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Thoughts from Our Fellows: Advance the Nation's Long-Term Fiscal Health

September 30, 2021

September 30, 2021

Welcome to Thoughts from Our Fellows, a collection of recent activity regarding the Academy's Grand Challenge of each Month. In September, the Academy focused on Advance the Nation's Long-Term Fiscal Health. Below you will find:

  • The recommendations from our Election 2020 project regarding the first year of the new administration,
  • Recommendations from our fellows for the next few years of the Biden Administration,
  • Management Matters podcasts related to this grand challenge, and
  • The top 5 clicked articles on this grand challenge from our Management Matters online newsletter.
											 NAPA Fiscal Health 72
Election 2020

In November of 2020, the Academy published a paper on this topic as a part of its Election 2020 Project. The Working Group recommended the following actions for its paper, Building a Stronger Fiscal Foundation.

  • Fix a broken federal budgeting process by adopting a four-year strategic plan where the federal government articulates, anticipates, and budgets for its crisis finance and management roles.
  • Achieve fiscal sustainability by flattening the debt growth curve and planning for future shocks by implementing an intergenerational debt relief surcharge and a budget policy of planning for fiscal emergencies.
  • Adopt investments criteria that optimize an asset’s long-term performance by defining a standardized life-cycle cost analysis, developing comprehensive asset management strategies, and leveraging new technology.
  • Enhance financial management and controls by expanding the use of accrual accounting, tightening controls over obligations, and giving federal agencies opportunities to contribute toward fiscal health.
  • Build fiscally sound intergovernmental partnerships and when the economy recovers, federal aid can shift from providing funds to leveraging state, local, and private funding.
  • Continued federal intervention in the economy in response to Coronavirus through legislation and monetary policy.

Thoughts from Our Fellows

In addition to our Election 2020 papers, which focused on recommended actions for the first year of a new administration, the Academy also asked its Fellows

“What should federal, state, and local leaders do now and over the next few years to ensure fiscal sustainability? What should they prioritize?”

John Bartle: To achieve fiscal sustainability, where possible revenues should be tied to the benefits provided by expenditures. So for example, infrastructure can be financed by user fees, earmarked taxes, tax increment financing, and "value capture" that leverages private financing. The same is true for payments to individuals such as Social Security, Medicare, unemployment insurance, and workers compensation. Broader taxes such as income, sales and property taxes should fund public goods where there is no close tie between revenues and expenditures, such as redistributive programs.

Doug Criscitello: Fiscal sustainability is a long-term concept, so we need to be pursuing policies over the long run that not only move in the general direction of future primary deficit balance but also enhance economic performance, quality of life for all, and citizen trust in government. Elected officials would be wise to pursue those objectives by advancing policies that stimulate private capital formation, foster R&D, and develop critical public infrastructure – all with an eye towards strengthening economic growth and resulting opportunities for all Americans. To be sure, the notion of having a rising tide (in this case, of red ink) lift all boats evokes other omnipotent solutions offered through the years (e.g., tax cuts paying for themselves). But having a more productive economy may be a destination worth the journey. Unfortunately, we’re now headed into fiscal waters where there’s no proven chart we can follow to assure a safe voyage.

Katherine Willoughby: Much in the same way that scholars and practitioners at Minnowbrook 50 assessed the state of social equity in public administration research, teaching, and service (Blessett et al. 2018), so too today, public leaders at all levels of government must be called to action regarding fiscal sustainability. Below are several fiscal sustainability guidelines adapted from the Minnowbrook 50 principles regarding social equity. Similar to the “call to action” of social equity as envisioned by the 2018 conference participants, these guidelines can help move public leaders “beyond rhetorical acknowledgment toward meaningful action” regarding fiscal sustainability.

  • Fiscal sustainability is and must be promoted as a foundational anchor and not just one component of government operations. Governments must be funded to exist and lack of fiscal sustainability threatens democracy.
  • Federal, state, and local leaders are fundamental actors in extending democracy and promoting fiscal sustainability. These leaders must commit to structural and institutional changes that can advance the fiscal sustainability of all governments.
  • Federal, state, and local leaders must stand up for good governance, fiscal sustainability, and strong communities. Toward that end, these leaders must continually educate the populace of the criticality of the long-term fiscal health of all governments for effective, efficient, and equitable public management, service delivery, and program outcomes, and more broadly, for advancing democratic governance.
  • Federal, state, and local leaders must consider fiscal sustainability with the same urgency as the COVID-19 pandemic or any other natural weather-related, man-made, or accidental disaster, or terroristic threat. Undoubtedly, these leaders will have to work harder to continually refine our intergovernmental system to communicate with one voice about the fiscal sustainability of all governments across the nation. Blessett, Brandi, Jennifer Dodge, Beverly Edmond, Holly T. Goerdel, Susan T. Gooden, Andrea M. Headley, Norma M. Riccucci, and Brian N. Williams. "Social equity in public administration: A call to action." Perspectives on Public Management and Governance 2, no. 4 (2019): 283-299.

