Federal Stimulus Dollars – Capping the Cost of the “Gift”

Diane Harkey Board of Equalization Member Diane Harkey Leave a Comment

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This op-ed originally appeared in the Flashreport

The Federal Economic Stimulus dollars are soon to be rolling out of Washington to our State.  However, what exactly our state will receive, the distribution process, or the full requirements and potential obligations that come with acceptance of such government largesse, is a bit vague.

The best estimate is that California stands to receive $31-32 Billion, including funding for critical infrastructure projects around the state. Creating thousands of badly-needed jobs at a time when our state’s unemployment rate has jumped to 10.1 percent is welcome.  These dollars will help promote more investment in our state, assisting at a time when the bond market, which is usually accessed for financing such projects, is somewhat unavailable to the State.

Other dollars will back-fill some of our General Fund deficit providing temporary as well as additional funding for existing services.  Approximately $7 Billion is allocated to fund education, $10 Billion for Health programs, $5.3 Billion for Social Services, and millions of dollars for Labor and Workforce issues, Housing, Criminal Justice and the Environment.

However, the Legislature must proceed with caution. In many instances the State will need to comply with Federal regulations which could create a future service or expectation, increasing our General Fund expenditures in future years.  Needless to say, in light of the enormous cash short-fall and deficit spending situation we now face, accepting these funds would be irresponsible.

To facilitate the review process, Assembly Republicans have formed a new Working Group on Safeguarding Federal Stimulus Dollars, to ensure stimulus dollars are spent responsibly on the real needs of working families.  I am pleased to have been selected as the Chairwoman of this important new effort.

The Working Group has already been working to identify and remove any barriers in state law standing in the way of money going to infrastructure projects across the state.  We want to get money out the door quickly so we can get new roads, highways, bridges, schools, levee repair, water storage and school construction and modernization projects built without delay and create jobs.   In fact, today the Assembly will likely be voting to immediately send out $2.6 billion in federal transportation dollars to shovel-ready transportation projects and modify state law so we can receive $443 million in federal funds for water projects.

We have also been working to ensure California carefully reviews the money we stand to receive, so we avoid accepting any funds that could further negatively impact our state’s long-term financial stability. We are working to sort out any federal “gift” that could force us to significantly expand some state programs. When the federal money runs out in a few years, we do not want to be holding the bill for expensive new state costs.

Take the debate this week over extending unemployment benefits to out-of-work Californians.  We all wanted to ensure those in need receive a little extra help while they are looking for work in these tough times.  But under the original proposal pushed by Democrats to accept approximately $2.5 billion in federal funds to extend this unemployment assistance, taxpayers would have been on the hook to pay for these extended benefits once the federal money ran out.

So Republicans stood firm and insisted that the measure be changed to protect taxpayers.  Now the measure makes it clear that taxpayers will not have to spend one dime on extended benefits.  All benefits will be paid for by the federal government.  We must continue to channel this spirit going forward when it comes to deciding how to spend stimulus dollars.

The entire State Legislature should continue to think through which functions are best for state government, and which ones are best left to the private sector.  Federal dollars should not be used as an excuse by state government to push new government programs and initiatives at the expense of private businesses and private-sector jobs. We also believe that as we decide how to spend federal dollars it must be spent with accountability to taxpayers.

With this huge influx of dollars from Washington, we have a great opportunity to invest in the critical needs of our state and our people if we take the time to do things right and act responsibly.  Working together to prioritize our needs, I am confident that we can stretch every dollar of the federal stimulus money to the fullest, build critical infrastructure and help get people back to work.

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