Breathing Room: A Panel of Legislators and Staff Tells State Legislatures That the Federal Recovery Money Took Some O the Sting out of the Recession. but There's More Pain to Come

Article excerpt


It's been nine months since President Obama signed the American Recovery and Reinvestment Act, the $787 billion package intended to pull the country out of its economic tailspin.

In that time, all but a handful of state legislatures finished their sessions for the year, passed their budgets and, in one way or another, accommodated the various streams of stimulus money that have begun to flow into their states. They've appropriated the money that was theirs to appropriate. They've wrestled with governors over the money that wasn't. And they've set up oversight mechanisms to adhere to the law's emphasis on transparency and accountability and begun to see first-hand how the stimulus law is working.

State Legislatures interviewed four Republicans, four Democrats and two staff fiscal officers to find out their thoughts on the recovery money. Did it help balance budgets and create jobs? Were too many strings attached? And what will happen in two years when the money runs out?

The recovery money began arriving during the early spring, just as most legislatures were confronting the worst fiscal situation in several generations.

State Legislatures: How has the recovery money helped your state?

Maine Speaker Hannah Pingree: As a state that has had a very difficult budget year, the stimulus funds made a horrendous budget a tough but not impossible budget.

Utah Speaker David Clark: We cut our budget by 15 percent and backfilled half of that with ARRA funds. The pain of the recession has been delayed a year, hoping the economy comes back. It has basically allowed a year's postponement of our budget challenges.

Missouri Senate President Pro Tem Charlie Shields: Missouri was in better shape than other states. We previously had cut Medicaid. Despite these cuts, we had a pretty big hole to fill due to declining revenue. The stimulus funding propped up the state budget through enhanced Medicaid match funds and education.

California Senator Denise Ducheny: Without the Medicaid and education money, California's budget would have been much worse.

West Virginia fiscal officer Fred Lewis: The stimulus has been a terrific help in preventing tax increases and curbing spending cuts, as it has effectively helped balance the budget in West Virginia.

Ohio Senate President Pro Tempore Tom Niehaus: It is likely the use of these funds alleviated the need for deeper spending cuts or additional revenue alternatives.

Backers of the recovery act argued it would create as many as 3.5 million jobs. While some state leaders and staff do not see a lot of job creation, they tend to agree the recovery funding has preserved jobs.

SL: Is the recovery act creating jobs?

Pennsylvania Representative Curtis Thomas: Much of what Pennsylvania has received so far has been for shovel-ready transportation projects. These projects have likely sustained existing jobs more than creating jobs.

Kentucky Senate Majority Floor Leader Dan Kelly: The act has been most effective in maintaining road-building jobs and keeping them on schedule.

Niehaus: I'm not sure of any assessment has shown any jobs were created or saved or at this point have accomplished what the stimulus set out to achieve.


Although it has money for many programs, the recovery act's strongest focus is on Medicaid, education and transportation.

SL: What ARRA programs have been most effective in your state?

Shields: The Medicaid money has certainly had an impact. It has kept the state's Medicaid program whole and allowed us to use some of the flexible money in other places. Missouri was on a seven-year implementation of a K-12 school funding formula and we were able to stay on track with the stimulus money. Furthermore, we were able to increase funding for elementary schools while secondary and higher education were held stable. …