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* The state/local government bailout has been unveiled…
The total amount being given to state and local governments, including non-profits receiving grants, is $318 billion.
But there will be quite a few restrictions on the massive program…
In the $105 billion education section alone, money is broken down and disbursed using eight separate funding formulas.
As [House Appropriations Committee chairman David Obey] explained, this complexity is in part to avoid anxiety over giving huge amounts of cash to state governors to spend as they see fit (read: Rod Blagojevich).
There’s already a move by the Illinois delegation to keep Blagojevich away from most of the cash…
On Thursday, Congresswoman Debbie Halvorson announced she had signed on as a co-sponsor of an amendment to limit Illinois Governor Rod Blagojevich’s ability to alter or direct the distribution of economic recovery funds in Illinois.
Illinois Rep. Mark Kirk and lead co-sponsor Rep. Bill Foster are offering the amendment. Other members of the Illinois delegation have also signed on to the amendment.
* Now for the money…
· $41 billion to local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion).
· $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
· $4 billion for state and local law enforcement funding.
Explanation…
· State Education and Other Budget Priorities: $120 billion to states and school districts to stabilize budgets and prevent tax increases and deep cuts to critical education programs, including:
· $41 billion to local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion).
· $79 billion in state fiscal relief, including: $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas; $15 billion to states as bonus grants as a reward for meeting key performance measures; and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
· Temporary Assistance for Needy Families: $2.5 billion for block grants to help States deal with the surge in families needing help during the recession and to prevent them from cutting work programs and services for abused and neglected children.
· State and Local Law Enforcement: $4 billion to support state and local law enforcement including $3 billion for the Byrne Justice Assistance formula grants to support local law enforcement efforts with equipment and operating costs, and $1 billion for the COPS hiring grant program, to hire about 13,000 new police officers for three years. The grantee is responsible for at least 25% in matching funds and must commit to use their own funds to keep the officer on board in the fourth year.
* This is big, since it’s such an important part of every state budget…
· $87 billion for a temporary increase in the Medicaid matching rate.
Explanation…
· Medicaid Aid to States (FMAP): $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent, with additional relief tied to rates of unemployment. This approach has been used in previous recessions to prevent cuts to health benefits for their increased low-income patient loads at a time when state revenues are declining.
* This is fast becoming a major budget problem here…
· $43 billion for increased unemployment benefits and job training.
Explanation…
· Benefits Extension: $27 billion to continue the current extended unemployment benefits program - which provides up to 33 weeks of extended benefits - through December 31, 2009 given rising unemployment.
· Increased Benefits: $9 billion to increase the current average unemployment insurance benefit from roughly $300 per week, paid out of State trust funds, by $25 per week using Federal funds, through December 2009. There are currently 5.3 million workers receiving regular UI and an additional 1.9 million receiving extended benefits.
· Unemployment Insurance Modernization: Provides funds to states though a “Reed Act” distribution, tied to states’ meeting specific reforms to increase unemployment insurance coverage for low-wage, part-time, and other jobless workers.
* And then there’s the capital program…
· $30 billion for highway construction;
· $31 billion to modernize federal and other public infrastructure with investments that lead to long term energy cost savings;
· $19 billion for clean water, flood control, and environmental restoration investments;
· $10 billion for transit and rail to reduce traffic congestion and gas consumption.
These are the “ready to go” projects which can be up and running within 180 days. Another capital bill is likely on its way later this year. The projects listed above are already in the hopper at the state and local levels. So, those griping in comments about transit funding need to keep all that in mind.
There’s a whole lot more to this stimulus package than what’s listed here, like giving the Secretary of the Energy Department the power to guarantee about $100 billion of loans to alternative energy projects. There are also lots of tax cuts. So go read the full committee report.
posted by Rich Miller
Friday, Jan 16, 09 @ 12:15 pm
Sorry, comments are closed at this time.
