The Senate Appropriations Committee did not approve an amendment Thursday that would have prevented the federal government from bailing out states and localities that are in default, are at risk of default or are likely to face bankruptcy.
The amendment was part of the fiscal year 2014 Financial Services and General Government Appropriations Act, which was approved by a vote of 23 to 7 Thursday. The amendment, introduced by Sen. Lindsey Graham, R-S.C., on Wednesday, would apply to all appropriations bills, not just the one for financial services appropriations.
The National Association of Counties sent an email message to its members Thursday informing them that it opposes the amendment. The group also sent an email to all legislative directors whose members serve on the Senate Appropriations Committee urging the lawmakers to vote on the amendment.
NACo said the amendment creates “significant uncertainty” because there is no definition of “at risk of defaulting” or “likely to default.”
“Local governments as a whole have weathered the recent financial crisis but are still just showing modest signs of recovery, losing all federal support would only hamper those efforts,” NACo wrote in the letter to the legislative staff directors.
According to a July 24 Congressional Research Service analysis of the bill, funds appropriated could not be used for purchasing or guaranteeing any asset or obligation, issuing lines of credit and providing direct or indirect access to any affected government entities.
NACo said the amendment would delay necessary funding to all recipients in a wide array of programs. For example, the amendment requires that, before the federal government provides funds to a local government, every agency that receives funds in any of the twelve appropriations bills perform a credit assessment of that government to ensure it is not “at risk of default.”
In order to receive credit worthiness assessments, each agency for each program would have to collect and review the financial stability of the localities with which they may work.
“This would create significantly more bureaucracy for 99% of local governments that need, receive and use federal funding,” NACo wrote.
