Stateline Story

States Still Hoping For Help From Above

  • May 30, 2002
  • By Jason White

U.S. Sen. Susan Collins, a Republican from Maine, has watched her home state ride a nasty revenue roller coaster in recent months.

From a large budget deficit announced last November to a slight improvement in February to a serious blow in April, Maine lawmakers have had to grapple with a seemingly ever-increasing budget gap.

Worried that Maine lawmakers' budget-balancing moves might include significant cuts to education or healthcare, Collins, together with the National Governors Association and Nebraska Sen. Ben Nelson (D), crafted legislation in early May to direct some additional federal dollars to all state governments, including Maine.

"During these difficult fiscal times, our states need more federal assistance in providing health care services through Medicaid, as well in providing social services, not less," wrote Collins and Nelson in a May 23 letter to their Senate colleagues.

The legislation includes a temporary increase in the federal share of Medicaid funding and funds a special social service block grant. Total fiscal relief would be $8.9 billion.

For the over forty states suffering through roughly $40 billion in aggregate deficits, the money would fall like cool water on a parched tongue.

"It was a priority three months ago," said Ray Scheppach in an interview with Stateline.org. "We think it's reaching a crisis at this point."

That's because many states have drained their rainy day funds and cut whatever fat was left in their budgets, said Scheppach, meaning the next round of cuts will pare "essential" services such as education and healthcare.

Collins and Nelson introduced their bill May 23 and hope to get it through Congress before adjourning this fall.

Analysts say the legislation has a reasonable chance of passing the Senate -- prominent and oft-opposing senators, such as Hillary Clinton (D-NY) and Tim Hutchinson (R-AR), have signed on as co-sponsors. In addition, the Senate has proven receptive to previous state aid proposals.

The legislation's fate in the House is less clear. Republican leaders are open to providing block grants to the states. But they have resisted past attempts to increase the federal share of Medicaid funding, fearing that even a temporary increase might become permanent.

Unfortunately for state leaders struggling with budget deficits, that's a stance they know all too well.

"Congress has to do what they have to do," said the Governors Association's Scheppach, when asked whether he's frustrated with the lack of fiscal relief flowing from the federal government. "All we can do is make the case."

The National Governors Association and the National Conference of State Legislatures have been doing just that since October, initially targeting Congress' economic stimulus package as a vehicle for relief.

An early Senate economic stimulus bill, endorsed by the governors, included an increase in the federal share of Medicaid worth about $5 billion. But the House rejected that part of the package.

A compromise stimulus bill passed in early March and signed by President Bush contained no such increase.

Now, with the Collins-Nelson bill beginning its legislative journey through the halls of Congress, state lawmakers are back lobbying their federal counterparts.

The problem is they have little leverage with which to ease the bill's passage.

"The states are not heavy hitting lobbyists because they don't have any votes. They don't control any votes. They don't influence any votes. They're dependent on the same voters members of congress are dependent on," said Alan Rosenthal, political science professor at Rutgers University and longtime watcher of state and national politics.

"So I think that Congress would rather put its money into programs that satisfy people, that satisfy voters, whether it's agriculture, health or education," he said.

Nelson, one of the co-sponsors of the fiscal relief bill, was once governor of Nebraska, an experience he cites as a key reason for his advocacy of federal aid for the states.

But according to Rutgers' Rosenthal, such fealty to state interests is rare in Washington, D.C., even among former state lawmakers.

"Members of Congress, maybe 40 percent of the member of the House, have been in the state legislatures," he said. "But once they get to Congress they have very different roles, they become federalized overnight. And I think it's the same with Presidents. There can't be any expectation that they're going to be sympathetic or understanding or giving."