Capitol Comments

States Could Lose out on Stimulus Funds

States that use stimulus funds to plug budget holes could face lose out on millions of dollars, the Obama administration said last week.

That warning came in a letter to Pennsylvania Gov. Ed Rendell after a plan by the Republican-led Senate came to light. The Senate planned to use stimulus money to plug budget holes -- it would reduce the share of the state budget for education while leaving the state's rainy-day surplus untouched, according to an Associated Press article.

Education Secretary Arne Duncan told Rendell the plan could hurt Pennsylvania's chance to compete for a $5 billion competitive grant fund to reward states and school districts that adopt innovations.

While Duncan's letter specifically addressed the situation in Pennsylvania, it also has implications for other states.

In Louisiana, Rainy Day Fund Debate Continues

Like many other states battling the current economic recession, Louisiana is dealing with falling revenues to the tune of a $1.3 billion decrease in the state’s general fund revenue forecast for the 2009-2010 budget, according to The Times-Picayune of New Orleans.

To dig out of that hole, the state can take money from the rainy day fund, known formally as the state’s Budget Stabilization Fund.

And the latest reports indicate Louisiana Gov. Bobby Jindal wants to dip into the state’s rainy day fund, according to The Times-Picayune.

The newspaper reported Jindal said he’s willing to sign a budget that takes $50 million from the rainy day fund to finance higher education. But, Jindal said he would require that the $50 million be replenished using state’s planned tax amnesty program, the newspaper reports.

Facing Budget Woes, Colorado Passes Economic Development Bills

Even though Colorado faced a nearly $1.5 billion budget shortfall this year, the state didn't give up on pursuing economic development measures.

In fact, at a time when the state’s tax revenues are coming in much lower than expected and there’s just less money to go around, many in Colorado argue that now is the most important time for economic development.

Todd Saliman, director of the state’s Office of Planning and Budget, is one of those believers.

“One of the things that we put a lot of effort into this year is focusing on economic development and trying to provide incentives for job creation—and Colorado has been limited in the amount of incentives it could offer to potential businesses that were wanting to locate in Colorado just because of our budget constraints,” Saliman said in an interview with State News.