Governors Downplay Stimulus Rift

By: and - February 22, 2009 12:00 am

Just one week after Congress approved an historic economic stimulus package to create jobs and help end the recession, the nation’s governors tamped down the divisions among them over whether to turn back some of the federal dollars flowing to their states from the billion plan.

“We’re not concerned with partisanship. We’re concerned with getting the job done. The president has done his part. Congress has done its part and now governors and mayors need to do our part,” said Iowa Gov. Chet Culver (D) who was among the governors who convened in Washington, D.C., Feb. 21-23 for the winter meeting of the National Governors Association.

Topping discussions both privately and publicly were how – and if – they would spend the federal dollars from the massive spending plan that some are comparing to public works programs under the New Deal of the 1930s.

At least six Republican governors, including South Carolina’s Mark Sanford and Louisiana Gov. Bobby Jindal, have said they may consider rejecting some of the federal aid because they fear their states will have to pick up the costs once the money runs out in two years. Even if the governors turn back the money, the bill allows state legislators to override them.

Vermont Gov. Jim Douglas, NGA vice chairman and a Republican who supported the legislation, said the controversy was overblown. “In the end, most governors are going to look at individual components of the act and decide what makes sense for their states and do everything they can to put their residents back to work,” he said.

Montana Gov. Brian Schweitzer (D) agreed. “I think an overwhelming majority of stimulus dollars that will go to states, whether they go to red or blue states, will be received enthusiastically,” he said.

Many governors wanted a more generous bill. NGA Chairman Gov. Ed Rendell (D) of Pennsylvania had hoped for more infrastructure money. “Look, the stimulus bill was a great idea, on balance. Are there parts I’d change? Sure. On balance, it’s the best response we could have made as a country.”

Rendell and other governors stressed they understood their responsibility in spending the money quickly and effectively to create jobs quickly. He pledged that the chief executives would be “good stewards.”

“We understand we have to use this money quickly, but we have to use it effectively and efficiently as well,” Rendell said.

Time and again, governors repeated the need for “transparency” and “accountability” in how the money is spent. (Click here for a snapshot of how some governors are preparing for the federal stimulus dollars.)

The governors are expected to meet today (Feb. 22) behind closed doors with an Obama administration official, possibly Peter Orszag, director of Office of Management and Budget, to discuss implementing the stimulus package. OMB has already alerted department heads that it will lay out how spending information will be posted on the Web site, , designed to give Americans detailed information on how and where recovery dollars are spent.

How states handle the money they receive through the stimulus package could determine whether the public will trust government officials enough to back a bigger, longer-term effort to rebuild the nation’s dilapidated roads, bridges, schools and other infrastructure, Rendell said.

If the stimulus package isn’t handled well, he said, the chances of the larger effort “go down the drain.”

A survey by national pollster Frank Luntz reinforced the message. He found that more of those responding to a poll were concerned about the openness of the process than the fairness of how funds were distributed, the number of jobs it created or even the safety of the projects.

“The public wants to know exactly what you’re doing and exactly what the measurement is,” Luntz told dozens of governors at a morning meeting Saturday. The success of the stimulus package could have even larger implications, Luntz said. “If you deliver on this over the next few years, not only will you have great job approval numbers, you will single-handedly be able to restore confidence in government, at least at the state level.”

The debate over infrastructure spending, which dominated Saturday’s session, largely turns on how to finance it in the long term.

Luntz told the governors that eight in 10 Americans said they would be willing to pay a 1 percent increase in their federal income tax for infrastructure, providing the money was not wasted. Rendell used the findings to say “the American people are ready to spend more money” on infrastructure. The billion for infrastructure in the economic stimulus bill is only about 5 percent of the nation’s total need for transportation and other infrastructure, Rendell said.

But Michigan Gov. Jennifer Granholm (D) said she was skeptical Americans would support higher income taxes during the current economic crisis. “I’m not sure in a recession that voters of any state will like to see an increase like that on their federal income tax,” she said.

In the closed meeting today, the governors are expected to work on these issues of how to pay for future infrastructure projects. Congress is preparing to overhaul the federal transportation program and replenish the Highway Trust Fund, the states’ main source of federal transportation dollars now supported by a federal gas tax. The American Society of Civil Engineers estimates that .2 trillion is needed to repair and upgrade the country’s infrastructure over the next five years.

The governors will go to the White House today (Feb. 22) as the Obamas host their first black-tie affair and again on Monday (Feb. 23) for a meeting with the president and Cabinet members. It will be their first gathering since joining then President-elect Obama in Philadelphia last December to discuss how states can help jumpstart the economy. The president met with the nation’s mayors Feb. 20 and warned them not to waste the stimulus dollars. He is expected to strike a similar theme with the governors.

Among the Cabinet members who could be on hand to speak with the governors Monday include Homeland Security Secretary Janet Napolitano, former Arizona governor, and Agriculture Secretary Tom Vilsack, former Iowa governor.

Another governor could be poised to join the Obama administration. Kansas Gov. Kathleen Sebelius (D) has been rumored as a top pick for secretary of health and human services. The president’s first choice, Tom Daschle, former U.S. senator from South Dakota , withdrew after admitting he failed to pay taxes. staff reporter Daniel C. Vock contributed to this report.


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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.