Previous Post: Schakowsky: “Time will tell”
Next Post: This just in… Kelly formally pleads guilty *** Ed Genson out as impeachment lawyer *** Team quits “in protest” *** Genson: Rules unfair *** Genson: Guv won’t resign *** Adam: “Kangaroo court” *** NBC5: Blagojevich ordered move *** Has Genson read the rules? *** Adam: “Lynching” *** Rules: Trial goes on ***
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State and local governments, including non-profits receiving grants, is $318 billion.
Oh boy, Rod probaby thinks it’s all for him and his defense fund.
Looks like Genson will get paid after all……
Comment by Wacker Drive Friday, Jan 16, 09 @ 12:20 pm
Other than Fmap, these economic stimulus spending areas are for new or additional spending — not for relieving core state spending deficits.
Increasing the Social Service Block Grant (SSBG) is something that our state government badly needs.
If most of the Fmap dollars go back into health care system reimbursements, which our state government does not have to do but we should,
we still will badly need an additional tax incrase and sales tax broadening just to survive the current fiscal year.
Comment by Capitol View Friday, Jan 16, 09 @ 12:23 pm
CV, Fmap is clearly not the only state budget stabilization aspect of this program. Re-read it. There’s $120 billion in there for budgetary relief for states and schools. These aren’t for new programs…
===$120 billion to states and school districts to stabilize budgets and prevent tax increases and deep cuts to critical education programs===
Comment by Rich Miller Friday, Jan 16, 09 @ 12:30 pm
A bit surprised and disappointed that the transit portion is relatively puny, especially considering Obama has made energy issues such a large part of his agenda.
Comment by The Doc Friday, Jan 16, 09 @ 12:31 pm
Doc, these are ready to go programs. States have usually underfunded mass transit, so that’s probably why. There will be another package.
Comment by Rich Miller Friday, Jan 16, 09 @ 12:32 pm
Darn, the Muntu Dance Theater transportation earmarks will have to wait til next year I guess.
Comment by TaxMeMore Friday, Jan 16, 09 @ 12:34 pm
Wow-do we have desk ready State employees to administer and oversee these shovel ready programs? Some agencies are understaffed as it is, and this is an additional massive administrative undertaking. Is IL ready for this after the reign of Rod?
Comment by Anonymous45 Friday, Jan 16, 09 @ 12:34 pm
Understood that it’s targeting “shovel ready” projects, and also understand that everyone is clamoring for a piece of the pie. Thanks for clarifying.
Comment by The Doc Friday, Jan 16, 09 @ 12:36 pm
Also keep in mind, these federal dollars are temporary or one-time infusions. Illinois still has structural budget issues, so prospectively, there will be big issues for the new GA and Governor to decide. This might, however, buy Cullerton a little time before proposing tax increases.
Comment by Budget Watcher Friday, Jan 16, 09 @ 12:36 pm
Anonymous45, that’s the least of our problems.
Comment by Rich Miller Friday, Jan 16, 09 @ 12:39 pm
Also, CV, some of the other provisions, like the unemployment money, will take pressure off some of the state’s fastest growing outlays.
Comment by Rich Miller Friday, Jan 16, 09 @ 12:41 pm
Spending $30 billion for roads vs. $10 billion for transit isn’t change. Yes, it’s an improvement over the usual ratio of roads-to-transit spending, but it still favors projects that will undo all of the stimulus plan’s “green” investments.
Repairing dilapidated roads and bridges is necessary, and can be spent immediately in cities and towns everywhere — it doesn’t take an Environmental Impact Statement to fill a pothole.
Giving this part of the money directly to state DOTs is short-sighted. Building new highways means spending billions on the wrong roads (hello, Prairie Parkway); roads that will encourage more driving, more vehicle miles traveled, and more greenhouse gas emissions.
This money will be better spent helping to make driving optional by repairing and expanding transit systems and their passenger capacities; and helping to repair and expand the nation’s intercity passenger rail system — helping Amtrak speed up the Chicago-Springfield-St. Louis corridor and expand service, linking Chicago and the Quad Cities, and Chicago, Rockford, Freeport, Galena and Dubuque, Iowa, for example. That will reduce greenhouse gas emissions while putting people back to work.
