Stimulus funds at the center of state budget troubles

The Office of Management and Budget argues that stimulus funds were the right answer to fixing state budget woes.

“Today, as federal, state and local governments make tough cuts to get back on a sustainable fiscal path, there’s no doubt that they are in a better position to do so because of the Recovery Act,” said Meg Reily, a spokesperson for OMB.

But for Florida, some of the heavily criticized cuts Gov. Rick Scott has made are the result of slashing government services that were once paid for by stimulus funds. Soon, some of those projects will no longer be cost effective after the stimulus money is drained later this year.

“Education is one example where federal stimulus that was in the budget the previous year, was no longer available this year,” said the governor’s spokesperson Lane Wright.

Florida’s budget, finalized under Scott in May, included $1.35 billion in education cuts.

Wright said costs associated with stimulus projects, such as the high-speed rail train which Florida also cut from its budget in May, have driven the state to refuse further stimulus dollars.

“High speed rail federal stimulus dollars would have obligated Florida’s taxpayers into debt down the road, (it) can hurt the state in the long run,” Wright said. “We have committed not to accept any new stimulus money.”

However, $370 million dollars of stimulus funds somehow managed to find its way into Scott’s budget.

Actions like these highlight hypocrisy in politicians’ willingness to critique stimulus funds while gladly using them, Florida Democratic Party spokesman Eric Jotkoff said.

“Rick Scott’s hypocrisy is matched only by his determination of his extreme agenda and to destroy jobs across Florida,” Jotkoff said.

With heavy spending restrictions placed on states that took the recovery money, the decision to make deep cuts during a time of economic difficulty wasn’t an easy one.

“Those (stimulus) dollars were obviously used to fill the gap the last two years, so states wound up putting off difficult choices,” Rick Hess, director of education at AEI, said. “So, now the states are in a situation where they have to deal with the consequence.”

This limit in state lawmakers to cut in a time where money was evaporating has resulted in a difficult situation for states, even as Obama’s administration continues to boast an economic turnaround.

“The result is now that stimulus dollars have tapered off, states are left with the same challenges they had a couple of years ago and no new influx of cash,” Hess said.

And the requirements associated with taking stimulus money from the federal government are pretty much never-ending, Hess said, specifically, of education stimulus money.

“Essentially, the states promised to do these things forever,” Hess said. “They were severely limited in the kind of cuts they were permitted to make for taking federal aid.”

North Carolina, a state that was stalled in a budget showdown between legislators and the Democratic governor up until a few weeks ago, is already wondering how it will keep up with the demanding costs of stimulus-funded projects in years to come, says North Carolina’s Speaker of the House spokesperson Jordan Shaw.

“The stimulus projects we had came with obligations from the state,” Shaw said. “Say, a transportation project, that may be paid for up front (by the federal government), the state incurs yearly obligated costs, the state economy is just not in a position right now to take on a lot of those costs.”