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The Sequester and the States

So now the National Governor’s Association is teaming up with President Obama to warn about the devastation to be wrought by the dreaded sequester (although Obama’s ham-fisted attempt to enlist GOP governors seems to have backfired). But wait, why should state governors care about cutting 2.3% of federal spending?

A few decades ago, the governors probably would not have cared. But today, the governors are addicted to federal cash – relying on it to plug their budget shortfalls. Take a look at this map from the Tax Foundation – it shows how much of each state’s revenue comes from federal sources. Mississippi tops the list with 49% of its general revenue coming from Washington; Alaska, by contrast, gets only 24% of its general revenue from the feds.

Virtually all of that money goes to programs and infrastructure projects that are administered at the state or local level and have no need for federal oversight. But by running the money through DC, you justify extra layers of bureaucracy and more opportunity for pork, earmarks, and rent-seeking. This whole sordid business of running money through Washington is unconstitutional. The enumerated powers of Congress do not include the power to fund state governments.

If the sequester happens, perhaps people will ask why state capitols should find themselves beholden to dysfunctional Washington for their fiscal health.