Transcripts For CSPAN3 The Urban Institute Hosts Discussion On State Budgets 20170217

Using liveaturban. We welcome you to ask questions. Well make a point to use these questions and comments in the q and a portion of the program. Im excited to be joining the Tax Policy Center and i thank you for joining us today to grapple with important issues surrounding our states fiscal issues. The panel the examine opportunities governors and legislators will face and the decisions theyll face as they pass new budgets. The budget this year the budget process this year appears to be exceptionally challenging given the understanding of what federal policy will look like in a wide range of areas. As the new Administration Stands up and new policies are shaped, its important to recall that many programs being discussed are implemented at the state and local level. Educating our children, building roads is done by state and local governments with federal funds paying for about onethird of state expenditures. The federal government effects the overall agenda. Independent of expected federal policies, state budgets are going through a long recovery from the Great Recession. Although state revenues have been growing for the past five years, they remain low in real dollars and spending and taxes are below 2008 levels in 32 states. States also face longterm liabilities with unfunded pension liabilities and growing health care costs. States are also entering the current budget cycle with about half of the states reporting unexpected short falls in revenue in part due to Economic Conditions. Governor brown said many of the proposed changes could have serious and detrimental effects on states budget and economy. Concerns arent limited just to democrat governors. Several governors are urging change, especially with respect to health care. Our discussion today will cover the effects of federal policy and whats happening in state capitals and if prior discussions are any indication todays discussion should provide lively commentary. We will examine potential effects of policies and were excited to announce that the spending drivers web tool is going live today and this tool allows users to delve deeper into spending in several states. Were fortunate to have several experts to drive these discussions. Laurie will be the moderator. Its important to know she has broader experiences and began her career in texas. So now let me kick things off by turning the mike over to laurie. Welcome to the state of the states. Its my job to introduce your panel. So immediately to my right we have joe henchman, Vice President at the Tax Foundation. John hicks the National Director of the association of state budget offices. Ken rubin state and local Financial Initiative and nick johnson at the budget on policy priorities. Were going to start off by talking about a survey of the states done by nasbo. Its going to be a very uneasy time i know here in washington. Were having a hard time grappling with the new reality. I think since friday weve had executive orders on aca repeal, building a wall, banning syrian immigrants, reinstating torture, opening cia black sites. We put out the front page in the evening and were ripping it up before we go to bed. I cant imagine what state officers are feeling right now. Can you tell us where things stand . My theme is cloudy with a chance of storms. States revenues and spending have been growing more slowly since the Great Recession than in Previous Post recession periods. We had mark said 32 states are still not spending at the level they were before the Great Recession adjusted for inflation. When you adjust for population, 39 states are spending at a level lower than prior to the Great Recession. For a period of this length of a recovery, thats a surprise. Last year in fiscal 2016 half the states had revenue sho shortfalls. This year half the states are predicting revenue shortfalls. We havent seen numbers like that since the Great Recession. Prior to that, post recession, thats about we average about ten states a year who have reven revenue shortfalls. So this is a combination of things. One is predictability and the other is that Economic Conditions are underlying most of state revenues. States have most of their money come from income and sales taxes that ride along with the economy. So why were they short if hn th last two years . Economic forecasts were overstated. Growth and income and output and other things didnt reach what underpinned the state revenue forecast. So a couple of numbers. Last year state general fund tax revenues grew 1. 8 . Thats low despite the low unemployment. This year states have revised their estimates. Theyre expected to grow 2. 3 . Next year the budgets theyre putting together right now theyre projecting a little sunnier revenue situation at 2. 9 . Those are still historically low numbers. Personal income taxes took a hit last spring. Nonwage income came in lower than everybody estimated. Sales tax revenues are surprisingly weak given the economic recovery. Youre going to see under 2 sales tax growth this year for almost a backtoback year. Economists give an explanation. Things like lower prices on economic goods and a gap between whats being consumed and tax. Online sales tax not being collected for states. Youre going to see Corporate Income tax receipts decline for the second straight year. We dont know yet what the impact of prospective federal tax changes are going to hold for this spring. Did Capital Gains get deferred from december to january and what will we see in april . We dont know yet, even though congress hasnt made any tax changes yet. Energy states are still suffering. Wyoming, west virginia. States have spending pressures. Medicaid has been growing faster than state revenues have grown. Pensions are a more notable issue that states have been dealing with in the last decade. Most states have reformed their Pension System in some form, but investment returns are causing states to have to get out the checkbook. Medicaid has gone from 14 of the states general fund to almost 20 in the last 20 years. That has crowded out other spending. Higher education has declined in terms of the share of the state spending, but one good news is states have stocked up their savings account since the Great Recession. States on average are sitting at about 5 of state revenues which is higher than where they were than before the last two recessions. States have taken their lessons from the Great Recession. So a new report is out. What can you tell us about what the federal government is about to bring in to this cloudy forecast . This is sort of either an exercise in optimism or pessism. I went through some of the things that have been proposed before by both President Trump during the election and speaker ryan and people in congress to try and figure out whether we could forecast what we think is going to go what theyre going to do going forward. We talk a lot about taxes based on stuff that was going on in the Tax Policy Center and health care, aca, medicaid, based on work that was done here by our policy health center, but it is not complete. Its things we felt like we had the best grasp on. For example, theres nothing in this report that talks about the epa. Not on my agenda. The fact that thats where we went first is interesting. What do we do . As mark said before, state tax systems and spending are really reliant on what the federal government does. About onethird of the money comes from federal sources to state and local governments. They set some of the rules and agendas if we think about whats been going on with health care in terms of the expansion and coverage is based on incentives that were put into place by the federal government for state and local governments. For the tax system, states typically use the federal tax system and the terms and definitions to do their own taxes, especially their income taxes. If we think about especially states that are relying on income taxes, often they conform to the federal system. As we change the federal tax system, its going to trickle through and effect what states do. If i go through broadly some of these areas and we can get into details as we go along. On the tax system, we think there is going to be a lowering of rates. Theres some discussion of getting rid of some of the deductions like the state and local tax deduction. Theres some talk, although not a lot of detail about broadening the base. So if we change rates, thats not going to directly effect states. If we broaden the base, that could help states. However, it could also the uncertainty is whats kind of killing states right now. I think part of the reason states revenues are below where they thought they were going to be is because people are waiting to see whats going to happen, especially for taxes on Capital Gains and corporate taxes as theyre expecting those to go down. If youre a highincome person and you have the option of realizing Capital Gains now or waiting a few months and doing it in 2017 when the tax law and the tax rates might be different, you actually have an incentive to wait. I think partly weve seen that in some of the weak state budget forecasts. If we think about health care, there are two things. If we basically repeal without replacement of aca, that means if states do nothing, theyll actually save a little bit of money, but millions