly.

Here in Massachusetts, cities and towns are used to engaging with state leaders over unfunded mandates, the preemption of local authority, or the ability to raise local revenues or receive adequate local aid. These debates and discussions are common because that is how our intergovernmental system works – a constant push and pull. Even during the most difficult and challenging periods, however, there is ongoing dialogue and an underlying respect for the positive and essential role that local and state governments serve, as well as an understanding that everyone – from a town meeting member to a councilor to a selectman to a mayor to a manager to a legislator to the governor – all serve the same people and must work together.

Our formal structure includes the Local Government Advisory Commission (staffed by the MMA), a group of elected and appointed local leaders who meet monthly with the governor or lieutenant governor and agency heads to discuss major policies and their impact on cities and towns. Our informal structure includes the countless relationships between municipal officials and legislators and statewide officials. And of course, the MMA serves as the official advocate for cities and towns before the Legislature and Executive Branch.

Each state likely has similar formal and informal approaches to making the state-local relationship work as effectively as possible.

Making the leap from local-state to connect to the federal government is much more challenging. Indeed, our system of federalism has become unbalanced, especially in the past two or three decades, as the federal government has grown and centralized power, and as Washington, D.C., has become increasingly politicized, polarized and locked in stalemate.

Decisions (and non-decisions) on Capitol Hill will impact every state and locality in the nation. The federal budget crisis threatens to have the same impact on communities and states that global warming is having on the environment – and widespread negative results will touch everyone. Yet it is chilling to watch the fiscal standoff in Washington and listen to the rhetoric from each party – and note that there is no real or lasting mention of the extraordinarily harmful impact that deep tax cuts or spending cuts will have on states and local governments.

In other words, the fiscal crisis has become, at least on the national stage, isolated and compartmentalized. This is the opposite of what our system of federalism demands.

There must be a full, collaborative process to understand the impact that solving the U.S. budget crisis will have on cities, towns and states. And there must be an equally collaborative process to decide how to proceed. Municipal leaders, state legislators and governors should be consulted and involved in shaping the fiscal solutions that must come. Otherwise, a fiscal solution for the federal government will almost inevitably spell fiscal disaster for localities and states, and the U.S. will plunge back into recession.

The sad thing is that we don’t even have an official governmental forum to raise these issues. Many years ago, the Reagan and then Clinton administrations (yes, both parties) had a hand in weakening and then eliminating the U.S. Advisory Commission on Intergovernmental Relations, a once-influential independent, bipartisan agency headed by a panel of respected federal, state and local leaders, which analyzed major policy issues through a cooperative intergovernmental lens. Because the ACIR was direct and clear in identifying unfunded mandates, preemption of authority, and negative fiscal impacts, leaders in both national parties were uncomfortable with the pressure and found that it was easier to abolish the agency than to heed its warnings.

Of course, local officials have the National League of Cities (the nationwide equivalent of the MMA), and states have the National Governors Association and the National Conference of State Legislatures – organizations that do outstanding work to advocate for a healthy and full-functioning intergovernmental system. But we need the federal government to show the same interest and the same respect for the importance of true federalism.

Over the summer, National Academy of Public Administration and the American Society for Public Administration, two nonpartisan groups devoted to making government function as effectively as possible at every level, jointly crafted a memo to national leaders on “America’s Invisible Governmental Crisis.”

Written by a bipartisan group of highly respected leaders, the memo underscores the fiscal peril that faces the United States if our national officials fail to integrate states and localities into the deficit-reduction and budget-balancing decisions that must be made.

Interestingly, the memo identifies a crisis that parallels our fiscal crisis: the breakdown of federalism. One of their major recommendations is a “back-to-the-future” suggestion: the creation of a strong, bipartisan, high-level intergovernmental policy council to analyze major policy areas that require interaction and cooperation between federal, state and local governments, and to “address the strengths and weaknesses of the intergovernmental system, and, in particular, the adequacy of the resources to achieve desired policy outcomes.”

That sounds like a conversation that should be taking place right now.

More than ever, we need our federal leaders to recognize that the only way the United States will overcome its fiscal challenges is through a real and robust partnership. Creating a U.S. Intergovernmental Policy Council may seem like a very small first step, but it is an important one.