Where's the Federal Help for State and Local Government?

As we pointed out in the Progressive Populist many months ago, the economic stimulus package adopted by Congress should have included help for struggling state and local government, as it was easy to forsee that their budgets would be hit in a downturn. It's not too late for Congress to revisit this issue.

As reported by VOA News:

In the House Ways & Means Committee, state governors, a city mayor, and state and local officials called for another government stimulus plan.

New York Governor David Paterson said his state is among 25 U.S. states facing huge deficits. "There are 25 states in deficit, totaling more than $48 billion of debt. Their projections for 2010 are spiked upward incredibly. There will be 39 states in deficit and the amounts owed total over $105 billion."

Among more dire warnings, Robert Greenstein, of the Center on Budget and Policy Priorities, spoke of potential sharp increases in poverty, with Americans facing what he calls holes in the social safety that did not exist during previous deep recessions in the 1970's and 1980's: "I think we are facing a growing prospect of levels of destitution, not just poverty, destitution, severe hardship and increases in homelessness that we haven't seen in several decades," he said.

Among other things, New York's Gov. Paterson called for Congress to approve an increase in the Federal Medicaid match (FMAP) to help states deal with increased costs for health care because of rising unemployment. An increase in the FMAP is critical both for ensuring financial health of state Medicaid programs, and preventing job losses that will aggravate the economic slowdown.



The US Conference of Mayors is calling for an $150 billion Main Street Stimulus package (nice name!!), which would include extended unemployment benefits, additional support for food stamps, and funds for short-term infrastructure projects.


A second stimulus package is also strongly supported by the AFL-CIO.

All initiatives of our Main Street Stimulus meet the jobs and infrastructure criteria of quick short-term investments to stimulate Main Street with jobs for unemployed workers and economic activity for businesses in our metro areas. We have added three initiatives to the House-passed bill. They are Community Development Block Grants (CDBG), Infrastructure, Green Jobs- Energy/Environment Block Grants, and Public Safety. In addition, we are adamant that highway funds must be distributed through the Surface Transportation Program to ensure the flexibility of funding will be given directly to our local officials to meet the infrastructure needs in our metro areas.

In all three of these initiatives, CDBG, Energy Block Grants, and STP, upwards of 30 percent would be sent to the 50 states. The remaining 70 percent of these three initiatives would go to cities and county areas - which accounts for 90 percent of the nation’s gross domestic product.

Posted by Chuck Bell at 6:13 AM