of people will be uninsured. If they decide its unacceptable to have that many more people be uninsured, their costs are going to go up. If things had stayed the same, states were already seeing their costs go up because that 100 pick up on the federal government was going to start declining. So they already thought that their aca costs were going to go up. Irrespective of that, we also think that depending on independent of whether they keep the expansion or not with medica medicaid, its pretty likely theyre going to change sort of what the rules are. Theres a lot of discussion about block granting it, on the the amount of federal money going for medicaid, which would mean that states would actually have to figure out ways of replacing that money or cutting the services that they offer. Ill stop there. Okay. So nick and joe, i would guess that there might be some opportunities for states here, but it sounds like there are many more challenges for states here. Do you want to start, nick, to talk about how the states might be looking at this . I would say cloudy with a chance of storms, thats an optimistic forecast. I think its going to be stormy. Thank you for having this session. A great turnout here, which i think really testifies to a recognition that in this era in the trump era, states may matter now more than ever before. What happens in state capitals, what happens to states is going to have a big impact on everything that happens in this country over the next several years. The reason i think we dont have to be uncertain in our forecast that its going to be stormy is that in every presidency the first year of the Administration Big things happen. Theres a lot of uncertainty about which of the many big things that are on the table will happen, but if you think about the first year of the Obama Administration, the recovery act and the first year of the Bush Administration, the tax cuts that year, think about the first year of the clinton and reagan administration, big stuff happens. Particularly when were talking about stuff that involves dollars, budget stuff, stuff can get through senate with a 51 vote majority. You dont need 60 votes. A lot of this stuff on medicaid and other stuff can be done through the reconciliation process. Its going to be challenging. Heres what im concerned about in terms of the federal state relationship. One of the most important roles that states play in our federal system is reducing poverty and expanding the Economic Opportunity for families for so many families who are having trouble making ends meet. For the last half century this has been a partnership between the federal government and the states. The federal government provides much of the funding and structure and structures it in a way to meet changing needs. So if needs in a lock calty or theres a national recession, these programs adapt. The federal government is providing the funding and structure. The states have some ability to do things differently. This partnership has turned out to be very effective. The best available data show that the percentage of people having a hard time making ends meet as measured by our best approximation of the poverty rate, the number of folks living below poverty, has declined by 41 over the last 51 years largely thanks to this partnership. Its gone from one in four to one in seven americans living with incomes below the poverty line. Heres whats at risk of happening right now. The proposal that we have seen or expect to see from this administration and this Congress Based on what has come out of the House Republican caucus in previous years, what is in trumps own plans, what his nominees have put forward, these proposals would cripple this Effective Partnership with damaging impacts on states and on families. Basically we would shift this responsibility to help families make ends meet and help them get ahead, we would shift it from the federal government to the states at a time when states really cannot afford to take on this big new responsibility. As john said, states are already facing budget shortfalls. Things will be tight in coming years. Rainy day funds are at 5 . Thats great, but thats nowhere near what it would take for them to get through a recession, particularly if these federal programs, these stabilizing programs arent there anymore. If you think about medicaid block grants, the chance that its not just 10 or 12 years out. In a very few years states would start to get under the proposal for instance that the House Republicans put out in two or three years states would start to get much less money than they would under current law to the point where ten years from now they might get 33 of what we might expect them to get. Another key program for families is the s. N. A. P. Program. Right now its 100 federal dollars. States administer it, but they dont pay for it. A block grant would shift that responsibility on to the states and give states this new area of responsibility for funding. Again, without any additional dollars to pay for it. In fact, less money. This isnt theoretical about what would happen because we did this 20 years. 20 years ago we took a program which was an Important Partnership and we turned that into a block grant. It was 16. 5. 20 years. Because its a block grant and states can pull money out of it to fund other things, the money going into assistance for low income families has dropped sharper. Its dropped about 73 . The number of 20 years ago the program was helping about twothirds of the families who were living in poverty. Now its helping about one in four. Weve seen what happens when you alter the structure of these partnerships. Thats my fear. From a state perspective, from a state policy perspective, theyre getting this new responsibility, no new revenue, uncertainty on the tax side, uncertainty with other parts of the budget and we should talk about all the way states get federal money it adds up to a dangerous time for state governments. What do you think states are taking away from this moment . First i want to thank you for hosting this. Theres a lot of panels and events in washington, d. C. All the time, but this one i know for a fact has real impact, real Decision Makers watch these and have takeaways from these and they lead to real results. As nick mentioned, its a full room here. Its not a small room, but every seat is filled and we have people in the back too. Its certainly a hot issue in washington, d. C. Right now. I think im going to disagree with a lot of what nick said. Let me start off with an area of agreement and that being he and i certainly walk the talk in terms of states mattering. Weve dedicated our professional careers to state policy. Its something i think a lot of people give lip service to. His organization and ours are certainly out there trying to make the states truly equal partners in the federal stu structure we have in the United States. That said im going to disagree with his characterization of it as a partnership. No disrespect to any Congressional Staff or federal workers who may be in the audience, but for the most part federal employees view the states as an administrative arm for spending money they give to them with lots of conditions. When this money comes when it does the round trip to washington to go back to the states, it picks up all of these mandates and conditions and ive had plenty of democratic legislators and governors in the states complain about these, let alone republican ones. Usually the democrats behind closed doors, but certainly its not any partisan divide its not so much a partnership, but the feds set the rules and give the money and if you dont do what the feds say, they take the money away. Weve talked about medicaid. Medicaid, ive seen some numbers recently and youll correct me if im wrong on it, but its growing at about 4 to 5 a year and its crowding out everything else. Maybe more evidence of how the aca has not bent the cost curve. Something that hasnt been mentioned which i think is the fundamental thing. If youre going to take anything away from what i say, let it be this. Economic growth is the underlying issue here. If the economy continues to grow at 1 , 2 , 3 a year, you can complain all you want how the feds arent giving 7 a year or the revenues arent growing or the feds are not providing more money and all of that, because if incomes and sales and Property Values and everything are only growing at the pace of the economy, theres not more money to be able to spend on these services and these programs. The pie is stagnant and everybody has to fight over the crumbs. So we can talk all we want about how do we restructure these or complain and get the feds to give more money to the states or whatever solutions we come up with, but ultimately if you want to solve this problem we have to figure out why are regrowing so anemically and how can we fix that. Im not a trump partisan, but the focus on taxes and on federal tax reform i think is a good one because that has a track record of being able to fix things, if its done correctly and if its done in the right way. At the Tax Foundation we have an economic model that runs if you have a tax proposal, we run it through it and it sees what the exactly be on the Economic Growth, job creation and the deficit. The kennedy and reagan tax cuts which do a lot for tax growth and then other changes that didnt do a lot for Economic Growth. Theres similar characteristics across them especially in the treatment and capital and investment and Wealth Creation that matter quite a bit. Some of the ideas that are emanating out of the Trump Administration talking about a boarder adjusted tax and full expensing for new investment and getting rid of the loopholes in the code that induce companies to move overseas, moving to a territorial system where the companies have to pay a u. S. Tax and the overseas tax, addressing those issues will have an impact. You mentioned that some people are sitting on their hands waiting to see what will happen before they spend money, especially on tax policy. I think thats exactly right. Tax policy does change behavior and it does induce people to make different decisions than they would otherwise. So were waiting to see what will happen on federal tax policy. I know state legislators are waiting to see what will happen on tax policy given the close relationship between federal and state tax codes. But its the only real good idea ive seen out there in terms of we talk about bending the cost care in washington, bending the Economic Growth cost curve. Once we figure out a way to get our gdp back up to what it was historically, then maybe the pressure will ease up and there will be a few more sunnier numbers and nick wont be so much worried about programs against each other. So thats kind of what i see the big debate happening right now and i hope we can keep the discussion focused on Economic Growth. Kim, you seem to have something to say. Well, i guess i just you know, i would love there to be more Economic Growth and higher Economic Growth and i think youre right. I think if growth was higher, a lot of these problems would be easier. A lot of the things on the corporate side, i think there might be things that if they get it right could be helpful, but i think a lot of what is being proposed by both the people in congress and by trump give a lot of tax breaks to the top of the Income Distribution and its not clear that it will lead to growth. It will increase the size of the deficit. If we actually have an additional 6 trillion in our budget deficit and our debt in our debt. Thats no tt the deficit. I think that could slow down growth. I think some tax cuts and some tax reform have helped, but i dont necessarily personally i dont think that comparing sort of cutting tax rates and comparing that to what was going on in the Kennedy Administration makes sense given how high they were then. I think taking some lessons about what we saw under bush is really important. So im afraid that we will see a return to what we saw under the Bush Administration where they cut taxes first and then they say were going to have reform, but theres no money left and how you do that is really hard. So i guess i am less optimistic were going to see growth come from what is being proposed on the tax side and how it stands and how its being proposed. I think theres some room to do some of the things, but i would like to think that if theyre going to do changes to corporate, at least do it sensibly. If were going to expense things, we cut the tax break for interest, which is not necessarily something that President Trump has proposed. So i dont want them to do things that we know are going to cost money and leave us even in worse shape to actually have funds to pay for things in the social safety net. Two points. One, theres a paper on our website that goes through the historical tax changes and you can see what was different about the kennedy and bush tax cuts compared to the proposals today, especially on the impact and Economic Growth. It aligns with how you described it. Kennedy did a lot and bush didnt do so much. Why is that . We dont wave our hands and say it was a tax cut for the wealthy, both of them were, but they had very different impacts. The second point on impacting revenue, i absolutely agree with you. Thats one of the reasons we embark on the tax model to emphasize there are trade offs. Im a policy student originally before i became a lawyer and theres no solutions in public policy. Theres only trade offs. When you are embarking on tax policy, you have a distributional trade off and a deficit and growth trade off. If you dial two of them too hard up, youre going to dial the other one down. To their credit, Speaker Paul Ryan and chairman brady have talked about making sure the overall plan is revenue neutral after accounting for Economic Growth, which is more than was the case in the Bush Administration. Theyre getting a lot of pushback from their caucus. I think senator rand paul said dont worry about that revenue stuff, but theyre pulling pretty firm on that. Im hopefully it wont be a return to the bush era, as you said. As far as working to make sure that its the corporate reform and the individual reform have good pieces on it, i look forward to the two organizations working together on that. Were pleased that the tax center has followed our lead. That was a long time coming. Im glad its happened and we can debate about these numbers on a level that actually incorporates the changes and peoples decisions. I think in part and ill stop after this and we can get back to states, i think in part the reason we were late in incorporating the growth is because its so assumption driven. When youre doing dynamic modeling and scoring, sort of knowing how much of it comes from the assumptions that are baked into the model and how it goes forward is really important and its something we took seriously. So were moving in that direction, thats right, but part of that is to try and tease out how much of what were seeing is being driven by assumptions versus the actual policy. Thats the debate we should be having, not whether it does or doesnt. Well do that next time, although maybe ill make mark do that. I mean general its the debate we should be having. I think to the extent that state policy makers are thinking about these kind of federal debates and what they want to say about them, i think it would be an enormous mistake for any governor or state legislator to sit back and say, well, im going to wait for the economy to start growing again thanks to all this wonderful tax policy thats about to come out of washington. I dont want to get into a big debate about the growth impacts of federal tax policies. No think thats where state policy makers are and i dont think its where they ought to be. Policy makers should be thinking about bending that Economic Growth curve and in fact thats one of the main things that states care about. Governors and state legislators are always thinking about their economy. Medicaid is going slower than private insurance and its cheaper than private insurance. States actually have a lot of incentives and tools with which to keep the cost of medicaid down. States are picking up 43 of every dollar spent in medicaid. They have really strong inse incentives to keep those costs down. Other big parts of the budget, education, transportation, public safety, those are things that voters care very much about it. When you think about taxes, im glad that tcp is building a model. In the states we have some examples of what happens when you have these tradeoffs. What happens when you do big tax cuts because states have to balance their budgets . They take it out of the spending side of the budget. What weve seen in most states, if you look in the states that have done huge tax cuts over the last few years, you look at kansas, ohio, michigan, maine, their economic cut has been below the National Average or right around it. You would think if tax cuts were good for the economy you would have most of those states growing and in fact theyre not. Theyre taking money away from schools, from higher ed, transportation, which is stuff that we need to grow vibrant state economies. Weve had Economic Growth in this country. There are people in this country who are doing very well, they tend to be concentrated at the top of the income scale. You have to think about what are the opportunities that were missing. Where are we missing chances to unleash the economic potential of a huge number of americans who are being left behind . I think investing more in education and children and families and investing more in infrastructure may be a way to get around this Current Issue of our Economic Growth is not where wed like it to be. We would probably spend a lot of time talking about tax cuts and Economic Growth, but i want to remind people listening outside the room that were going to take questions shortly. If you have a question, you should direct it to events at urb urban. Org. Lets go back to lets take things in the order that Congress Seems to be taking them and go back to obamacare and the repeal of the Affordable Care act. There are a lot of unpack a little bit the effects for states. On one hand you have the subsidies and then you have the expansion of medicaid. Can we talk about what we expect them to do and how states will be looking at this, particularly since our president is saying that nobodys going to lose coverage and its going to be better for everyone . Let me start there. As it relates to the Affordable Care act, i want to be sure and be clear. There are three big elements. The private Insurance Market and the health exchanges, the expansion of medicaid, but the core Medicaid Program and the third is the largest element that states are concerned about. The partnership is at least a Financial Partnership as nick described. The idea of states will all raise their hand if they say can you give me more flexibility. 50 governors will raise their hand and the legislators. More flexibility and block grants dont have to be the same thing. States have already exhibit haddhaexhibited they want to be at the table. Its the second largest expenditure of state dollars. So while maybe this is an example, weve never seen anything like the prospect of block granting medicaid at the state level. This is a first. We have nothing to compare it to. So good or bad, what states are saying is, as i said earlier, states revenues are tied to Economic Conditions. They rise and fall. Medicaid is set up as partially an automatic stabilizer when there is high unemployment and people lose their jobs and health care is a necessity. We have higher enrollment. When theres higher enrollment in medicaid, you have higher medicaid expenditures. States revenues are dropping. States are not set up to be count counter cyclical. States want to be sure there are innovations that states are permitted to do in health care. States have been aggressive in changing the cost of medicaid. It is a myth to believe that the matching rate of the federal dollar leads states to spend more on medicaid. When you put a budget together with a governor and a legislator, they dont want to put the next dollar into medicaid. They want education and Economic Development. Thats where they want to invest. So states have been have worked very hard at combining lower cost and Better Health outcomes and do not want to take on the responsibility of being countercyclical when recession eras come. You asked whats likely to happen and i dont know. I dont think anybody really knows. What theyre doing so far is mainly repealing the tax side of the aca. All the taxes associated with it are going to go away. Whether theyll do anything on the program side remains to be side. Senator collins put out a proposal and senator rand paul did too. He has been busy this week too. Well see what comes of that. Health care is tough. Its tough to do whatever your background, especially since i guess taxes are important. Lets tie taxes into it. The deduction for Employer Provided Health care is wrapped up in that. 80 of americans get their health care through their employer and step one is the decision do you change that or do you keep it the same because its a very different decisions going out from that afterwards. At least a lot of the Health Care Experts i talked to say they dont like that deduction. They say it drives costs up and its kind of a fundamental flaw there, but certainly a very one that people are used to. So it may be very difficult to dha change. On medicaid, im glad you brought up the flexibility aspect of it because nick is right its a big part of the budget and you have the intentative i incentive to make changes to it. Vice president pence expanded medicaid in his state and he got a waver from the department of health and Human Services in a way to bring some cost awareness to the lowincome recipient. If you made above x amount of dollars you had to pay from an account. Kind of a classic compromise that made people on both sides angry. I dont know how involved he will be on again, i dont think anybody knows how involved any one particular player will be, but at least thats one data point that maybe can provide insight on whats down the road. What i wanted to sort of piggy back on that, joes point brings up an important point. When we talk about block granting and getting more flexibility, its taking away from the fact that states were given a fair amount of flexibility with the expansion. They were able to take that money and apply for wavers and do some things. I dont want to overstate the value of that flexibility with the block grant. I also think its really important, and i think that the point that its a much Larger Program is relevant, but i do think its worth focusing on a point nick made that when we actually block granted the taniff money, a lot of that money stopped going for the same purpose it was going for and its going to pay for other things that states value. Part of it is if you think theres a fundamental value to the safety net and that having the federal government provide some lower level that states should be providing is important because theres less competition then if theyre actually setting some of the rules, theres some benefit for there being a federal role in this. As much as people complain about theyre tying our hand and setting policies we have to follow, i think its important to note we are a country that people can move from place to place and i think its important to sort of set what we think are our basic standards for what we think are important for people to have in terms of health care and in terms of an ability to live. So i think that there is some flexibility now, but i think states, if we actually move in this direction where were sort of repealing it and then also block granting that other part of medicaid, not necessarily the expansion, but the whole thing, it could lead to some tough tradeoffs. If some of the federal money is sort of kept at a certain level and states no longer have the mandate to cover certain populations, they then have to make the tradeoff between do they want to use other funds to keep those populations covered or do they want to spend less money, but then have a larger uninsured population because of which theyre probably going to pick up a fair amount of in terms of other ways they have to pay in terms of if you think about uninsured payments for hospitals and other things. I think there are tradeoffs there and there is a big benefit to having the federal government sort of be a partner and play this role, i think, and not just were giving you x amount of money and you decide. Is there a difference in how republican governors and democratic governors are talking to washington about what they expect and want out of this process . I think whats surprising is how much similarity to what republican and democratic governors are saying. Theyre saying we want to maintain the basic structure of the program and continue to get these funds. We dont want big cuts. The other thing is republican and democratic governors have done a ton in using the existing program in flexibility and innovation. Its not just about how much cost you shift on to the beneficiaries. Its flexibility on things like how do you get providers to Work Together to reduce duplicative care and to communicate better in terms of the care that gets concentrated on a very small number of individuals. A lot of that is below the radar because it doesnt erupt into partisan fights, but over times researchers and policy makers have worked together to keep the cost of medicaid at a reasonable price. I dont think theres any way that the scale of the cuts that are being envisioned in some of these block grant proposals or other proposals, theres no way those can be accommodated at the state level without taking people off the program or severely cutting back the benefits they receive. That will have negative effects on Peoples Health and peoples ability to afford health care, on the Long Term Health prospects of kids and their ability to contribute to the economy over the long term coming back to the question of how do we strengthen state economies. Joe, as you said, health care is tough. You sort of suggested that its hard to tell what exactly they might do on the policy part of this. Do we actually think that obamacare is going to go away . I dont think anybody would disagree this is going to be an unconventional administration. I think the president might even hang that banner in his office eventually. Youre trained never to say i dont know on these panels because youre an expert because you must know. I dont know what the administration is going to do on health care and i dont know if they know what theyre going to do on health care. As i said its a lot of people get their health care through their employer. If you dont change that fact, it really limits what else you can do. You end up back in the same decision tree that i think the democrats ended up in 2009 and 2010 when they crafting the Affordable Care act. That has a lot of downsides too. The fact that its tied to employment, a lot of are p petrified about losing their job. Its not as portable as it could be if it was individual because its almost all thirdparty pay, whether thats an Insurance Company or the employer or a government agency. Nobody ever asks and nobody ever answers the question of how much things cost. If you want to have a ball in the hospital or with your doctor, ask them how much a service cost. They have no idea. About a hired of the clerical staff has no idea. Theres some fundamental problems with our Health Care System that the Affordable Care act didnt come close to addressing. One of the ways that the Affordable Care act did attempt to address the cadillac plans. Its supposed to go into effect in 2018. So do we think that is actually going to happen . I would think again, this is supposing and i dont know what theyre going to put into place, but the things i think theyre most likely to get rid of is the taxes on the cadillac plans and medical