According to the stimulus plan’s executive summary, transit will get just $1 billion for new construction; $2 billion for upgrades and repair, while acknowledging “the repair backlog is $50 billion”; and $6 billion in capital funds for new equipment, while the US DOT “estimates a $3.2 billion maintenance backlog and $9.2 billion in needed improvements.” What about the “ready to go” standard? The summary speaks for itself: “The American Public Transportation Association identified 787 ready-to-go projects totaling $15.5 billion.”
The Congress for the New Urbanism, where I work, and the Transportation For America Coalition have much better proposals. Please check them out at www.cnu.org/connectedstreetnetworks and www.t4america.org.
Comment by Railfan Friday, Jan 16, 09 @ 12:45 pm
Railfan, you’re still not getting it. These are ready to go projects. That means the spending is essentially dictated by existing state priorities. The “change” comes with the next capital plan.
Take a breath.
Comment by Rich Miller Friday, Jan 16, 09 @ 12:46 pm
Absolutely. One hopes that Cullerton will hold off on the middle class tax increase he may or may not be planning. Or any tax increase.
And who is to say there will not be more state bailouts down the road. Don’t think that’s possible? Look at the financial services industry.
It’s reps are all over the news hanging crepe and talking about how more, much more, will be needed.
Hard to believe our state political leaders would have the nerve to raise the income tax in light of this money tsunami, but Madigan has been reputed by some to want an income tax increase to
ensure a fiscially smooth term or terms for his daughter when she becomes governor.
Let’s hope somebody talks him out of that. We in the middle class really can’t afford it.
Comment by Cassandra Friday, Jan 16, 09 @ 12:49 pm
Rich @ 12:46: Yes, but if the states’ priorities are still “build more highways,” then those are bad choices that we cannot afford and should not fund. The hydrocarbon era is ending; we should be funding the alternatives. Who will drive those new highways when gasoline is back at — and above — $4 per gallon?
Comment by Railfan Friday, Jan 16, 09 @ 12:53 pm
Railfan, the idea is to get people working ASAP. Whatever’s shovel-ready gets the money.
Wait for the next round before you start complaining.
Comment by Rich Miller Friday, Jan 16, 09 @ 12:55 pm
This news would be welcome relief to Illinois school districts and special districts heavily reliant on the property tax. The Consumer Price Index (CPI-U) figure was released today and it is a meager 0.1%. This is awful news that taxing bodies will face in 2010 and will undoubtedly result in reduction of services to the extent possible.
Comment by Jake from Elwood Friday, Jan 16, 09 @ 12:56 pm
Every dollar temporarily –three year — spent from Fed money on personnel means higher taxes in the fourth and out years, unles the feds permanently fund them, which is not likely
Every shovel ready new road project means higher maintenance costs to be funded down the years.
The best, but not ready to fly project (because of the Asphalt and cement lobbies) would have been the Chicago hub and the interstate spokes for a high speed — truly, not Amtrak east cost style, I am talking maglev at 200 mph plus, connecting us and (run the 400 mile circle) the large metropoli with passenger and fast freight. Build the lines, rent the time slots. No further, because thereafter planes can likely beat the time city center to city center. A lot of shovels to go to work. Saves the roads, saves the airports.
This was the big chance to do it. Instead we are going to buy buses to fill non existent demand.
Comment by Truthful James Friday, Jan 16, 09 @ 1:03 pm
===This was the big chance to do it.===
No, it isn’t, since you already admitted that it wasn’t ready to go.
People, I’m really not digging the goofiness here.
Comment by Rich Miller Friday, Jan 16, 09 @ 1:05 pm
One of the down sides to the federal bailout provisions is that it would ease the immediate pressures for Illinois to significantly address it’s structural problems. Even if the capital stimulus added hundreds of thousand of jobs here, employment growth couldn’t sustain current spending within the existing tax structure.
