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The Federal Partnership and the Federal Deficit

The Government Finance Officers Association (GFOA) recognizes the crisis this nation faces over the foreseeable future as we attempt to reduce the magnitude of the federal deficit. We fully appreciate the difficult task facing the Administration and the Congress in this effort.

As state and local fiscal officials, we are acutely aware of the impact of the federal deficit upon the long-term health of our nation and its cities, states, and other local governments. The solution cannot be to simply shed the deficit onto state and local governments or to abandon the well-established concept of federal partnership. We must all share the burden of dealing with this problem.

If equity in dealing with national problems is our goal, we must focus on contributing to the solution, not shifting the problem to a different level of government. Thus, each major component of the revenue and expenditure pattern of the federal government must bear its equitable share of the burden of reducing the onerous deficit which, without a positive commitment from all participants to the federal budget process, has little chance of decreasing.

The GFOA therefore proposes that reductions to the federal budget deficit be done fairly and in such a way that affects each of the four major contributors to the national expenditure/resource spectrum:

  1. military spending which includes both defense systems, retirement and other benefit programs;
  2. domestic programs which represent the partnership between national, state, and local government in provision of services to all citizens;
  3. entitlement programs which commit a major portion of federal resources while exempting such activities from effective annual budget review; and
  4. federal tax policies which direct the basic revenue flows by determining what is taxed and at what level.


The GFOA recognizes that a national consensus may exist that the maintenance of or increase in one or more of these categories is essential to the public safety or welfare. Such problems, caused by constrained resources, occur regularly at the state and local level. The GFOA recommends that, if it is deemed necessary to expend more than the reduced level to sustain a vital program, said expansion should be financed by revenue enhancements. This will preserve the integrity of the deficit reduction program.

Adopted: May 28, 1985