devices. So the things that they could take away the tax and say that theyre changing it, and maybe thats sort of my optimism that maybe if we can do a couple of things around the edges, we can call it something else, but fundamentally not disrupt all of Health Care Markets and lead to nobody being able to have health care coverage, but i would think that the things that are helping to balance the budget and make things stainable, but dont seem like theyre core for maintaining markets are most likely to be cut. I think a broader point about tax policy that takes us can bao the conversation about states. Joe pointed out a number of policy makers at the federal level have said nice things about the importance of revenue neutral tax changes. The reality is when you sit down and score whether its the trump plan or proposals coming out of congress, we are seeing tax plans that would cost the federal government not just the Trump Administration, when you get to the proposal and seeing it on paper, 5 trillion or 10 trillion over ten years. So in that context where these enormous tax cuts have been on the table in the tax reform debate, we have these debates about are we going to broaden the base here, cut rates here. How is it going to net out. Theres a very big from the state perspective where youre thinking if they broaden the base, that might mean we get a windfall. If they narrow the base, we lose a lot of revenue. I think the whole tenor of this debate is going to be much more geared towards narrowing the base than broadening the base on that and thats going to be a disaster for states. So the proposals around permanent exceptions for expensing, 50 exclusions for Capital Gains, these kind of proposals would really be very damaging for state Revenue Systems. The estate tax. We havent had in this first few days of this administration, the estate tax hasnt come up, but certainly its been in all the republican plans to repeal the federal estate tax. Its been the president has certainly in past statements has indicated he would like to repeal it also. There are 14 states that have estate piggyback on the federal estate taxes. For most of the states, it is the most progressive part of the tax code. It has a small number of highincome folks and they use that money to pay for education and transportation and health care and other things that state governments do. If the federal government repeals its estate tax, that will cost the states potentially up to 3 billion a year. Which is significant money in those 14 states. So watching this tax debate very carefully as it unfolds is going to be really important for states. Im not confident tax reform at the federal level in this environment, in this era, under this president , is going to yield anything approaching the kind of wind fall that states have gotten in past tax reforms that work revenue neutral like in 1986. I think we can go somewhere different than that. When you Start Talking about the trillions, with a t, i thought where you were going to go, which is something that worries me, is sort of when we blow that kind of hole in the federal budget, and we have discussions about whats on the table and whats off the table, what does that mean for domestic discretionary funding . And while there are all sorts of little programs, but theyre already zeroing out, its worth keeping in mind that a lot of this goes down to states and local governments. And so if you actually have less money coming in, and youre saying that were going to spend more on defense, will you make up that money, and what that looks like in terms of spending on these other projects . That are even things that are said to be a pri . I dont know where you get money to do, like big infrastructure. If you cut this other side . And so i think its worth always keeping in mind that the two sides of the budget need to Work Together. That if you actually have less money coming in, and we kind of forget this sometimes in washington, because deficits seem to be big and ever growing. But at some point youre going to have to figure out how you actually, you know, balance your budget. At some level. Whether youre cutting spending, or raising taxes, or at what point people stop buying our debt. Were going to take questions very shortly. Again, its an event at urban. Org. This raises a great point, because in all of the proposals weve seen from this administration so far, the pay board is really not so clear. I would think infrastructure in particular has got to be an area where states are going, holy cow, what . Could one of you explain what the proposal is . Well, let me try. One of the ideas is to in essence repatriate corporate profits back into the United States and provide a, if you will, a tax break if those are invested into Infrastructure Projects of a certain type. States here in the United States, we call that Public Private partnerships, in terms of the financing arrangements that may go into particularly transportation in the United States. Not solely, but mostly. In that case, there are a lot of good Public Private partnerships out there today that can get financing. People are waiting to invest in good projects. So increasing the supply of capital can be invested, wont necessarily increase the number of Public Private Partnership Project because of its inability to make the return is the basics for that. So that doesnt necessarily, hon itself, create more infrastructure. But if it is also seeded with real money, federal dollars, or even state dollars, that combine many that have that combination of funding, theyre not often a hundred percent privately funded, then thats the pros pect of having more infrastructure with both investment from the public side as well as the private side. Go ahead. Im going to be a Debbie Downer again. Reading through what was proposed when theyre talking about 1 trillion in investments the ferrara document . Yeah. Its tax credits. But it doesnt even specify who gets to decide which projects are eligible. The other thing that worries me is, these tax credits, this investment is supposed to be paid back by money raised by the projects. Which would work if youre talking about our toll highways, or even the airports. But if youre talking about waste water, or bridges that need to be rebuilt or maintained in a place that doesnt actually have a lot of traffic, but its really important, you know, we dont necessarily want bridges falling down in nebraska just because they dont have the volume to, you know, pay for the building. I didnt see anything in that proposal that led to increased money for things like maintenance, or for projects that werent going to have some specific private return, which worried me. I certainly agree with that. Lets use an example that i think a lot of people are familiar with. Theres a bridge, the Lincoln Memorial bridge. It will start falling down if youre in d. C. , enjoy it before it does that. And theres no tolls or anything on the bridge. I think it probably carries more foot traffic than road traffic. Its not the main bridge between virginia and d. C. That the commuters take. So how do we fix it . Im not really sure whether its the park service or the district of columbia, or who is responsible for it. But regardless, theres no money for it. And the administration or i guess at the time the campaigns documents on that talked about how to finance project that have a stream of revenue. Over 30 years, you have all this revenue, how do you turn that into money right up front. I dont know how much that really is a roadblock, not to use a pun, that was unintended, to a lot of these projects. For a lot of them, its, how do you get the funding in order to be able to do it. I dont know how much it costs, but how do you get the money to be able to do that. At the state level, and since this is about states, lets bring in states, theyre solving this through raising more money for transportation. The vast majority of cases adjusting your gas taxes for inflation, because its cents per dollar, they dont update, and its like half of the states have done that in the last couple of years, theres been more Public Private partnerships, more tollways, more innovative ways to get the money, the rail line built in maryland, they found a contractor in the stream of revenue and theyre going to be able to do it that way, so theres a lot of room in innovation, certainly in transportation, but it doesnt come you still get to the point where we need like 1 trillion or 2 trillion worth of stuff. And tax credits arent going to do it. Yesterday, the vice chairman of the National Governors association from nevada said i dont have toll roads in my state and i dont want them. But joe is right, states have been raising revenues at this time of low Economic Growth, and maybe cutting other kinds of taxes, personal income taxes in some cases, but theyve come up and theyre spending more and theyre raising revenues more in order to fill the transportation what theyre doing is taking their income tax money, or sales tax money in nevada and other places and shifting it to bail out the transportation funds. New jersey has done this for like a decade until last year when they finally passed a bipartisan plan to fix it. They muscled the Port Authority to give their state transportation funds, anything they could do without raising the estate tax. Marjorie, when she cast a