The National Governors Association have sent two similar letters to President Obama and congressional leaders urging them to put their partisan bickering aside and come together to avoid the automatic, across-the-board budget cuts set to begin Friday.
"Indiscriminate cuts to federal programs create uncertainties that undermine state and local budgets, discourage private sector investment and slow our economy just as it is beginning to recover," said the letter to Congress, which was signed by Delaware Gov. Jack Markell, NGA's chair, and Oklahoma Gov. Mary Fallin, the group's vice chair.
The looming sequestration cuts, totaling $85 billion in the first year and $1.2 trillion over 10 years, could trigger an economic downturn, economists have warned. The sequestration cuts will reduce Build America Bond subsidy payments for some issuers.
"Over the past five years governors have made difficult decisions to balance their budgets during a time of decreasing revenues and increasing demand for services. But in contrast to the arbitrary cuts the sequester requires, governors changed the way our states do business and began the process of redesigning our state governments," they wrote to congressional leaders.
The letters were sent several days after the governors were in Washington for their annual winter meeting and met with President Obama. In their letter to the president, Markell and Fallin thanked him for the meeting and highlighted several other key issues outside of sequestration they are concerned with, including congressional passage of an online sales tax bill.
Recently, Congress reintroduced the Marketplace Fairness Act in both the House and Senate. Democrats and Republicans in both houses are determined to pass the bill this year.
"This important legislation would allow states to collect billions in taxes that are owed and help level the playing field for all retailers to ensure fair competition and create jobs," the governors told Obama. "The additional revenue will allow many states to fund shared priorities and mitigate some of the reductions seen in public sector employment."
The governors also urged Congress and the administration to set funding priorities and establish a long-term path that "creates certainty for states to plan and businesses to invest."
Specifically they said, deficit reduction should not be accomplished by shifting costs to states or imposing unfunded mandates; federal reforms should be designed to produce savings for both the states and federal government; 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.
Maintenance of effort provisions ensures grant recipients spend state and local funds for the same activities the grants are funding. Obama is set to meet with congressional leaders Friday afternoon, the same day the sequester cuts will go into effect. It is unclear if Republicans and Democrats will be able to come to a mutual agreement on how to avoid the budget cuts.
The letters to Congress were sent to Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky.; House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif.