Bipartisan Group of Governors Announce Support of Obama's Stimulus

SAN FRANCISCO—A bipartisan group of 19 governors, including Republicans Arnold Schwarzenegger of California and Charlie Crist of Florida, sent a letter to President Obama yesterday expressing their support for the stimulus package that passed last week in the House and is currently being considered by the Senate. No Republicans in the House voted for the $819 billion bill, with John Boehner, the Republican House minority leader, declaring it a "bipartisan rejection of a partisan bill."

Still, Republican governors from large states that continue to face expanding budget deficits seem to believe that a similar bill under review in the Senate is good enough. "We are writing to express our support for the American Recovery and Reinvestment Act, which passed last week in the House and is under consideration currently in the Senate," the governors say in their letter to Obama. "As stewards of the economies of our respective states and regions, we urge the Congress to reach prompt resolution of all outstanding differences and you to sign the bill when it reaches your desk."

With states facing a combined budget shortfall of $100 billion—and with California alone struggling with a $42 billion budget gap over the next 18 months that has forced the state to stop paying some of its bills—there is little disagreement among governors and state legislatures that the federal dollars need to start flowing, and fast. "States need this money, and they need it soon," says Joe Hackney, president of the National Conference of State Legislatures and the Democratic speaker of the House in North Carolina. "It's the right move for America at this point in time."

According to figures released yesterday by the National Conference of State Legislatures, the stimulus plan under consideration in the Senate does have a few substantive differences with the House bill. Republicans in the Senate are pushing to include provisions that would prevent middle-class workers from having to pay the alternative minimum tax, for example, and the Senate is also debating whether to add initiatives that would do more to prop up the collapsed housing market.

By and large, though, the spending differences between the two bills are relatively minor. Both combine some tax cuts with a deluge of emergency funds for everything from Medicaid and education to infrastructure projects. A few Senate Republicans have quibbled with some of the House bill's spending priorities, but when the bills are finalized, experts believe cash-strapped school districts, child care centers, and universities will receive roughly $150 billion in new federal spending combined. States will most likely get at least $27 billion for highway construction projects, $7.5 billion for public transit, and $1.1 billion for airport projects. Billions will be spent to increase access to broadband ($5.6 billion in the House bill or $9 billion in the Senate's plan) and clean water ($6 billion in both proposals).

As much as $79 billion will go into a new "State Fiscal Stabilization Fund" to provide general assistance to the states. State lawmakers will be required to spend 61 percent of those funds to support K-12 and higher education. The remaining 39 percent can be spent on public safety and other government services. Experts say it is still unclear exactly how the states will share those funds.

There has been some disagreement about whether the House or the Senate bill would do more for the economy—and which would be more beneficial to the states. The Congressional Budget Office released a report on Monday that said the Senate version of the stimulus package would probably give the economy a swifter boost. It offers a combined $694 billion in spending and tax breaks by October of next year, while the House's bill injects only $526 billion into the economy during that same period.