Economic stimulus plan on move, but ignores needs of states, local governments

Source: AFSCME Legislative Report

Jan. 25, 2008 (Washington, D.C.) - House Speaker Nancy Pelosi (D-CA) and House Republican leader Rep. John Boehner (R-OH), announced a bipartisan agreement with the President on an emergency economic stimulus tax package aimed at middle-class families and business interests.

But, the plan omits aid to fiscally strapped states or an extension of unemployment benefits, key priorities of AFSCME.

The upcoming issue of OCSEA's membership magazine, The Public Employee Quarterly, includes a feature exploring the state of Ohio's fiscal condition and how a sputtering economy is impacting the Strickland Administration's ability to balance the budget.

Watch your home mail the week of Feb. 9 and check out the complete story. Also, check back regularly at the OCSEA website at www.ocsea.org/budget.

Under the proposed plan, tax rebates or "stipends" of at least $300 would be given to all workers who earned at least $3,000 last year, including low wage workers who did not earn enough to pay taxes.

Families with children would receive an additional $300 per child, up to a cap of $1,200. The stipend would go to individuals earning up to $75,000 and couples earning up to $150,000.

The $140 billion package would be split roughly two-thirds to individual taxpayers and one-third to businesses.

Fiscally strapped states would lose $4 billion in state revenue because of the business tax cuts.

The package has not been approved by Senate leaders, where stimulus consideration is scheduled for next week in the Senate Finance Committee.

AFSCME President Gerald W. McEntee said, "Congress will be making a big mistake if they pass an economic stimulus deal that ignores the needs of state and local governments. Rebate checks alone are not going to address the crisis facing families who rely on unemployment insurance, food stamps and Medicaid programs." 

Senate leaders have said they will try to make improvements to the package, including:

• the possibility of increased state aid in the form of an increase in Medicaid payments;
  
  
• extending unemployment benefits beyond the standard 26 weeks;
  
  
• larger food stamp payments; and
  
  
• money for ready-to-go infrastructure needs.

Each of these items would provide a more immediate boost to the economy and help to resolve underlying concerns in the economy.

AFSCME has taken the lead in lobbying for more state aid and has reformed a large coalition which includes the National Conference of State Legislatures, the National Association of Counties, the American Hospital Association, many health care industry groups and others.

See Related

State Budget Resources

Budget Forecast - January 2008 (PDF)

State budget might suffer massive cuts; Gloomy revenue forecast says shortfall could near $1.9 billion (Jan. 23, 2008 - Columbus Dispatch)

State faces big budget shortfall (Jan. 23, 2008 - The Plain Dealer )

State predicting budget shortfall up to $1.9 billion  (Jan. 23, 2008 - Akron Beacon Journal / Ohio.com )