Comment by Budget Watcher Friday, Jan 16, 09 @ 1:08 pm
Cassandra,
At some point, we are going to have to match fed. stim. dollars. How do you propose we do that? It is always easy to spend money, but we as a state are going to have generate some as well. Putting people back to work is absolutely important and with a state capital plan we can, but we have to pay for it. Gaming, gas tax, and an income tax increase are going to have to be talked about. Any other ideas? I am sure they would be welcomed.
Comment by My Opinion Friday, Jan 16, 09 @ 1:09 pm
With all due respect to John Maynard Keynes, deficit spending, aka fiscal policy, is dead. It doesn’t work. George W. Bush has overspent massively for the last eight years, and voila we find ourselves at the abyss. This mind-numbing reliance once again on federal borrowing is like Winnie the Pooh, banging his head on every step as C. Robin takes him downstairs, saying, “I’d go downstairs some other way if only I knew how!”
Comment by InquiringMind Friday, Jan 16, 09 @ 1:09 pm
BW, there ain’t no money and there’s very little public will to solve the structural deficit right now. Best to just tread water, cut wherever they can and wait for the flood to recede.
Comment by Rich Miller Friday, Jan 16, 09 @ 1:10 pm
===It doesn’t work.===
You’re comparing apples to broomsticks. Try going back and looking at what really happened to the budget, the economy, etc. and then come back here. If you’re advocating cutting spending now and balancing the budget, you’re insane, or Herbert Hoover reincarnated.
Comment by Rich Miller Friday, Jan 16, 09 @ 1:12 pm
BW, good point. The federal stimulus package is not a substitute for a statewide capital bill. It appears much of the federal $$$ will fill funding gaps to avoid layoffs and service reductions, and keep payments to vendors flowing.
Comment by The Doc Friday, Jan 16, 09 @ 1:14 pm
Railfan, the vast majority of IDOT’s budget goes for the maintenance of existing highways and bridges - not the construction of new ones. Also, Truthful James, IDOT tried a high-speed rail project and ended up spending a lot of money to up-grade UP tracks and facilities only to find out that the existing technology doesn’t match Fed. safety requirements.
Comment by Sangamon Sage Friday, Jan 16, 09 @ 1:16 pm
Hmmmm. I don’t think its fair to say that transit doesn’t have projects that are “ready to go”. Replacing worn/deteriorated tracks for example (to irradicate slow zones of the CTA) takes similar “preparedness” to replacing a roadway bridge. And if project engineering is fundable through the proposed capital program - but it is through most federal transportation capital programs (CMAQ, STP, etc.) - that that would allow many drainage issues, station rehabs and platforms modernizations to get underway quickly. We’re not talking STAR Line here.
The RTA can only budget based on anticipated (not wished for) revenue, and 2009 looks like this:
CTA - 232 million
Metra - 203 m
Pace - 41 m
TOTAL 476.5 m
There are plenty of capital expenses that the service boards could move into the first year of the 5-year capital budget if completely federally funded. And the entire system would be much healthier and sustainable if RTA and CTA could retire their debt from previous capital bonds.
Anyway, just saying…
Comment by KeepSmiling Friday, Jan 16, 09 @ 1:37 pm
I think that the better prepared IL government is will only bode well for the projects that are “ready”…being ready to start a project has nothing to do with prioritizing needed infrastructure repair…my concern is that yet again those with the loudest voices (read: clout) will be heard instead of munis and capitol projects that can benefit from the stimulus money will yet again be left in the dust…what about follow up and accountability with the monies for approved shovel ready projects…Maybe Quinn’s ethics panel should keep several eyes on this inititiative and keep it relatively clean and to the task…
Comment by Anonymous45 Friday, Jan 16, 09 @ 1:37 pm
If the Chicago Welfare Sox (and Bears etc) are still feeding at the trough, then yes, you can cut spending and balance a budget now. (I know its pocket change, just making a point that not every penny spent by government should be assumed to be necessary.)
And you can do it without touching a penny going to feed the hungry, shelter the homeless, care for the sick and disabled, or upholding individual rights and the law or any basics of society. We could easily cut government by 25% AND take care of our own that need it. And we could stop taxing poor people completely if we really cared about helping poor people more than we do spending money on useless things.
