Governors Call for $1 Trillion Stimulus to Offset Budget Cuts

By Robin Shulman
Washington Post Staff Writer
Saturday, January 3, 2009

NEW YORK, Jan. 2 -- To help offset state budget cuts, a group of Democratic governors urged the federal government Friday to pass a $1 trillion economic stimulus package, significantly larger than the one under discussion in Congress.

The package would help states compensate for cuts to education spending that could cause long-term economic decline, as well as bolster infrastructure projects and benefits programs for the poor, the governors from New York, New Jersey, Massachusetts, Ohio and Wisconsin said in a news conference.

Congress is reportedly considering $675 billion to $775 billion in stimulus spending, but the governors suggested the package must be larger to have psychological and economic impact.

"The scope of it needs to be substantial," and it must "include this education piece," said New Jersey Gov. Jon S. Corzine.

The governors recommended that the stimulus plan include $350 billion for infrastructure, including transportation, wastewater and broadband projects; $250 billion for anti-poverty programs such as Medicaid, unemployment insurance, food stamps and child care; $250 billion in flexible education spending to maintain funding for programs from pre-kindergarten to higher education; and middle-class tax cuts.

The money, disbursed over two years, would offset cuts needed to balance state budgets and would serve as a "bridge" until 2011, by which time the governors hope the economy will have recovered, said Massachusetts Gov. Deval L. Patrick.

President-elect Barack Obama's transition team has been talking with this group since a bipartisan gathering of 49 governors and governors-elect in Philadelphia last month, said a transition official. Some of the group met with senior transition staff members before developing their formal proposal, the official added.

At least 41 states and the District face budget deficits totaling $42 billion this year, according to the Center on Budget and Policy Priorities.

Obama has said he wants to create or save 3 million jobs in the next two years, and on Monday he is to discuss his economic recovery plan with congressional leaders of both parties. He has asked state leaders for lists of infrastructure projects that are "shovel-ready" -- meaning they can be started with federal funding in the next six months.

House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) have said they hope to pass the stimulus legislation as soon as possible after Obama is sworn in.

The Republican Governors Association's executive director, Nick Ayers, said Friday that the Democratic governors' proposal goes too far, calling it "essentially a bailout of these states' general funds."

"Now is the time to focus on finding cost-effective ways to provide essential services without burdening future generations with ever greater debt," Ayers said.

The proposal the Democratic governors discussed Friday is not only larger than others under discussion but presents a new emphasis on education, they said. The recession is causing about 25 states to make or consider making cuts in education, Patrick said.

Ohio Gov. Ted Strickland said he applauds the idea of responding to the economic crisis with infrastructure jobs. But he also said that if the states do not get significant help to offset their own cuts, they will be working at cross-purposes with this aid and harming their economies in the long term.

"We may be putting people to work while at the same time we are laying off teachers, allowing college tuition to explode and failing to provide adequate Medicaid resources to the most needy," Strickland said.

Wisconsin Gov. Jim Doyle said, "We will see quality fall off in our schools," adding: "We will see a great restriction of university education, or such soaring tuition that ordinary hard-working families will be unable to afford it."

"I think often during these days about my parents, who grew up during the Great Depression and went to public schools . . . and went to a great state university," Doyle said. "Those people educated in the '30s went on to win a world war and bring this country into the '60s and '70s."

The governors emphasized that they are facing unique, temporary hindrances and outlined their setbacks.

"We aren't crying wolf; these are real circumstances, unprecedented situations we're facing," Strickland said.

"Looking forward, if I were simply to flat-fund the operations of this government, I would end up with $7.3 billion in deficit," he said. "To get a balanced budget, I would have to fund current operations at 75 percent."

In Wisconsin, by the end of the fiscal year, 10 percent of state employee positions will be kept vacant, on top of a similar number of jobs eliminated several years ago, Doyle said, adding that his state has made billions of dollars in cuts.

New Jersey started the fiscal year by trimming the budget by $600 million, Corzine said. Now the legislative leadership has proposed an additional $2.1 billion in cuts.

New York has a budget deficit of $15.4 billion, Gov. David A. Paterson said. The state lost 56,000 jobs from January to December 2008.

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