Stimulus Deal Restores Some Aid To States

Senate negotiators on the economic stimulus bill say a small but contentious provision to aid states has been partially restored.

The $25 billion "state stabilization fund" had been devised by the House to help states plug holes in their budgets as tax revenues fall. The Senate deleted the fund completely, and governors fought to get it back.

In the Senate, the rap on the fund was its lack of oversight. Last week, budget committee Chairman Kent Conrad (D-ND) called it a slush fund, saying, "There's absolutely no strings attached. Governors can use it for any purpose."

But without it, Ohio's Democratic Gov. Ted Strickland said, he'd be looking at "some terrible, terrible choices."

The economy has blown big holes in the Ohio state budget. Strickland gave some examples in an interview: "We believe that perhaps 500 employees in our correctional system would be terminated, that there would be as many as 51,000 Ohioans who would lose mental health services, and that as many as 5,200 mental health providers would lose their jobs."

In its original form, the stabilization fund would have provided Ohio about $1 billion, Strickland said. He scoffed at the "slush fund" accusation: "I would welcome the Senate putting specific constraints on how those resources can be used."

But with the stimulus bill on a fast train to the White House, Strickland and other governors had little time to make their case.

Strickland wrote an urgent letter to Ohio's members of Congress. He got on the phone to them and to other governors who also wanted the money restored. Governors made calls to the House, Senate and White House.

There wasn't time to organize the usual lobby campaigns, with e-mail barrages on Capitol Hill or Washington fly-ins.

"Things are happening pretty fast," said Scott Pattison, director of the National Association of State Budget Officers. "It would be hard to put together a huge grassroots organization that you hadn't already been utilizing at this point."

The governors also had to worry that a hard push to resurrect the stabilization funds might upset the political balance of the entire stimulus package.

Democratic Gov. Ed Rendell of Pennsylvania, chairman of the National Governors Association and an ally of President Obama, said in a news conference Tuesday, "I can't emphasize this strongly enough. We, neither myself nor my fellow governors, are complaining. If the cut remains in the stabilization fund, we'll find a way to make it work."

Republican Sen. Arlen Specter of Pennsylvania helped to write the Senate bill that deleted the $25 billion. The other two Republicans in that session were Susan Collins and Olympia Snowe, both of Maine.

But Maine's Democratic governor, John Baldacci, said his budget for next year doesn't anticipate any emergency boost from Washington, and he isn't mad at Collins and Snowe. He compared them to a Maine regiment that halted a Confederate assault at the Battle of Gettysburg and said, "We think that our two senators are standing right up there and should be recognized for their leadership."

On Wednesday afternoon, Collins announced that negotiators had restored some of the money. "We were able to come up with a stabilization fund that will help the states close holes in their budgets," she said.

House members didn't rush to agree with Collins. But since it was the Senate that had deleted the $25 billion, sources told NPR that restoration of about 20 percent of the original total seemed likely.

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