vote, all the congressmen said, bye, marjorie because they knew what was going to happen to her. Weve all kind of gotten used to paying half price for roads and bridges. Because the money were putting in in license vehicle fees and gas taxes arent covering the cost. You can only coast on that, sorry, again, so long. Ouch. I think that raises a really important broader point about the relationship between states and the federal government going forward. So one attitude that states could be taking, but i think were agreeing they shouldnt be taking is sitting back and saying, federal government, were going to wait for all this wonderful infrastructure to flow down to us. Or states can start a different course and say, well, people in washington are battling over trumpanomics, or were going to try to chart a different course. They can do it through infrastructure, i dont know if they can do it on Human Services, on kthrough12 education, talk about an Economic Development tool, so i think increasingly were going to see governors and policy makers looking at whats happening in washington, and saying, this sort of the antiinvestment, antitax approach being taken by the federal government is not working in our state. Were going to take matters into our own hands. At the city level as well. And go forward. I think it will create tensions between what the feds want and what the states want. I know we have questions from the audience that we want to get to, but we could also talk about immigration between the localities and feds. Before we go to questions, are we seeing any states where we see innovations that could inform washington decisions . Are there states that are solving these problems or figure out how to attack obamacare . The state legislators, which is a group of, well, as the state legislators coming together, they put on panels theres a legislator from this state and here are the good results and bad results and take that lesson as you will. One of the many tax issues i write on is marijuana taxation. And states are going different ways on how theyre legalizing and taxing. And how theyre structuring that. Which is good. Every time i come to this panel, i talk about the laboratories of democracy as our 50 states. If you want high tax, high service, thats there for you. If you want low tax, low level of service, thats there for you. What were always on the lookout for is the low tax high level service. Its a fundamental tension. What tim talked about, we want the baseline level. People disagree on what the base line should be. So instead, all of our elections and all of our debates are, well, what should washingtons one size fits all policy be, when i really think we ought to let states decide that, and let people fight it out at the state level and then we could have the fight over which one is doing a better job. I would be really happy if the federal government would let the states innovate. The problem i see in the next few years is the federal government is going to make it harder for the states to innovate and address problems. States dont want to spend more money on medicaid than they have to, certainly, thats true. Of course, there are times when that medicaid funding stream is really helpful for a state who wants to address the opioid epidemic, or the Mental Health issues, the Behavioral Health issues that are driving homelessness in many cities, Community Health clinics, that have been proven to be effective in states. Or education. You know, investing in things that we know work. Better training for teachers. Class size reductions in certain populations. My fear is the cuts that are coming are going to get in the way of states being able to use those Revenue Streams to start implementing stuff thats proven to work. Ill say one last thing and then well take your question. One thing that is going on in the states, and this gets off of where we are seeing states innovating in some ways on the marijuana taxes, sugar taxes, theyre looking for ways to raise money, to see funds going to tobacco taxes or things like that. The problem with having their budgets too reliant on the taxes that are arguably there, i dont think marijuana is said to be something to sort of discourage people to smoke it. But in general, the way these taxes are set up, theyre partly there to raise money, but in part to help public health. If a states budget becomes too dependent on these taxes that arguably they should want to go to zero because they want the behavior to stop, if we think about Something Like cigarette taxes, or Something Like the new soda taxes so we can sort of try and discourage young kids from drinking a lot of soda and getting obese, you set up this tension between your budget and the public Health Outcomes youre trying to do. If too much of your tax revenue is coming from this year two the spending goes up but the revenue goes down and you have the gap open up. You have to remember, states have an elastic growing with the economy revenue stream, some of these other revenues are stabilizers. Theyre not large portions of state budgets. But that next million is an important million. Lets start in the room. Does anyone have a question . In the back. And please identify yourself and your affiliation. Thank you. My name is rene brice laford, im a consultant here in d. C. A lot of conversation has floated around health care and infrastructure, which is understandable. I have a work force and education question. I talk to employers, arkansas, ohio, to california, to here in d. C. , the refrain you hear again and again is, we cant find workers with the skills we need. And the actual number people quibble about, but theres a need for education to do the jobs that are out there. Had Hillary Clinton won, you know, the thought was out there about helping students pay for their education. Maybe not going to happen here. What is as you see it, the situation with states and helping students get the education they need to fill the jobs that we have . I will start. States are working hard on that. You go and read state of the state addresses by governors and often youre going to see that very question, that problem raised, and ideas about how to improve that. A number of states are now moving to last dollar in for twoyear credentials or below, states are moving heavily into apprenticeships in nontraditional areas like i. T. So a lot of governors are really trying to get to that issue of the skills gap, particularly in advanced manufacturing, health care, and i. T. Are several areas that are being focused upon. So tennessee, oregon, kentucky, several other states are also putting money where their mouth is there, in terms of assisting individuals to, you know, to help pay for a posthigh School Credential that is, you know, related to in demand industries and in demand jobs. I was just going to say, so i do think under the clinton plan, we saw more focus on how you incentivize and how you get training. I think thats really important. I think in some ways, im a little sad that were missing that part of the conversation, that if you think about sort of wh whats going talked about how were going to restore good jobs for people who live in america, im sad about the fact that theres not more emphasis on how we train people to do new jobs, rather than focus on beating up why jobs have left. Its backward looking rather than forward looking. I think states are trying to figure out ways of getting their, you know, populations, the skills they need for these jobs. But i dont think we see a lot of discussion about that in washington. Its far more technology than china, or trade. I talk to a lot of people, too, and hear the exact same thing. Our education sis tenl is not preparing for the modern economy. And back in the day in my grandfathers day, you would start a job at 20, and you retire at 65. And thats the one job youd have in your lifetime. Whereas here, for my generation, the ones after, it will be a lot of different jobs over your lifetime. So you have to be flexible enough and have enough skills to be able to do all those things. Were just not preparing for that. Theres some innovation from the states, but theres a lot more that needs to be done to overhaul it. A lot more accountability. Im from california originally, and people still talk about the days that pat brown was the governor in the 60s, and a lot of capital investment, a lot of thinking about how to do things. It was different from how it had been constructed in the past. A lot more focus on the real life. The thing that takes that kind of reinvention now. The reason we dont have the money to spend a lot on it is in education, a lot of the money into education goes to union salaries, to protecting everybody in a Public School had that employee who that teacher that checked out long ago, and you just couldnt get rid of them. Theres a lot of Employee Pension funds under water, like in chicago, they just did a property tax increase for education. A lot of it is to bail out the pension fund. The reason theyre under water is not because too much money has gone into them, but not enough money has gone into them, right . Whats happening in education over the last ten years has been essentially a flatlining of funding. We have a lost decade going back to 2007, theres actually 23 states now spending less on k through 12 education than they were before the recession