Bring all of our troops home and you cut 10-15%, while adding new blood and innovation to the economy right along with the tax cuts to the poor and middle class. From Iraq AND Afghanistan and Germany and Japan and Australia and England and everywhere else.
Comment by TaxMeMore Friday, Jan 16, 09 @ 1:39 pm
===We could easily cut government by 25% AND take care of our own that need it.===
Yeah? Tell me how to “easily” cut state gvt by 25 percent, and not your goofy Bears stuff, either. By “easy,” I mean politically simple, which is the only way it can “easily” be done. This ain’t a dictatorship, it’s a republic.
Comment by Rich Miller Friday, Jan 16, 09 @ 1:42 pm
We get close to the same numbers every year. We give we give and we give but every year they always ask for more. Why don’t we make change and so NO MORE. We don’t have the money.
Comment by Mommy Friday, Jan 16, 09 @ 1:47 pm
Actually I think the people of Illinois need a “bailout”. Not these programs
Comment by Mommy Friday, Jan 16, 09 @ 1:51 pm
“Medicaid Aid to States (FMAP): $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent…”
Question– Is this a 4.8 percent increase in the federal match, i.e., to 52.4 percent from 50 percent in Illinois’ case, or an increase of 4.8 percentage points, to 54.8 percent for Illinois? The difference could be significant; Comptroller Hynes estimated last October each percentage point increase was worth $80 million to the state, at current spending levels.
Comment by Charlie Wheeler Friday, Jan 16, 09 @ 1:58 pm
Good question, Charlie.
Comment by Rich Miller Friday, Jan 16, 09 @ 2:01 pm
You got me there. Nothing solves ignorance and appeasement on the part of the public and media, I guess.
We’re more of an autocracy in Illinois than a Republic. How many years of Madigan? Dictatorship isn’t as far fetched in the course of human events as you might think.
Politically, yeah, you’d probably need to be a dictator at this point in time in Illinois to start cutting all the patronage and make-work and useless and wasteful and redundant agencies and departments and jobs in state government and below.
The people that get money from the government give money to the candidates so they can get elected and give them more money. Both corporate and union. Look at People’s Bank giving Blago $30000 a month after he was arrested. They have no shame or consequences when they do it either.
We could do it, but people have to start getting informed and start being accountable to their fellow citizens. People’s Bank should be out of business today after their customers learned about that donation and realized it was also their responsibility to do something about it by withdrawing their money.
You are right, its not politically possible and won’t be until we can solve our problem of being fools for political promises and meaningless words.
Comment by TaxMeMore Friday, Jan 16, 09 @ 2:02 pm
The federal government shouldn’t send any money to state or local governments, since that spending isn’t mentioned, in the Constitution. Some tax money, that is earned in Illinois, is sent to Washington, DC, and, later, some of the same money is sent back to the same state or city from which it came. Each year, the federal government gives about $350 billion (about 10% of the budget) to state and local governments. Congress should eliminate that spending, and, since they would cut spending by 10%, they would also pass an across-the-board 10% tax rate cut. When all taxpayers have lower federal tax rates, state and local governments could change their tax rates, to ensure that they receive enough money.
Comment by Phil Collins Friday, Jan 16, 09 @ 2:07 pm
Charlie…you have no idea how people very high in gov can get tangled on that question.
Wild to see Foster joining with Bush Dog Kirk to keep Blagojevich’s hands off the bucks.
Comment by Bill Baar Friday, Jan 16, 09 @ 2:12 pm
Railfan:
Prairie Parkway is not a candidate for the stimulus package. All projects I am aware of are “off the shelf” shovel ready projects to fix existing roads and bridges. And there is definitely $1 billion of needs to do just that, on the most used mode of transportation in the state.
Comment by IDOT'er Friday, Jan 16, 09 @ 2:12 pm
IDOTer: you just said what people interested in alternative transportation fear the most about middle management IDOT employees fixation on road building and repair with stimulus money…Newsflash: The oil based economy is over!
