Stimulus Red Tape Tying States in Knots

Tuesday, 17 Mar 2009 01:51 PM

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ST. PAUL, Minn. - Think Congress moves slowly? Try getting something past more than 7,300 lawmakers in 50 states.

Speed is supposed to define President Barack Obama's $787 billion federal stimulus plan, but that theory is being tested in statehouses from Jefferson City, Mo., to Sacramento, Calif. The bulk of more than $250 billion going through state governments requires legislative appropriation or review.

Most states are desperate for cash to put people to work and mend big deficits. But legislatures rarely move fast, and even the sharpest number crunchers in statehouses still don't have a grip on all the details and implications of the American Recovery and Reinvestment Act.

It's been a month since Obama signed the bill, and in Minnesota last week one lawmaker was already fretting over the time it was taking to mete out more than $100 million in stimulus money for local water projects.

"Did we miss a month? Are we slow here or was it just, that's the way it is?" asked James Metzen, a Democrat from a St. Paul suburb.

As states scramble to understand the stimulus, delays are blamed on those who don't want to use all the money and those who are trying to build budgets around it. Clashes over how to spend discretionary money in the stimulus could bog things down even more, especially in 22 states where party control over state government is split:

_In Michigan, House Democrats fear that a special appropriations subcommittee set up by Senate Republicans to oversee stimulus spending is a ploy to drag things out. Republicans say they want to make sure spending is done wisely.

"We need to scrutinize this very closely because with this legislation that Congress has passed, and we bite on all of it, will this make our own state government grow so that it becomes unsustainable two years from now after the federal stimulus money is gone?" said state Sen. Alan Cropsey, a Republican.

_In Missouri, the GOP-controlled Legislature and Democratic Gov. Jay Nixon disagree on how extensively to use stimulus money. Nixon proposed to sprinkle it throughout the budget, but some Republicans want to wait and spend much of the stimulus money through a separate bill focused on one-time uses such as construction projects or a tax rebate.

"The state's budget is always complicated enough," said Rep. Allen Icet, a Republican from suburban St. Louis who chairs his chamber's budget committee. "Now you've got this 800-pound gorilla in the room that you have to deal with."

_In California, Republican Gov. Arnold Schwarzenegger and Democrats who control the legislature both want to tap as much of the federal recovery kitty as they can get. The state is in line for at least $31.5 billion.

But Democrats in California are still negotiating with their GOP counterparts over fine-print legislative changes needed to bring in federal cash. The state must undo Medicaid eligibility changes and expand its wastewater treatment program. Republicans worry about giving unemployment checks to more people when the federal government is already covering the state's unemployment costs.

The administration also has not specified how aggressive it will be in seeking funding.

"At over 400 pages long, the federal stimulus bill touches nearly every part of our state budget," Assembly Budget Committee Chairwoman Noreen Evans, D-Santa Rosa, said last week at a committee hearing. "Our actions ahead must get the most aid for California."

Even in states that don't have major political disagreements over the stimulus, lawmakers and governors are under pressure to get the spending right. Some states could open themselves to lawsuits, tying up the federal money in court, if legislatures don't follow the correct budgeting process, said Chris Whatley of the Council of State Government. That takes time.

"You want to be speedy but you also want to make sure this is spent appropriately and correctly and without fraud or the perception of fraud. That slows it down a bit," said Scott Pattison, executive director of the National Association of State Budget Officers.

Minnesota Gov. Tim Pawlenty, a Republican, is no big fan of the stimulus but he plans to take the money just the same. The state is running $4.6 billion short over two years, or about 13 percent of the budget. Pawlenty said he doesn't expect major problems reaching agreement with the Democrats who control the Legislature over how to use the stimulus dollars.

"We'll have our differences, but I don't think the use of the stimulus money is going to be one of the main differences," he said this week.

But lawmakers there plan to weave big pieces of the stimulus into appropriations bills that make up a roughly $37 billion state budget. That could tie up a good share of the federal dollars in the haggling over a deficit fix, a debate that could spill into summer.

Other money from Washington will probably slide through much faster, with legislators eager to fire up construction on roads, sewage treatment plants and energy-efficient buildings.

There were no problems passing the water projects bill through its first committee.

"This is good stuff," said Metzen, who heads the Senate Business, Industry and Jobs Committee. "This is good, good legislation. Helps when we get a lot of money from someone, too."

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