State Budgets and Federal Stimulus

Posted on June 29, 2010 by townsend

• States fear strain as feds curb spending, By Ronald J. Hansen, June 21, 2010, Arizona Republic: “With Congress increasingly reluctant to add to the nation’s debt, financial help is hard to find for state governments and individual casualties of the recession. Last week, the Senate rejected a bill that would have extended stimulus provisions to help the unemployed. Several attempts to extend higher Medicaid assistance have failed, too, leaving dozens of states, including Arizona, with looming budget holes that collectively total about $24 billion. Many still expect that the Medicaid money will materialize, if only because many states have expected the help for months and built it into budgets that begin in July. In Arizona, the federal money would mean an extra $394 million to help defray the medical costs of about 310,000 poor adults. Extending help for the unemployed would cost $40 billion nationwide. Without a share of that money in Arizona, weekly unemployment checks that are already among the smallest in the nation are $25 lower, and fewer people qualify for help at all. The push for austerity comes as Congress tries to balance the needs of the social safety net against the costs of soaring debt…”
• States struggle to balance budgets after Congress refuses to offer more stimulus money, By Beth Fouhy (AP), June 28, 2010, Grand Forks Herald: “For at least 30 cash-strapped states counting on federal stimulus money, the news was a stunning blow: A deficit-weary Congress had rejected billions in additional aid, forcing lawmakers into a mad scramble to balance their budgets. Now, with a new fiscal year just days away in most states, many governors are proposing to make up for the shortfall with tax increases, cuts in essential services and potential layoffs of thousands of public employees. ‘I support restraining federal spending, but cutting the only funding designed to help states maintain the very safety-net programs Congress mandates us to preserve will have devastating consequences,’ California Gov. Arnold Schwarzenegger said in a letter to his state’s congressional delegation. California faces a whopping $19 billion deficit _ more than 20 percent of the state’s total budget _ despite deep cuts that have already been made to many programs. Its new fiscal year begins July 1, and a budget deal there is nowhere in sight…”