Some states may shun stimulus funds

“This stimulus gives states some time, but it doesn’t make the problem go away,” says Donald Boyd, who wrote the report. “There is a risk of losing discipline, [but] in the end, I’d be very surprised to see a state reject the money. It’s fine to take a stand, but retreat may look pretty good.”

Rebel Republicans say that the focus of the stimulus package on expanding the government payroll may hobble the ability of states to target local and regional problems that have contributed to the downturn.

Mississippi’s Governor Barbour objects to a provision that extends unemployment benefits to people who have turned down full-time employment. Similarly, South Carolina’s Governor Sanford thinks extending unemployment benefits to part-time workers will bankrupt the state’s unemployment trust.

In Idaho, Governor Otter would rather have seen money go toward the federal government paying more so-called “payment in lieu of taxes” to local communities for the huge chunks of federally owned lands in the West.

“This shows that states like Idaho that have creative ideas ... are being stymied by an uncreative, old-ideas bill,” says Scott Ward, president of the Republican State Leadership Committee in Washington.

The rebel governors may be playing to simmering taxpayer discontent over the size and obligations of the package, evident in anti-tax protests across the country, including one that greeted President Obama recently in Denver. Politically, the GOP has found some success in painting the package as an overblown spending bill. Support for the package has waned in recent days, polls show.

“These are people jockeying for the next round of president, vice president and cabinet for Republican administrations.... [T]hey’ve understood the symbolic importance of saying no to what appears to be expanding federal government and deficits and social programs that their constituents, frankly, wouldn’t necessarily care for,” says Pearson Cross, a political science professor at the University of Louisiana in Lafayette. At the same time, Professor Cross says, “It’s a bit disingenuous to say, ‘Well, we may not take it,’ when in fact we need it desperately.”

Expecting just such a revolt from Southern governors who may resist expanding welfare for minorities, South Carolina Congressman Jim Clyburn fought for an amendment that would give state legislatures, not governors, the final say on receipts.

“The only strings attached to this money is if you have a community that for the last 30 years has had persistent poverty rates ... then you must direct 10 percent of this money to those communities,” says Rep. Clyburn. “If you don’t want this pot of money because that string is attached, what am I to conclude from that?”

The underlying cause for the resistance has to do with state sovereignty, says Byron Schlomach at the conservative Goldwater Institute in Phoenix. Will a short-term federal government intervention weaken states’ rights by making them more financially beholden to Washington?

That’s an issue that is particularly relevant as the revolt is largely coming from states such as Louisiana, Mississippi, and Alaska, whose residents currently receive some of the highest shares of federal subsidies in the country. These states, argues Mr. Schlomach, know the price that comes with federal largess. “We’re giving up our sovereignty and putting the federal government even more in the driver’s seat,” he says.

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