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Guest Blog: Stimulus Strings Will Hobble Budget Options in 2010

Posted By Amber Gunn On October 19, 2009 @ 1:24 pm In Economics | Comments Disabled

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 [1]–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 [2]) 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 [3]. 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 [4]. 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 [5])
  • $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 [6].


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URL to article: http://blog.heritage.org/2009/10/19/guest-blog-stimulus-strings-will-hobble-budget-options-in-2010/

URLs in this post:

[1] $5 billion in one-time funds to balance the budget: http://www.effwa.org/files/pdf/2009%20PH%2011%20-%20Legislature%20Continues%20Faith-based%20Budget%20Saga.pdf

[2] Governor Gregoire: http://www.libertylive.org/blog_main/post.php?post_id=1091

[3] revenue forecast is lower than they expected: http://www.libertylive.org/blog_main/post.php?post_id=1598

[4] Senate Ways & Means staff documents: http://apps.leg.wa.gov/CMD/showdoc.ashx?u=A2iGB9PMbwyP2X1C%2bw7qdVoo636n00r%2fAh888keMqQ0q2VAKi0ds%2bwJY5ty52OhTg7TFe%2b2P3unwwV9RLlR9yWXfswMFL0EVXtBz2Ahcx%2f8vMGVD4g1Zh51EYusQumCX&y=2009

[5] Cover All Kids debacle: http://www.libertylive.org/blog_main/post.php?post_id=307

[6] Evergreen Freedom Foundation: http://www.effwa.org/main/page.php

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