If Congress delivers the massive $800 billion stimulus package that President Obama is seeking, states will be under a lot more scrutiny than the Wall Street firms that used $18 billion of their federal bailout money for employee bonuses.
"The theme is, you better spend it like your mother is watching," said David Quam, director of federal relations for the National Governors Association. "Better do it wisely."
The governors of Arizona, Kansas, Maine and Wisconsin are among some 15 governors who have already created "stimulus recovery czars" and/or task forces to manage the states' share that will pay for fixing roads and highways and other job-creating projects.
While Congress is still working out the details, the final package is expected to require states to post on the White House's new www.recovery.gov Web site information that describes their stimulus projects, how much federal money is involved and how many jobs will be created. A handful of states have already launched their own stimulus-tracking Web sites.
Democrats hope to put a finished spending package on Obama's desk before President's Day, Feb. 16, but a lot of tough negotiations have to happen first. The U.S. Senate expects to vote on its bill early this week and then work out the differences with the House-passed plan.
Billions of dollars to the states hang in the balance. The Senate cut some $39 billion from a "state fiscal stabilization" fund aimed at helping states avoid cutting education and other services. The Senate bill also has about $20 billion less for school construction, Head Start and state and local anti-crime efforts.
The stepped-up oversight of the pending federal stimulus package comes amid public uproar over huge bonuses handed out by the very Wall Street firms that received a federal bailout to stay afloat. The president and Congress have insisted on more accountability in this package, including setting aside money for government watchdog organizations, such as the Government Accountability Office, to track how the money is spent. The House version, for example, also would require that governors certify that any expenditure has been fully vetted and is an appropriate use of taxpayer dollars.
"At the end of the day, they [governors] know as CEOs of the states, they will be in charge of an awful lot of money," Quam of the governor's association said. Governors, he said, "will be held accountable for making sure this money is spent wisely."
Also noteworthy is that over the next two years, 38 governors' spots will be up for election, although term limits will prevent 17 current governors from running again. How states have handled the influx of federal dollars will certainly be an issue during the campaigns.
The responsibilities of the governors' stimulus "czars" or commissions vary, but their main job will be to work with local and state governments and community and business groups to make sure projects are selected in a fair and open process and deserve to get the federal funds.
Here is a sampling of how some governors are preparing for a stimulus package:
- Kansas Democratic Gov. Kathleen Sebelius' task force made up of state Cabinet officials and legislative leaders has already met to discuss potential projects.
- Maine Gov. John Baldacci (D) has launched a Web site to track how funds are being used.
- Missouri Gov. Jay Nixon (D) appointed 26 people to a new "economic stimulus coordination council."
- Wisconsin Gov. Jim Doyle (D) is looking for ideas for projects on www.recovery.wisconsin.gov .
- Ohio Gov. Ted Strickland (D) picked a former U.S. diplomat who served in Japan, Ronald Richard, to be his "infrastructure czar."
On the Republican governors' side, Vermont has created a Vermont Federal Recovery Office "to expedite projects when federal funds are received," Republican Gov. Jim Douglas, vice-chairman of the National Governors Association, said when announcing the office.
In California, every agency is part of a working group on "constant call" with each other and the state's offices in Washington and Sacramento "so that we are constantly monitoring how this will be implemented," says Linda A. Ulrich, director of Republican Gov. Arnold Schwarzenegger's office on Capitol Hill. "There is a lot of accountability."
And Minnesota Gov. Tim Pawlenty (R), who has expressed concerns that the package would deepen the federal debt, appointed the state budget office director to be Minnesota's stimulus coordinator.
The vote on the stimulus package on Capitol Hill comes at a time when states face shortfalls reaching $135 billion through fiscal 2010, according to the latest estimate from the National Conference of State Legislatures.
Many states currently are drafting budgets for 2010, the new fiscal year that for all but four states begins July 1. Legislatures will have to raise taxes, cut programs or borrow the money since, unlike the federal government, most states are required by law to balance their budgets.