Governors Mixed on Accepting Strings Attached to Stimulus Funds
February 23, 2009 - 6:54 PMGovernors of both parties expressed unhappiness about strings attached to federal stimulus money but most said the money is needed for their states' ailing economies as money to states was the key topic when the National Governors Association met with President Barack Obama on Monday.
Louisiana Gov. Bobby Jindal had already declined $32.8 million in federal funds to increase unemployment insurance payments in his state. The money was a chunk of the $787-billion economic stimulus bill approved by Congress.
Jindal will likely have company with some Republican governors rejecting some parts of the bill. Meanwhile, even governors taking the money, including Pennsylvania Gov. Ed Rendell (D), chairman of the National Governor’s Association, expressed some regret.
“There is an option to decline those requirements. Some states will, including some Democratic states, and some states won’t,” Rendell told CNSNews.com at a press conference at the White House.
“For me, it is a burden to meet those requirements. But I think I have no choice. Our people are hurting. It doesn’t matter whether they’re part-time workers or full-time workers. Right now in this economy, I believe it is my moral duty to provide as much help as I can,” Rendell said.
Jindal’s refusal came because the strings attached to the money would have required Louisiana to change its law in expanding unemployment insurance, which could require states to raise taxes on business to keep the benefits in place once the federal money is gone.
“I do appreciate the president acknowledging that there were legitimate concerns, legitimate issues when it comes to taking temporary federal dollars to create permanent state-spending obligations,” Jindal told reporters after Obama addressed the National Governor’s Association.
Mississippi Gov. Haley Barbour, a Republican who is refusing the same amount of money, added that, in the long term, such a proposal could do the opposite of stimulating the economy.
“If you expand our unemployment benefits to include people who are not willing and able to accept a full-time job, when the federal money ran out in a couple of years, we’d have to raise taxes,” Barbour told CNSNews.com. “The tax we’d have to raise is the unemployment insurance tax, which is a tax on job creation. We want to create more jobs. If you want to create more jobs, you don’t put a new extra tax on creating jobs.”
Obama acknowledged the issue when speaking to a gathering of governors in the East Room of the White House.
“There are some very legitimate concerns on the part of some about the sustainability of expanding unemployment insurance,” Obama said. “What hasn't been noted is, is that that is $7 billion of a $787 billion program. And it's not even the majority of the expansion of unemployment insurance.
“So it is possible for those who are concerned about sustaining a change that increases eligibility for part-time workers to still see the benefit of $30-billion-plus that is going even if you don't make the change,” Obama said.
“And so, if we agree on 90 percent of the stuff, and we're spending all our time on television arguing about 1, 2, 3 percent of the spending in this thing – and somehow it's being characterized in broad brush as wasteful spending – that starts sounding more like politics, and that's what right now we don't have time to do,” he added.
Obama also told governors Monday at a gathering in the East Room that Vice President Joe Biden would oversee the American Recovery and Reinvestment Act, coordinating with both cabinet secretaries and governors.
A hands-on approach by the administration is good news for the states, said Kentucky Gov. Steve Beshear (D).
“If each one of us could have written this bill ourselves, I’m sure we would have made some changes in it. But overall, it is a very solid approach to trying to get America moving again,” Beshear told CNSNews.com. “I’m looking forward to working with the federal government in doing just that.”
Hawaii Gov. Linda Lingle, a Republican who supported the stimulus legislation, said it is not so unusual for states to choose not to accept a certain pot of money when strings are attached.
“That’s not unusual, it’s like any bill that gets passed by Congress and grant that becomes available,” Lingle told reporters. “You need to make a determination as the governor of your state.
“Does this work in my state? Is it consistent with our policies? Does it have requirements that we don’t agree with? Then you make a decision to take it or not. Governors have to decide that all the time. In fact in my state, my departments can’t apply for federal money if I don’t sign off,” she said.
Barbour agreed with Lingle.
“In fairness, and the president said this, this bill affects more than 200 programs. There are going to be some that we don’t agree with, but the disagreements are not significant or immaterial,” Barbour said in an interview.
“There may be others, like this one, that are material. If that’s the case, we won’t accept that part of the money. Some people take that as being against a stimulus package. I’m for a stimulus package. I think this one could have been a whole lot better. But the fact that there are some programs that we won’t participate in does say we’re against a stimulus package.”
The target at specific programs was primarily to prevent states from using the money for tax cuts or simply putting it in a rainy day fund, New York Democratic Gov. David Patterson, told reporters, adding, “If we don’t reduce debt, we’ll be back here in two years.”