in this era when education and work force and so on is more important than its been in the past. The situation in the Higher Education is worse. Most states are spending less. On higher ed than they were ten years ago. The challenge, of course, for states is, one of the big reasons is, they dont have enough money for education, because its funded at the state and local level. As we all talked about at great length on similar panels like this, state and local tax systems are in desperate need of modernization. Were taxing goods, not services. Were not taxing goods purchased over the internet. Corporations have far too much room to minimize their tax sales. A lot of states have flat personal income taxes that fail to capture the top of the income scale. Tax breaks for senior citizens. States and counties have some of the blame here for failing to tend to the Revenue Systems that would generate the funds necessary. Speaking on spending adjusted for inflation. Before i sat down here, i tweeted out a graph somebody posted on various numbers of costs over the last ten years, adjusted for inflation. Tuition was number one on the list. Triple or something in real terms. Student textbooks not far behind. I think thats where a lot of the money ends up going. And whose pocket it ends up in. And a lot of other housing transportation. They were right at about the inflation level. Most consumer goods, clothing, computers, et cetera, were far below. Theyre less in real terms than they were back then. It still shocks me with the technological revolution that weve had, with the transportation and Communications Revolution that weve had, that we still teach students pretty much the same way we did 150 years ago. And that has to change. Right here. You in the black sweater. Im from the American Federation of teachers. Ill start with just one question. I guess im surprised that nobody has talked about the impact of sequester. And what thats going to do to the state budgets, as i travel around the nation talking to union leaders. I tell them to anticipate a 10 to 15 cut based on the eventually implementation of the sequester. I think trump talked about that, as he was going around the nation. I wonder if you could just address that. Thats all theyve been talking about is federal funds. You talked a little bit about it earlier. Let me give you some numbers from the state level. Last ten years, if you toss out medicaid, states have been getting about 13 1 2 of their budget last year was federal funds. Excluding medicaid. That was the lowest weve seen in about ten years. So states have already been living with a flatlined or slightly declining discretionary programs. Our friends at the federal funds information for the states kind of show that if sequester goes into effect in 2018, i think there was about a 4 billion drop off of 519 billion base. So dont yet see what that is, and to which programs. In the education, states receive significant amount of money on title 1, the idea fund, school nutrition. Those are some of the biggest federal Grant Programs that go to states that arent medicaid. So were waiting to see dont know what the percentage change is, but based on that information, there is that would be, what, a oneplus percent reduction. I was just going to say, so i think part of the reason i didnt use the term sequester, and we havent really talked about that, because of all the things that are changing, i feel like those rules are in place, but because we have a republican majority and a president whos a republican, as they play with the budget, and how they come up with their decisions, im note sure what was decided there is going to be whats relevant. Thats not saying i think its going to be better, because i think actually we have less money and theyre talking about having more money go to defense, and when we dont actually know what theyre going to actually do with Social Security and medicare, it might actually leave even less money available for those discretionary domestic programs. I actually think it could be worse than what we were expecting under sequester. I think what were going to do is were going to see almost a reset in how in what the terminology is and how they go forward. But your basic point is right. Its important to Pay Attention to that category funding that we so artfully call nondefense discretionary. Weve got to come up with a better phrase for it, because people dont understand what were talking aboutment. Funds for schools, school lunches, for the wik program, for roads, for public safety, you know, Police Officers in cities, for housing, community development, housing vouchers, just a whole range of programs, for scientific research, that are under this awkward bucket. And i think probably a lot of state budget offices dont understand it. But as that gets ratcheted down over time, as it has been, that bucket of category spending is now at its lowest level historically since the 1960s. So we are squeezing that chunk of funding, and potentially accelerating the squeeze in coming years, depending on what the budget parameters are set up. Thats a real sleeper one to keep your eyes very closely on. I dont want to put the squeeze at the foot of the Republican Congress or the republican president , i agree that its happening. But i think its more of a structural thing associated with especially the growth of entitlements. Cbos, pick the group, theyve been putting out projections for years and years where if we just put everything on autopilot, it will squeeze everything out of entitlements. Theres a lot of things you can do to make it worse. But its something thats on the radar. And i think for states that are used to getting so many millions, or tens of millions, or hundreds of millions of dollars, i think youre right to be saying this is something we have to think about, that this may happen. Whoever is telling you its not going to happen, tell them they need to think about it. Lets not imagine its some force of nature. Its a deliberate policy that is very likely that at least some of the leaders in this congress and this administration will try to accelerate that trend artificially by ratcheting down the caps further. Okay. Over here in the checked shirt. Yeah, you. My name is chris scherrer. The guy with the nice smell. I work for senator joe matchins office. On tuesday, the Budget Committee had their hearing for the nomination of the office of management and budget. Congressman mulvany. And they really tried to hit home about his ideas for Entitlement Program cuts in reform. But they also tried to hammer home about the contrary and the differences that that was with the trump campaigns, and how he does not want to cut the various Entitlement Programs. How do you see the differences between the new proposed leader of the omb, and the Trump Administration . How thats going to affect their policies and their Budget Priorities . I was going to say that i feel like the person who is being considered for omb is taking the fact that you have numbers to add up or not in a way that im not sure all of the rhetoric and all of, you know, the proposals that were part of the campaign, and its often the part of any campaign dont necessarily add up. But if we think about some of the specific comments that have been made, it isnt possible to think about how they are all satisfied. You cannot, you know, cut taxes, guarantee that health care does not nobody loses health care, and were not going to cut any entitlements, like these things dont work. And so in some ways, i feel like its tough to be in those hearings, and have to answer these questions if you are a serious person who is trying to come up with sort of what the policies are. Because almost by nature, and weve seen this in other hearings, and this gets beyond sort of states, we have seen people sort of ratchet back, or sort of pull back a little bit from some of the statements that weve seen either from the president or during the campaign. Thats a Common Thread you see from the organizations here on the dias is that we all work to make sure the numbers add up. There are more organizations out there that dont, and want just ice cream and cake without eating any vegetables. But were out there pushing for it. I forgot to say, kim ruben has an excellent paper out here, be sure to read it, because it walks through a lot of the tradeoffs, especially how it affects the states. I think in practice, we wont see a lot of public daylight between the omb director and the white house. In the past, theres been a lot of private contention between the president and their omb directors, because they are the people who want to make sure the numbers add up. But as for what will happen, youre working for a swing state senator, so you know more than we do, or swing senator. Lets take a question from somebody watching outside the room. This comes from david merriman, a professor at the university of illinois. And the university of illinois chicago. The question is, i have recently heard that some policymakers are considering the possibility that the aca may offer states an option between keeping something similar to the current Medicaid Expansion or opting for some kind of medicaid block grant program. Is this a realistic possibility . If so, is it viable . And in general, is it advisable that federal policies offer states choices between different types