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Unformatted text preview: AjpYBSS_blog.html) One potential pitfall with handing over more and more infrastructure responsibilities to the states, meanwhile, is that states tend to cut way back on spending during recessions. And local funding can be pretty erratic, all told. Here’s a graph from New America’s Samuel Sherradan, based on CBO data: We’ve seen this in the current downturn. Sherraden observes that California’s transportation spending declined by 31 percent from 2007 to 2009 after the housing bubble burst and local tax revenue fell. The same goes for Texas, which saw an 8 percent drop. “[I]t is clear,” Sherraden writes, “that leaving a greater share of infrastructure spending to state and local governments makes infrastructure investment more vulnerable during downturns.” [___] Federal funding more stable because states can’t deficit spend The Transportation Politic, 2012 (February 16, 2012, “Clearing it Up on Federal Transportation Expenditures,” http://www.thetransportpolitic.com/2012/02/16/clearing-it-up-on-federal-transportation-expenditures/) Commenter John notes that many transit projects are paid for through bonds, which are in essence deficits, and that states have the technical power to have deficits — and these points are both valid. However, all states except Vermont have some form of balanced budget rule. And the selling of bonds by transit agencies are reliant on them having future guaranteed funding sources to pay back the debt — federal funding like capital grants are an important part of making that equation happen. Transit agencies do not have the ability to expand their debt capacity greatly (unlike the federal government) because of investor fears about future funding security. 2|Page States CP Aff BDL No Solvency – State Funding Not Stable [___] [___] States fail at transportation programs because of budget instability AECOM 2011 (“U.S. Infrastructure: Ignore the Need or Retake the Lead?”, March 30 -April 2, http://www.aecom.com/deployedfiles/Internet/Brochures/AECOM_ACEC%20white%20paper_v3.pdf , DOA: 4-8-12) Meanwhile, states continue to experience cuts in transportation-related and public works budgets for the foreseeable future. Adding pressure, a potential increase in municipal bond defaults threatens to dampen investor enthusiasm for what has been a widely successful financing tool for state and local projects. Even if widespread municipal bond defaults are unlikely, the cost of capital will assuredly increase to reflect a risk premium. [___] States legally can’t run deficits and the courts will enforce balanced budget amendments National Review 2011 (On Balanced-Budget Amendments; July 19, http://www.nationalreview.com/corner/272203/balancedbudget-amendments-michael-j-new) However, enforceability is not among my main concerns. Right now, 49 states have balancedbudget amendments. Obviously these amendments differ in terms of their stringency, but they all seem fairly well enforced. In many cases, state balanced -budget amendments have resulted in politically damaging spending cuts and tax hikes. I am sure that in these situations, many legislators and gover...
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