Related Podcasts

Grand Challenge: Advance the Nation's Fiscal Health
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The Impact of Fiscal Health at the State Level with Lauren Larson

Season: 1 Episode:73 | September 28, 2021

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Being Fiscally Prepared for the Next Crisis with Dr. Deborah Lucas

Fellow: Deborah Lucas

Season: 1 Episode:72 | September 20, 2021

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The Impact of Individual Financial Health on the Nation's Overall Fiscal Health with Michael Ettlinger

Fellow: Michael Ettlinger

Season: 1 Episode:71 | September 13, 2021

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Assessing America's Current Fiscal Health with Doug Criscitello

Fellow: Douglas Criscitello

Season: 1 Episode:70 | September 06, 2021

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Fiscal Tools in Dubuque with Mike Van Milligen

Fellow: Michael Van Milligen

Season: 1 Episode:24 | September 28, 2020

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Fiscally Healthy Communities with Chris Morrill

Fellow: Christopher Morrill

Season: 1 Episode:23 | September 21, 2020

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The Federal Budget Process with Bill Hoagland

Fellow: G. William Hoagland

Season: 1 Episode:22 | September 14, 2020

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Navigating Fiscal Health at All Levels of Government During COVID-19 and Beyond with Scott Pattison

Fellow: Scott Pattison

Season: 1 Episode:21 | September 08, 2020

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COVID-19 Impacts on State Budgets with John Hicks

Fellow: John Hicks

Season: 1 Episode:8 | July 06, 2020

Top 5 Articles on Advance the Nation's Long-Term Fiscal Health

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Brookings: Cities are taking it slow with American Rescue Plan funds, by Alan Berube and Eli Byerly-Duke

When President Joe Biden signed the American Rescue Plan Act (ARP) into law last March, it was a momentous occasion for local governments around the country. In contrast to past federal fiscal relief efforts—including the CARES Act of 2020—ARP provided a large number of cities and counties with direct, flexible support from the federal government. And the sums on offer were substantial: $130 billion in Fiscal Recovery Funds (FRF) for cities, counties, and tribes, often amounting to significant shares of local governments’ annual budgets.

The Treasury Department began disbursing these dollars in May, requiring larger recipients to submit initial reports by this week on how they are allocating the dollars to address the impacts of the COVID-19 pandemic, and to “build back better” for the future.

In turn, many big cities are telling Treasury: We’ll get back to you on that.

Read The Full Article

Marketplace: Treasury says U.S. child care system is a market failure, by Kimberly Adams

It’s a busy month in Washington, with deadlines on the debt ceiling and government funding. Plus, there’s the Joe Biden administration’s ongoing efforts to get Congress to pass that big infrastructure bill and a budget reconciliation package that includes more of the “human” infrastructure agenda.

To push that last bit along, the Treasury Department released a study on the child care industry Wednesday, arguing that the system is basically in a state of market failure, with significant consequences for the overall economy.

Just about any parent who’s been on a waiting list for day care or a child care center has experienced those difficult economics.

Read The Full Article

Brookings: The new child tax credit does more than just cut poverty by Jason Jabbari, Leah Hamilton, Stephen Roll, and Michal Grinstein-Weiss

With COVID-19’s disruptions in employment, child care, and education, it is unsurprising that child poverty substantially increased in 2020—roughly 1.2 million more children were living in poverty in 2020 when compared to 2019 (an increase from 15.7% to 17.5%). As child poverty is unequally distributed in America, so too were its increases—poverty rates grew the most among Latino children (4.2 percentage points), Black children (2.8 percentage points), and children from female-headed families (4.1 percentage points), while they remained flat for white and Asian children.

In response to these trends, President Biden signed a bill this March that restructures the child tax credit (CTC) for one year—making it larger ($3,000 per child between the ages of six and 17 and $3,600 per child under six), broader (gradual phaseouts start at $75,000 for individuals and $150,000 for those married filing jointly), and more periodic (monthly payments). This restructuring would allow the CTC to act like a child allowance, which has been used in a variety of other countries. While the new CTC officially launched in July of 2021, policymakers are already considering whether or not to extend the new CTC beyond 2021. Here, policymakers are not only considering the impact that the new CTC will have on child poverty, but also the impact that it could have on family social mobility.

Read The Full Article

Marketplace: Loan forgiveness not coming easily for some PPP borrowers, by Kristin Schwab

Andrew Song’s restaurant and karaoke bar is a ghost of what it used to be. The shuttered business in Manhattan still has an outdoor dining structure up and a menu posted by the door. A phone sits on the dusty host stand inside.

After eight years in business, Song shut down Le Midi last summer, during the pandemic. Now, he’s left with debt.

The business got nearly $250,000 through the federal Paycheck Protection Program. His lender, Citibank, told him he has to pay back more than $25,000.

Song can’t figure out why. Was it something in his application? Did he not follow the program’s guidelines? Is he even liable for the money since his business closed?

“I couldn’t get a clear answer, and no one picks up phone calls, no emails are returned,” Song said. “It feels like you are dealing with a faceless organization.”

Read The Full Article

Route Fifty: Public works agencies hit by rising prices and supply delays,, by Bill Lucia

State and local agencies that build and maintain the nation’s streets, bridges and waterworks are getting squeezed by rising costs for materials and equipment, supply chain disruptions and workforce shortages—combined pressures that are threatening to take some punch out of pending infrastructure legislation in Congress and other boosted spending on public works.

Price increases and supply shortages are playing out across the economy and are in many cases linked to the turmoil the coronavirus outbreak caused. It’s likely these issues could fade as more industries recover and stabilize. Finding workers, like truck drivers and laborers, is a problem that agencies faced before Covid-19. But officials say the pandemic has made it worse, especially as private sector employers compete more aggressively in a tight labor market.

These factors are in some cases driving up overall construction and maintenance costs and causing places to question if they should scale back, or hold off on projects—at least for now.

Read The Full Article