Nov/Dec 2009

State News: August 2009



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States May Soon Get Assistance

By Chris Whatley, CSG Washington Office Director
States may soon get federal assistance in dealing with their economic woes.
President-elect Barack Obama’s transition team has launched unprecedented outreach to state leaders since his historic election. In addition, Congress has indicated any new stimulus funding will go directly to the states, and U.S. Senate leaders are considering a stimulus package that will include an increase in the federal Medicaid match.

Obama Reaches Out to States

In the six weeks since the election, the incoming Obama administration has launched an unprecedented intergovernmental outreach campaign, seeking input into virtually every aspect of federal policymaking. Within days of the election, “parachute teams” of issue experts drawn from the campaign descended on cabinet agencies with instructions to take stock of current programs and operations and to reach out to a wide range of constituencies to seek input on new directions.
Nearly every cabinet agency has held outreach meetings with The Council of State Governments and other state and local associations. In addition, Obama has made it a personal priority to reach out to states, most notably by meeting with governors from across the country in Philadelphia in early December.
The new administration appears to be taking the state fiscal crisis seriously and is actively working with Congressional leaders to get a bill passed within its first few days in office that will provide direct relief to the states as well as needed stimulus for the economy as a whole.
In addition, the Obama transition team is considering an executive order on federalism that would affirm the strong principles of intergovernmental cooperation in policymaking that were contained in executive orders by former Presidents Ronald Reagan and Bill Clinton, but were never affirmed by the current administration, according to Nick Rathad, transition team intergovernmental affairs director.

Infrastructure Funding Will Go to States

House Transportation Committee Chair Jim Oberstar has indicated the infrastructure funding included in the proposed economic stimulus bill will go straight to the states. House Speaker Nancy Pelosi wants the package to be a clean bill, free of earmarks.
The proposal is likely to follow the proportions included in a $45 billion draft proposal released by Pelosi on Nov. 7, which included $18 billion for highways and bridges, $9 billion for environmental infrastructure, $6.5 billion for transit, $5 billion for the Army Corps of Engineers, $2 billion for rail, $1 billion for aviation, and a long list of smaller program areas.
Priority will be given to shovel-ready projects that can begin work, and start creating employment, immediately, according to Oberstar. There is no clear consensus, however, on how to define shovel-ready. The American Association of State Highway and Transportation Officials has released results of its survey outlining $64 billion worth of highway and bridge projects in all 50 states that could be under contract within 180 days.

Senate Pushes for Blanket Medicaid Assistance

Senate leaders have proposed increasing the federal Medicaid match for all states by as much as 8 percent. Senate President Harry Reid outlined a plan last month that would involve using the proposed stimulus package to spend $37.8 billion over 15 months to increase the federal match to 8 percent. This is a much bolder and more expensive plan than the $15 billion initiative outlined in September by Pelosi to increase Medicaid reimbursements to states through a three-tiered approach by 4 percent, 2 percent or 1 percent based formula based on rates of change in home foreclosures, unemployment and food stamp usage since 2006.
Most observers anticipate the final funding for an increase in the Federal Medicaid Assistance Percentage will be roughly $40 billion with a potential blanket percentage increase to all states of 5 percent spread over two years.


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