Stateline Story

Fiscal Relief Funds Fight Fires Real and Budgetary

  • July 25, 2003
  • By Jason White

Fire suppression in New Mexico, police officers in Maryland and local governments in Wyoming are just a few of the many areas state lawmakers are spending the fiscal relief money they received from the federal government this year.

Congress approved the money earlier this year $20 billion to be spread among the 50 states based on population as part of its $350 billion tax cut bill. Its purpose is to help state governments maintain programs in the face of depressed fiscal conditions.

Half of the $20 billion was earmarked for Medicaid, the state-federal program that provides health care to 47 million low-income and disabled citizens. The other half was left largely unrestricted so states could meet their unique budgetary needs. Based on a review of how that money is being spent, the needs of the states appear as varied as the states themselves.

In Wyoming, which has experienced few budget problems, a portion of the flexible funds are being passed on to local governments.

"Local government leaders, who are out in their communities every day, are in the best position to know how to use this money," Wyoming Gov. Dave Freudenthal (D) said in a press release.

Freudenthal released $5 million to local leaders. The state is scheduled to receive a total of $50 million from the federal government, half in July and half in October. The governor hasn't decided where to spend the other $45 million, said Freudenthal spokeswoman Lara Azar.

That's the case with many states, according to a report released Wednesday by the National Conference of State Legislatures (NCSL).

"Fiscal relief to the states from the federal Jobs and Growth Tax Relief Reconciliation act was an important boost. Many states, however, already had passed their fiscal year 2004 budgets and adjourned legislative sessions by the time the federal fiscal relief hit their coffers in early June. In many of those states, unspent federal funds are temporarily propping up balances," the report said.

In New Mexico, Gov. Bill Richardson's (D) disbursement of fiscal relief funds touched off a small controversy when New Mexico House Minority Leader Ted Hobbs (R) complained that legislators were being shut out of the spending process.

"I just believe that when there is an appropriation the Legislature should be involved in the process. As a matter of fact, our counsel service agreed with that. That's my only issue," Hobbs said in an interview with Stateline.org.

Richardson disagreed, saying that legislators would spend the money wastefully.

"It is the intent of the executive to prevent the 'pork fest' likely were these funds made available to the entire Legislature as a whole for distribution," Richardson said in a July 17 press release.

So far, Richardson has allocated $5 million to purchase equipment to fight forest fires, $5 million to drill new water wells in Santa Fe and $2 million to restore the Bosque, a wilderness area adjacent to the Rio Grande River that was decimated by forest fire, according to the governor's spokesman, Paul Shipley.

Richardson has instituted regular briefings with Hobbs and legislative leaders to keep them appraised of where the funds are going. New Mexico is scheduled to receive $31 million in fiscal year 2003 and another $31 million in fiscal year 2004.

Congress approved the fiscal relief funds for New Mexico and other states after a two-year lobbying effort by governors and state legislators. President Bush and House Republican leaders opposed fiscal relief for states. Many Senate Republicans opposed it as well. But in the end, a small cadre of moderate Senate Republicans joined with Democrats to force $20 billion for states in the Senate version of the tax bill. The money survived a House-Senate reconciliation conference and Bush signed the legislation May 28.

The money came none-too-soon for Maryland, which had been predicting a deficit between $50 and $100 million for fiscal year 2003, according to Maryland Budget Director Neil Bergsmann.

"We're going to give it to the Maryland state police, because they perform an essential government function. That's going to free up general funds that were initially appropriated to state police operations and that will reduce our need to cut elsewhere in the budget," Bergsmann told Stateline.org.

Maryland's share of the flexible relief funds for fiscal year 2003 is $90 million. It will receive another $90 million in fiscal year 2004, probably around October.