We need a real assessment of the feasibility of repairing the thousands of miles of roads in the state and compare it with light rail infrastructure…your logic is off kilter …just because roads are the most used mode of transportation doesn’t mean we should spend all the stimulus money repairing this mode of transportation to the exclusion of others…I hope the regional planning organizations will be called upon to weigh into the question of how best to use this stimulus money to keep the state competitive, and afford an improved quality of life for it’s citizens including clean air and transportation choices that do not rely solely on the automobile…
Comment by Anonymous45 Friday, Jan 16, 09 @ 2:28 pm
I’m still not even close to satisfied that the figure given for transit comes anywhere near to covering all projects that are approved and shovel-ready. The state of Missouri alone lists more than $5 billion in upcoming transit projects, including the $900 million Metrolink expansion in St. Louis that just got voted down by the narrowest of margins in November’s referendum due largely to voter disgust over the Metrolink prior project management, the flashpoint being an ill-conceived lawsuit against a contractor that resulted in a counter-suit from the contractor that the contractor won big on.
More generally, Obama has a political problem here due to the fact that the word “transit” just isn’t in his stump speech. It’s always just “roads and bridges,” along with references to energy policy. And now we see that in the budget proposal.
Comment by Angry Chicagoan Friday, Jan 16, 09 @ 2:42 pm
I’ll add that the other programs in areas such as education and health seem very well thought out, and could potentially cover a very large share of state and local budget deficits over the next two years.
Comment by Angry Chicagoan Friday, Jan 16, 09 @ 2:43 pm
Railfan:
I’ll take a little of that global warming the last few days!
Comment by Ben Friday, Jan 16, 09 @ 2:54 pm
Angry-
I reviewed St Louis’ $900 M Metrolink proposal and it definitely does NOT fit within the 180 day shovel ready time frame, if the legislation stands as now contemplated.
Comment by Six Degrees of Separation Friday, Jan 16, 09 @ 2:58 pm
Let’s hope that the capitol plan does not inspire nation-wide “pay to play.” Whether or not the projects are ready to go will make no difference. The Blago types are smelling $$$ in the air.
Comment by Splitendz Friday, Jan 16, 09 @ 3:06 pm
I’m cynically optimistic.
I expected worse.
Comment by VanillaMan Friday, Jan 16, 09 @ 3:12 pm
anonymous 45:
There are 9 Highway districts in the state. Only one has an extensive rail transit system, and another one has a little bit of rail transit. All the other districts either have no transit or are served by bus (which uses ROADS) where transit exists. Your implied suggestion to ignore road repair in the stimulus package is unacceptable to the vast majority of residents of these districts, who also happen to be VOTERS.
Comment by IDOT'er Friday, Jan 16, 09 @ 4:01 pm
anonymous 45:
automobile = oil based? Maybe today but with every automaker working on plug in hybrids and electric vehicles that equation will probably change. Light rail has it’s place but it is completely unrealistic for the majority of the state, or do those citizens living in these areas not count?
Comment by Highway Man Friday, Jan 16, 09 @ 6:49 pm
Also, Amtrak is severely short-changed; this is vastly short of the authorization passed in October and doesn’t even fully cover operating expenses. Talking Points Memo has a good write-up on this.
Comment by Angry Chicagoan Friday, Jan 16, 09 @ 7:22 pm
Here’s a great breakdown of the two rival House plans so far — the very solid and well thought out legislation from the Transportation and Infrastructure committee, and the pig-in-a-poke from Appropriations. The T&I plan has a higher share for transit AND a more stringent provision for rapid stimulus than Appropriations. Full details at http://t4america.org/news/archives/618
Comment by Angry Chicagoan Friday, Jan 16, 09 @ 8:00 pm
Folks, for the past few months, we’ve been in the land of “In Case of Emergency: Break Glass.”
We have to go all in here to save capitalism. It’s all paper at this point, anyway. Roosevelt got in trouble during the Depression because he didn’t go all out; he kept trying to cut spending at any glimmer of economic growth, and then the economy would tank again.
