Several takes on the impact of the stimulus package on the states

Stateline.org this week has been asking various officials their thoughts on how much the federal economic stimulus package signed into law Tuesday by President Barack Obama will impact the economy on the state level. 

Today, the site turned to the head of the American Association of Highway and Transportation Officials (AASHTO) and an official with the U.S. Chamber of Commerce to get their takes

Here’s the response from John Horsley, AASHTO’s executive director – 

Transportation funding in the bill will allow the states to increase their highway project contracting by 25 percent to 50 percent this year. Our state DOTs said they could spend $65 billion on more than 5,000 ready-to-go highway projects. The $27.5 billion is very helpful, but we could have done more. We are also disappointed that transit funding was not provided at the level proposed by the House.

On Tuesday, the site asked various economists from around the country about what the package will mean for state budgets. 

I found the response from Jerry Nickelsburg, a senior economist at UCLA Anderson Forecast which provides forecasts on the California economy, interesting. 

The decision making on the part of the states will be the determining factor. In some cases, the transfer from the federal government to state governments will simply substitute borrowing in the Treasuries market for borrowing in the muni markets. In other cases, states will use the funds to postpone cutting programs. In the latter situation the transfers may just serve to push the budget cutting out to the 2009/2010 fiscal year and only have a temporary impact. Thus it is difficult to quantify the efficacy of these transfers.

Those seem to be some of the same concerns House and Senate leaders along with Gov. Steve Beshear were trying to allay with language in the recent budget shortfall legislation dealing with any stimulus money.

House Bill 143 which was signed into law on Friday stated had this language to make sure these stimulus dollars don’t increase the structural imbalance of Kentucky’s budget – 

It is recognized that the federal dollars received will not be recurring in nature; therefore, the intent of the General Assembly is that funds received from the American Recovery and Reinvestment Act of 2009, or its successor, are not used to permanently expand existing programs, permanently create new programs, or in any way increase the requirements to be placed on the General Fund, Restricted Funds, or Road Fund above the adjusted appropriation level as of June 30, 2009.

But even with those assurances, the state is still facing an even larger revenue shortfall during the next fiscal year, which prompted many lawmakers and legislative leaders to call for a deeper look at the state’s tax system and revenues streams in the future. We’ll see what those concerns translate into this legislative session or next year when the next fiscal year moves closer.

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