Obama jobs plan splits leaders of strapped states

[September 12, 2011]  JEFFERSON CITY, Mo. (AP) -- President Barack Obama's latest jobs plan calls for $130 billion in aid to state and local governments, providing either a welcome infusion of cash for those struggling with budget gaps, government layoffs and crumbling roads or merely a temporary patch for budget holes that are likely to remain long after the federal money runs out.

The perspective of governors and state lawmakers varies but often follows political affiliation, with Democrats generally praising Obama's plan and Republicans remaining skeptical.

"It's a no-brainer: Congress should pass the bill. Now," said California Gov. Jerry Brown, a Democrat, whose state would receive some $13 billion for construction projects and teaching and public safety jobs at a time when it has the nation's second highest unemployment rate.

Many Republican lawmakers and governors are less enthusiastic about accepting the federal money, especially if it locks in costs they will have to account for once the aid runs out.

"If we're given the flexibility to spend it as we see fit and not as they see fit, I could see some benefit," particularly for long-delayed infrastructure projects, said Missouri House Budget Committee Chairman Ryan Silvey, a Republican. "I'm not a big fan of using one-time money for ongoing expenses. I think that's what the state should be getting away from, not getting deeper into."

Obama's plan has to clear a politically divided Congress, which could scuttle it entirely or enact bits and pieces of it. As envisioned by Obama, state and local governments would receive $50 billion for transportation projects, $35 billion for school, police and fire department payrolls, $30 billion to modernize public schools and community colleges, and $15 billion to refurbish vacant and foreclosed homes or businesses.

It would mark the second, sizable infusion of federal cash to states in less than three years, coming just as they are burning through the last of the billions of dollars they received under the 2009 stimulus act.

In many cases, states used the original stimulus money to fill in for declining tax revenue and lessen or delay spending cuts for public schools, health care programs and other services. But those budget holes remain in many states as high unemployment persists and government tax revenue remains lackluster.

With another round of money, "the federal government may be able to play a critical role in helping states close their budget gaps," said David Adkins, executive director of the Council of State Governments.

But he said the prospects for receiving the money appear "very, very slim" given the focus on reducing government spending among Republicans in Congress. He said state government leaders are more interested in long-term stable federal funding for transportation projects and education programs.

In New Mexico, Democratic state Sen. John Arthur Smith said provisions of the Obama proposal, such as infrastructure financing for highways and aid to schools, should provide a short-term economic boost for the state. But he worries that it could create a future financial squeeze if state government needs to replace the federal money when the program ends.

He said state spending had to be cut this year to help close a $200 million budget gap created when federal stimulus money ran out.

"I'm one of those who would rather confront the enemy at hand right now," Smith said. "I don't think we're elected to push the issue down the road."

State budget officials have only estimates of how much they would receive under the Obama proposal, which was announced Thursday to a joint session of Congress. They are waiting to learn exactly how those dollars would be disbursed and what strings, if any, would be attached.

Some Republican governors already have established a precedent of rejecting portions of the federal stimulus money.

Wisconsin Gov. Scott Walker rejected $810 million in federal funding for a high-speed rail line between Madison and Milwaukee, and Ohio Gov. John Kasich turned down $400 million for a rail project to connect Cincinnati, Cleveland and Columbus. Florida Gov. Gov. Rick Scott canceled a $2 billion federal grant for a high-speed train between Orlando and Tampa, citing concern that state government would be locked into years of operating subsidies.

A state-by-state breakdown of the president's plan shows that Florida could receive more than $7.5 billion for schools, roads and other projects. That money would come into a state with a 10.7 percent unemployment rate and one of the nation's highest home foreclosure rates. But Scott spokesman Brian Burgess left open the possibility that the Florida governor could reject money under Obama's latest plan, especially if it added to the federal debt.

Republican Texas Gov. Rick Perry, who is running for president, dismissed Obama's proposal as wasteful spending and argued that budget cuts were the only way to help the economy.

"President Obama's call for nearly a half-trillion dollars in more government stimulus when America has more than $14 trillion in debt is guided by his mistaken belief that we can spend our way to prosperity," Perry said.

Perry has a history of rejecting federal money that would require changes in state law. Last year he declined to accept $550 million in additional unemployment funds because it would have required Texas to adopt a more generous program.

While it is not clear whether the Obama proposal would require Texas to rewrite its unemployment laws, it would extend the benefits of nearly 124,000 people in the state.

Kansas Gov. Sam Brownback, a Republican who as a U.S. senator voted against Obama's 2009 stimulus legislation, did not say whether Kansas would accept federal money under Obama's latest proposal. But he said the use of one-time revenue in the earlier stimulus program created budget problems for the state when the funding expired.

Other governors, particularly Democrats, welcomed the potential for more federal aid.

"We need all the help we can get," said Vermont Gov. Peter Shumlin, a Democrat whose state remains devastated by flooding from the remnants of Hurricane Irene.

"I think the hopes that we had for our recovery have been stalled for all kinds of reasons that are beyond Vermont's control," Shumlin told The Associated Press. "But it seems to me that the president's package for job growth and infrastructure investment is the right thing to help us avoid a double-dip recession."

Maryland Gov. Martin O'Malley, chairman of the Democratic Governors Association, said the president's proposal includes some job-creation ideas that have been supported previously by Democrats and Republicans.

"I think it's pretty much a nonpartisan idea that a modern economy requires modern investments in order to create jobs," O'Malley said. "There are things that we know will get people back to work -- rebuilding our infrastructure, rebuilding our schools, our bridges our tunnels."

Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, said Obama's plan to provide $4.5 billion for Illinois transit, construction projects and for teaching, police and firefighting jobs could help the state's economy, based on historical evidence.

"Spending money in the local economy creates a positive economic multiplier," he said.

[Associated Press; By DAVID A. LIEB]

Associated Press writers Scott Bauer in Madison, Wis.; Chet Brokaw in Pierre, S.D; Gary Fineout in Tallahassee, Fla.; Dave Gram in Montpelier, Vt.; Judy Lin in Sacramento, Calif.; Barry Massey in Santa Fe, N.M.; John Milburn in Topeka, Kan.; Julie Carr Smyth in Columbus, Ohio; Chris Tomlinson in Austin, Texas; Tammy Webber in Chicago; and Brian Witte in Annapolis, Md., contributed to this report.

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