This is the easy part. The pain is going to come when we have to contract this greatly expanded money supply to hold off inflation. That’s going to be tricky.
Comment by wordslinger Saturday, Jan 17, 09 @ 12:39 pm
I’m very late to this discussion, so apologies in adavance.
I was at Sen. Bond’s hearing Friday and read the executive summary of Obey’s federal Appropriations Committee report. It’s my understanding that the federal stimulus is intended purposefully to guarantee capital spending that otherwise would have occurred in 2009, financial meltdown notwithstanding.
Think of it as a loan guarantee for $500-800 billion in new spending for all 50 states. Illinois’ share will be decided via formula like all other states. Those states that can process the funds on to entities that contract for the work will get the money (aka, disbursement for “shovel ready” projects). Those states that don’t commit funds within 90-180 days lose the federal funding.
Bond’s hearing was to encourage all of Illinois’ eligible entities to prepare realistic projections in order to capture the maximium amount of federal stimulus funds. Water and sewer projects, school construction, maintenance, roads and bridges, etc., all are eligible for funding. Cullerton and Bond offered everyone a chance to submit ideas for how Illinois can best utilize this short-term funding.
I am a huge fan of transit, especially high speed rail. Nothing that is happening with the current stimulus package is a threat to longer term capital projects. This is an emergency stimulus plan designed to use federal dollars in place of other dollars during this crisis so people keep working.
Unemployment is projected to increase, perhaps to 9% or 10% by the end of 2009. The Obey report projects a need to infuse as much as $850 billion in public funds to replace the anticipated loss of $850 billion in nonpublic Gross Domestic Product spending, so people keep working.
We’re in an emergency situation, and this a short-term fix. It only guarantees current projects will continue. It does not preclude new, smart programs that also will encourage economic growth.
Back to Illinois: the federal stimulus still does little to erase the current state spending deficit. Illinois will see a bottom-line benefit on Medicare spending/match in the current fiscal year, but we still owe billions to providers. Nothing in the federal stimulus helps greatly in repairing Illinois’ structural deficit.
Illinois still has to consider some dramatic and costly operational changes, on the management, spending and revenue sides. Given the billions needed to begin to catch up with currnet obligations, Illinois will still grapple with the need to increase taxes. Even with the federal stimulus, our state and country still must travel a long road to recovery.
“What we have here is a big (deleted by Miller) sandwich, and we’re all going to have to take a bite.”
Comment by 47th Ward Sunday, Jan 18, 09 @ 2:26 am
All of this spending will help reduce overdue reimbursements, but the federal dollars cannot be counted into the new state base of annual revenues. Most of the dollars are for one or two year duration, a true economic stimulus for the crisis of the moment.
The appropriate state government response would be to seek a State Constitutional Amendment making our income tax graduated rather than flat, and then when the federal dollars run out at the same time the new constitutional amendment becomes effective, set the tax rates based on what state government needs now and into the future to maintain esential services.
But a gas tax now may be a good idea, to keep us thinking smaller and more fuel efficent cars even if the price of gas drops a bit more in the future. We dropped the ball back in ‘73 after the Saudis finished retooling their oil retrieval processes (while blaming the stoppage on pro-Israel foreign policy by the west.)
Broadening the sales tax onto more services is also long overdue, and reflective of the overall economy of the past twenty years or more.
Comment by Capitol View Monday, Jan 19, 09 @ 1:32 pm
The ammendment for 180 days allowance for obligation instead of 90-120 days to obligation for contract award will mean highway projects will not turn dirt or pay cash out the door until June 1, 2010 in central and norther states. Obey is falling for the pay now, deliver later culture in Federal transportation funding. Oberstar was right to limit to 120 days to award. How about getting the states to accelerate their performance on existing Hwy moneys to meet this year’s construction season as the method for initial money out the door stimulus.
Comment by HwyFundingGuy Sunday, Jan 25, 09 @ 11:49 am