Governor asks feds to help states facing credit and budget crises
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[October 11, 2008]
CHICAGO -- In letters sent Friday, Gov. Rod R.
Blagojevich called on congressional leaders, Treasury Secretary
Henry Paulson and Federal Reserve Chairman Ben Bernanke, asking that
the federal government provide direct financial assistance to states
to address the current financial emergency. For the fiscal year of
2009, Illinois and 30 other states are projecting more than $53
billion in total deficits. In addition, rising unemployment,
declining home sales and lagging consumer spending are reducing tax
revenues, which is putting pressure on states to cut or eliminate
"Last week, Congress and the president took unprecedented action
by providing a $700 billion bailout to Wall Street. At the same
time, states, like most American families, are facing uncertainty
about their ability to pay bills and balance the checkbook,"
Blagojevich said. "We need financial assistance and stimulus to get
this economy back on the right track."
Many states and localities, including Illinois, use short-term
borrowing to manage cash flow and pay for important services,
including ensuring timely Medicaid payments and making state aid
payments to local school districts. The current restrictive credit
markets make it increasingly difficult for states, as well as
households and businesses, to borrow these funds.
"Federal assistance is essential to help states endure the
current economic slowdown. They can help stop this crisis by
providing a direct injection of federal dollars to states,"
Blagojevich said. "That is why I'm asking them to consider providing
assistance as soon as possible."
The text of the governor's letter to Congress is below:
Dear Congressional Leadership:
Last week, Congress and the President took unprecedented action
by approving a $700 billion economic rescue plan for Wall Street and
commercial banks. In the past week, the economic crisis facing
American families, businesses and state governments has deepened.
I am writing you today out of my great concern that without
additional help from the federal government, families, businesses
and state governments cannot meet their basic needs. Specifically, I
ask that you provide an additional economic stimulus package to help
revive our ailing economy and to provide direct financial assistance
to states that cannot access capital markets.
Rising unemployment, dramatic stock market losses and rapidly
declining home values all further erode consumer confidence and lead
to lower state revenues – underscoring the urgent need for federal
relief to stabilize markets and to put people back to work. Due to
the loss of tax revenue, Illinois and thirty other states are now
projecting more than $53 billion in deficits for fiscal year 2009.
As these deficits mount, another federal economic stimulus package
will be essential to help families, businesses and states endure the
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This period of financial uncertainty is exacerbated by the
unprecedented freeze of credit markets and a lack of liquidity that
has made it difficult for families to buy homes, for businesses to
meet payroll and for state governments to provide essential
services. Illinois, like many states and local governments, relies
on short-term borrowing to ensure timely Medicaid payments and to
provide state aid to local school districts. Without direct federal
assistance, Illinois and other states could be forced to cut, or
even eliminate, vital services that more and more American families
need during this time of economic turbulence.
The federal government can help ease this crisis by providing an
immediate and direct injection of federal dollars to states. During
past periods of economic uncertainty, Congress led the charge to
provide fiscal relief to states and help ensure that working people
get the assistance they need. Now that we are again in a period of
economic turmoil, I ask that you provide assistance to states in the
form of increased Medicaid match and resources for infrastructure
such as road and bridges. And, most importantly, I encourage you to
include the direct cash aid that states need to withstand the lack
of liquidity in the credit markets.
Congress' swift action to approve the economic rescue plan was
necessary to help prevent widespread economic distress. However,
many areas of our economy need the same direct aid that Congress
provided to the banking and mortgage industry. That is why I ask
that you now provide additional economic stimulus to American
families and businesses as well as direct aid to states in order to
prevent the credit and liquidity crisis from paralyzing the ability
of states to meet our citizens' basic needs.
Rod R. Blagojevich
[Text from file received from
Illinois Office of
Communication and Information]