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  • Guest Blog: Stimulus Strings Will Hobble Budget Options in 2010

    File this away in the “I told you so” budget commentary section. Last April, legislators hobbled together nearly $5 billion in one-time funds to balance the budget–including about $3 billion in federal stimulus funds ($4.1 billion total if you count the 2007-09 supplemental). In their eagerness to gobble up as many dollars as the feds would offer, legislators (and Governor Gregoire) forgot two of the most fundamental life lessons in a world of scarce resources.

    First, there’s no such thing as a free lunch. Second, if it seems too good to be true, it probably is. The stimulus money is no exception. The stimulus strings that were practically invisible from the budget debate during the 2009 legislative session are finally making a public appearance as legislators begin discussing next year’s expected billion dollar-plus budget hole.

    You see, the state is in a bit of a pickle now that the revenue forecast is lower than they expected. Add to that the fact that legislators cannot make cuts to certain areas of the budget due to their acceptance of stimulus dollars and the problem is compounded.

    For example, due to what are called “maintenance of effort” requirements, the acceptance of over $800 million of education stimulus dollars means only about $80 million would be available for cuts–this according to Senate Ways & Means staff documents. Also, the state cannot adopt Medicaid eligibility standards that are more restrictive than those that were in effect in July 2008 until the current biennium expires (Dec. 31, 2010). It gets worse. Of $3.4 billion in low-income health care and disability spending allocated for 2011, only about $400 million can be cut without getting tangled in those pesky stimulus strings.

    Still, of the $400 million that is eligible for cuts, a couple of items are noteworthy:

    • $68 million for “non-citizen pregnant women”
    • $32 million for “undocumented kids to 300% FPL” (FPL=Federal Poverty Level; See Cover All Kids debacle)
    • $13 million “SCHIP kids 200-300% FPL”

    Ahem. Why are we still funding these things?

    Amber Gunn is the Director of the Economic Policy Center for the Evergreen Freedom Foundation.

    Posted in Economics [slideshow_deploy]

    2 Responses to Guest Blog: Stimulus Strings Will Hobble Budget Options in 2010

    1. Kary says:

      I watched the Washington State Legislature in session on public TV at home. The Democrat majority passed every bill that came to the floor. It's like they are drunk with power, believe they have an endless source of funds and no common sense. We are in a recession! My own small business in Washington made no profit last year, we took no paycheck, but we paid over $4,000 in B & 0 taxes on our Gross Income. But lawmakers in Washington don't get it. I feel our one hope for survival is to pass Initiative 1033 to rein these folks in.

    2. jerry brazile says:

      where is the raise that people on social scurity was to get NOT HERE and not even the $250.00 he promise us I live on $690.00 per mo. and I cant live on it Where is our money Obama can bail out big Ins. co.and big banks but the hell with the poor.jerry brazile in Alk.

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