Report: States should look to economic stimulus plan to plug budget holes

A report issued Monday by the Center on Budget and Policy Priorities found that the proposed federal economic stimulus package wouldn’t go very far in plugging a $350 billion gap in state budgets over the next 30 months. 

In an article today at Stateline.org, reporter Pamela Prah cites the report by the center as saying that although $300 billion would be sent to states under the plan but less of that could be used fo cover budget shortfalls than some are speculating. 

The report notes that about half of that amount couldn’t be used to cover the state’s bottom line. It would be used for infrastructure, which is part of a state’s capital budget, as flow-through money to local governments, or to initiate new programs. 

From the article – 

“It was never anyone’s intent [for the stimulus package] to entirely fill state budget gaps,” said Nick Johnson, who directs CBPP’s State Fiscal Project. “The assumption has always been that states would take some degree of action themselves. It’s only appropriate.” The CBPP estimates the House plan would help states close between $150 billion to $155 billion in shortfalls or less than half of the states’ $350 billion projected deficits.

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