of fiscal partnerships with the federal government . Hes talking about the collinscassidy proposal that came out earlier this week. Our website, folks should definitely go and read it. The answer to the second question, the devil is in the details. If you want to know about this proposal, go read the papers on our website. More generally, it depends. John, do you want to tackle the question of whether it makes sense to offer these very different partnerships with states . Its a really interesting question. In general, states, as i said earlier, states would say, give us flexibility. Tell us what the purpose is. And let us engineer the way we do it in our locality. So id say in general, states would be the sitting elected officials in a state would be happy to have the choice. The elected official 20 years from now, im not so certain. If the choice is, do the same or more, but accomplish it with less money, thats not going to go over very well in the states. Depends on the choice. This is probably something the Obama Administration didnt give enough credit for, but they did a lot of trial programs, and small Grant Programs to try to offer these. They did one on education of, heres some extra education money, you have to either, like, fire your principal or send everyone through training or become a charter school. It was four options. Everybody picked training so it didnt really result in anything. For unemployment insurance, it was pick two of the four in order to get some extra money for administration. And that one i think had some better results. Im all for flexibility. But, of course, for health care, the goal is, we want healthy americans. And so it doesnt do that, thats the question. Other questions . Here in front . Hi there. Zach barber from cbo. One of the core questions when looking at medicaid and flexibility of the states, is how much money they spend on mandatory services, versus Optional Services to optional populations. Theres a figure preaca about ten years ago estimated, i believe it was 60 of the average of state medicaid spending was on those optional populations. The data was a little faulty at the time, was a little hard to get. So a little dubious what that is. But with less spending available potentially in the future, where do you think, or will states draw money from other areas to continue funding the Optional Services . I think thats where were going to see people having hard choices to make. I think were going to see some states doing that. And i think ironically, in the reports that are policy centers here that were put out a few years ago, in part, they actually found that the states are more generous now, would have an easier time of figuring out where to put that money, to raise money more easily, if the Optional Services had been covered with federal funds. And youre in a state like mississippi, they might have a harder time finding the money to maintain those services. But i do think its setting up some tough choices for states to make the decision about whether theyre going to shift money to provide those services, or cut those Optional Services. You know, i think in the Great Recession, we saw on the parts of states, i think with like dental and vision, where basically there were Optional Services that there got ratcheted back, and some of that could actually lead to bad consequences if you think that somebody has, you know, cant see a dentist for a number of years, that could become something more serious. I think there are hard choices. Im not sure we know and i dont think it would be one size fits all. I think were going to see variation across states as they have to come up with the answers. Time maybe for one more question. There was one in the back, right here. My name is jen budoff and im the budget director for the dp council. Yesterday trump signed the executive order limiting federal grants to sanctuary cities. And the district is a sanctuary city. We receive over 1 billion a year in federal grants, you know, for everything from Refugee Resettlement to Homeland Security to grandparent caregivers, it runs the gamut. So i was wondering if you had any insight on the types of federal grants that might be targeted through this executive order . And the impact on states and cities in general . Its really unclear. It could be really narrowly they could decide really narrowly it will be through a few Justice Department and Homeland Security grants around this Law Enforcement issue. Or it could be much more sweeping. If you read the language of the executive order, it seems to contemplate the possibility of very draconian hits to cities and potentially a couple of states. Like connecticut and california. And the challenge is, and from a state and local perspective, the problem is that youre really catching folks between a rock and a hard place, right . Because the sort of nickname of sanctuary cities, i dont think that gives a real accurate picture of what actually happens when you when a Police Department is required to hold people under these i. C. E. Detainers, there are costs for incarcerating that person, there are costs for processing that person. Theyre potentially a legal viability of the Fourth Amendment, where people where a locality that violated someones Fourth Amendment protections against search and seizure was sued, because they were doing it under i. C. E. The federal government doesnt reimburse for that. You have to send a cost to a local city, where they started doing what i. C. E. Wants them to do. On the flip side youve got the federal government threatening to take away money if they dont. I think those costs are why its interesting, last year more than 20 states actually considered laws that would prevent localities in those states from that would require the localities to abide by those i. C. E. Detainers. All of those laws in state legislatures, including a lot of conservative state legislatures, i think because they were hearing from Police Chiefs and mayors and city council members, that they didnt want those costs and they didnt want their cities made less safe because their Police Departments couldnt do their jobs because they were paying so much attention to what i. C. E. Was telling them what to do. I think if they push it my understanding is that if they push the funds that they cut to cities who are in the sanctuary city, were going to see lawsuits about that and it will be years of legal action. Back on the theme of uncertainty. It will be really interesting and challenging to see how that plays out in coming years. Well, the theme for today is Stormy Weather and uncertainty. So it seems like a good place to close. I want to thank the urban institute for hosting this event. And joe, john, nick and kim for having such an informative panel. [ applause ] thank you so much for coming. Sunday, on cspans washington journal, the results of our third historian survey of president ial leadership. Joining us for the discussion are historian douglas brinkley, Howard University professor edna medford, and president ial historian and biographer smith. President s in ten different categories, like crisis leadership, relations with congress, and moral authority. Join us live sunday morning at 8 00 a. M. Eastern to see which u. S. President s received top billing in the president ial Leadership Survey on cspans washington journal. This weekend, cspan cities tour along with our Comcast Cable partners will explore the literary life and history of richmond, virginia, saturday at noon eastern on book tv. Well talk with former governor wilder, author of son of virginia, the life in americas political arena. Now a professor at virginia commonwealth university, he was the first africanamerican to be elected governor of the commonwealth. And i keep an ear to the ground. People are always ahead of politicians. Politicians hear what they want to hear. People hear what they have to hear. Well also visit the Edgar Allen Poe museum. The poet was a richmond native, and the museum is the largest collection of his artifacts and memorabilia. If it hadnt been for richmond, poe wouldnt have produced a lot of his best work, and wouldnt have had that chance to experiment when he was in his early 20s and find his literary voice. On sunday, at 2 00 p. M. Eastern, on American History tv. Explore richmonds history, from the american revolution, the civil war, and today. And then well visit the home of maggie walker, a leader in richmonds Africanamerican Community at the turn of the 20th century. E became the first female ceo of a bank in the United States. And mrs. Walkers goal was to primarily help women of the organization. And black women in the entire community. Thats what the strength of st. Luke was. Mrs. Walker goes on, not just to have an effect in richmond, but towards civil rights and equal opportunities for black women across the United States. Watch cspan cities tour of richmond, virginia, saturday at noon eastern on book tv, and on American History tv on cspan3. Working with our cable affiliates and visiting cities across the country. The house energy and commerce subcommittee on oversight and investigations held a hearing to consider the efficiency and effectiveness of the Medicaid Program. Members questioned witnesses about changes in the programs impact, resulting from revisions made by the Affordable Care act. This hearing is two and a half hours