NY Governor: States Need Federal Money Now

Wednesday, October 29, 2008 9:38 AM

New York's Governor David Paterson said on Wednesday the U.S. Congress must pass a stimulus bill that includes "direct and immediate fiscal relief" for states such as emergency block grants.

Paterson said in prepared testimony other measures Congress is considering to revive the country's economy are important, but "much of the good that would be done through proposals like expanding unemployment or food stamp benefits would be undone if states do not receive necessary federal budget relief."

Like emergency block grants — the direct cash assistance that was given to states in 2003 — increasing the federal share for Medicaid would help states, Paterson said during a House of Representatives hearing held on the economic downturn.

States and federal government jointly administer the health-care program for the poor and Paterson asked that the federal government reimburse states for at least 5 percent of their contributions through 2011.

"It could make the difference between targeted, surgical spending reductions that will help heal our fiscal condition and massive and wide-ranging cuts that will cause irreparable damage to millions of families," he said about the direct assistance.

The country's governors and city leaders are pressing the U.S. Congress to include Medicaid spending in any stimulus bill. But they have also asked the federal government to pitch in funds for infrastructure repairs that have been delayed.

Paterson agreed infrastructure spending was a good investment, but should come only after direct assistance.

"It is important to note that state budget conditions have deteriorated to the point where any federal dollars received for infrastructure projects must be free from state matching fund requirements," he said. "States have already reprogrammed and reprioritized to a point where there is simply nothing left in the budget for the current fiscal year."

According to the think tank Center on Budget and Policy Priorities, 39 states are facing budget shortfalls this year.

Speaker of the House Nancy Pelosi, a Democrat from California, has said the Congress will pass a stimulus bill following up on one enacted at the beginning of the year that sent taxpayers rebate checks.

Paterson pointed out his state, which is the heart of the U.S. financial services industry, has been hit harder than any other by the problems in investment banks.

New York state's deficits have leaped $20 billion to $47 billion over the next three years and, despite repeated cuts, the deficit in the budget for the current fiscal year that ends in April has grown to $1.5 billion.

On Tuesday, the state's budget director said the state would lose 45,000 jobs, 50 percent more than the 30,000 jobs cut after the attacks on the World Trade Center on Sept. 11, 2001.

"Just as after 9/11, we are asking the federal government to come to our assistance in a time of emergency," Paterson told Congress.

"New York has been shortchanged for years when it comes to aid from Washington. In 2007 alone, New York sent $86.9 billion more to the federal government in taxes than it received in return -- again, more than any other state," he added.

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