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Here’s the “Enormous Problem” Facing States: Ravitch

Daily Ticker

The budget crisis of state and local governments has been the subject of much discussion and debate. Former New York Lieutenant Governor Richard Ravitch says the biggest drivers of the crisis are rising costs for health care and retirement obligations.

But Ravitch, currently co-chair of the non-profit, non-partisan State Budget Crisis Task Force, also points a finger at Washington D.C.

“Whether it’s the Ryan plan, Bowles-Simpson or the Obama plan, they all include things that accentuate problems at the state and local government level,” he says. “Fiscal stress always rolls downhill.”

Related: Whitney: The 'Shocking' Details Behind California's Budget Surplus

To that point, Ravitch says federal budget pressures are being pushed down to the state level where, in turn, they are passed along to local governments. As a result, cities like San Bernardino, California, are filing for bankruptcy and/or breaching contracts to pay pensioners and “disinvesting” in infrastructure, he observes.

“Ultimately as the quality of social services and education and physically imperiled infrastructure grow at the local level, there will be increased pressure on the federal government to do something about it,” Ravitch says. “But most of the focus in Washington is on how to solve the federal budget crisis.”

Ravitch says his “biggest concern” about state finances is the failure of D.C. politicians to even consider them. “In fact, if you look at the sheer politics, no member of Congress’ election or reelection is dependent on whether or not the [local] school district lays off 20% of teachers because the Congressperson will blame the state government,” he says.

Asked whether it’s reasonable to expect any change in that dynamic anytime soon, Ravitch replies: “Only with the right kind of presidential leadership. I don’t know any other way.”

In other words, don’t expect any relief for the states anytime soon.

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