Some states may shun stimulus funds
At least six governors have said they may refuse money, but will they face a backlash?
On orders from his boss, Idaho chief legal counsel David Hensley spent three days poring through the fine print of the gargantuan stimulus legislation, returning bleary-eyed to Boise with what looked like a college freshman’s dog-eared copy of Tolstoy’s “War and Peace.”Skip to next paragraph
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His boss, the cowboy hat-wearing Gov. Butch Otter, is one of at least half a dozen Republican state executives who have said they may reject some, even all, of the money their states would get under a stimulus package expected to enlarge the government’s slice of gross domestic product and slow, if not reverse, the economic downturn.
Critics such as Rep. Jim Clyburn of South Carolina say the Republican resistance is a political, even racist, ploy to withhold critical help from the nation’s poorest and most hard-hit communities. But with Americans – even Republicans – split on support for the bill, there could also be fiscal wisdom in cautiously approaching a spending package that could weaken states’ rights, put state taxpayers on the hook to fill future funding gaps, and stymie local innovation to turn the economy around.
“We’re concerned that we’re just going to be doling out million dollar hugs,” says Jon Hanian, Governor Otter’s press secretary. “It really comes down to the proper role of government, and that is a soul-searching question we’re engaged in here in Idaho right now.”
Indiana Gov. Mitch Daniels has also raised concerns about future state obligations especially for education, welfare, and healthcare spending, which make up the bulk of the $787 billion package.
“Some school systems will see a gusher of money the like of which no one has seen before,” said Governor Daniels at a press conference last week. “When federal funds stop coming, there will not be any way to replace all of that.”
The rift in the GOP became evident on “Meet the Press” Sunday as Governor Jindal faced off with Gov. Charlie Crist of Florida, who welcomed the package faster than he could say “Sunshine State.” “We are at a time of need and to do nothing is not acceptable,” said Governor Crist. “I’ve looked into the eyes of people [in unemployment lines] and I understand the challenge.”
But Jindal, who called the stimulus debate “a great opportunity” to offer conservative-based solutions, countered, “We should be unafraid to stand up on principles and point out alternative solutions.”
The topic is also likely to overshadow the Republican Governors Association conference that begins Monday in Washington. Facing a massive budget crisis, California Gov. Arnold Schwarzenegger is one of the nation’s 22 GOP governors who has said he is quite happy to take the money.
In a study released late last week, the Rockefeller Institute found that states are wise to take the money, but should plan judiciously. By the time the money runs out in 2011-12, conservative estimates show states could face budget gaps equaling 6 percent of general revenues, or about $100 billion nationwide. Spending cuts or tax hikes would be inevitable, the report concluded.