Governors Pushing For Federal Aid

Although education did not receive much attention at this week’s National Governor’s Association (NGA) meeting in Washington, fiscal problems were a topic of great interest. Governors cited different reasons for their state’s financial troubles, but all of those in attendance at the meeting were looking to the federal government to provide support. Many Governors are already taking steps to ensure their state either survives or sidesteps tight budget crunches over the next few years, but many Governors are still hoping Congress and the President will provide a helping hand. Their pleas may fall on deaf ears.

Many of the Governors discussed the benefits of passing a second stimulus package that includes money for transportation projects and other state funding needs. Currently, as many as 18 states have deficits, totaling $14 billion in the current budget cycle, and 20 states forecast spending shortfalls for 2009 totaling $34 billion, when combined. Governors are also looking to Congress for a one-year reprieve from new Medicaid rules that the Bush administration is attempting to put in place. State officials and health providers vigorously oppose the changes, which they say will shift $13 billion in costs over five years to states at a time their own budgets are facing deficits because of the economic downturn. (For more on the Medicaid rules, see the article above).

While Congress may be ready and willing to acquiesce to the states’ requests, they may not be able. In light of the federal budget deficit, and the need for continued war funding, the President is unlikely to give-up the Medicaid cuts easily, cuts he claims will provide billions in savings for the federal government. The President is also unlikely to support another $20 billion package until the current one has a chance to demonstrate success. If the President is unwilling to yield on his tight fiscal constraints, then states may have to work out their own financial difficulties without federal aid.

Resources:
Eric Kelderman and Daniel C. Vock, “Govs Press for More Money on Real ID, Medicaid,” Stateline, February 25, 2008.
Andrew Welsh-Huggins, “Governors Battle with Tight Budgets,” Associated Press, February 25, 2008.
Author: SAS