Democrats Urging Senate to Add State Budget Aid to Bill

Democratic governors and senators yesterday pushed for the Senate to add an amendment to a tax-extenders bill that would provide federal funds to states to help them through their budget crises, with members expected to begin voting on the bill today.

“Without that money, North Carolina will go in, as I’m doing right now, and figure out whatever else it is we have to cut,” Gov. Beverly Perdue said during a conference call. “If we don’t have the federal help with our Medicaid bills, then obviously we have to cut [other spending] and find solutions to our budget problem.”

The American Jobs and Closing Tax Loopholes Act, sponsored by House Ways and Means Committee chairman Rep. Sander Levin, D-Mich. and former committee chairman Charles B. Rangel, D-N.Y., was debated in the Senate yesterday.

Republicans, led by Sen. John Thune, of South Dakota, are sponsoring alternative legislation that, like the Democratic proposal, would extend unemployment benefits through November.

The amendment that the Democrats want to see added to the bill sponsored by Levin and Rangel would extend through June 2011 the Federal Medical Assistance Percentage funding that states receive from the government for health care, and lengthen federal unemployment benefits.

States have received an enhanced federal match for FMAP since the American Recovery and Reinvestment Act was enacted last year. The amendment would provide states with $24 billion for Medicaid.

Pennsylvania Gov. Edward Rendell said during the conference call that his state would have to lay off 20,000 employees if the Medicaid provision does not come through.

He noted that 47 governors signed a letter in February asking Congress to provide an extension of the funds through summer of 2011, the end of the fiscal year for most states.

However, at least one signatory of the letter, Virginia Gov. Robert F. McDonnell, has withdrawn his request. McDonnell said this week that he no longer supports the extension because he fears its impact on the national debt.

According to a Senate summary of the amendment, the extended FMAP funding would cost about $24.2 billion over 10 years.

To further help states and localities, the bill sponsored by Levin and Rangel would extend Build America Bonds for another two years, but would lower the subsidy to 32% or 30% from 35%, extend Recovery Zone bond authorizations through 2011, and exclude water and sewer exempt-facility bonds from state volume caps.

President Obama on Saturday urged lawmakers to approve the pending legislation with money for cash-strapped state and local governments.

“While state and local governments have already taken difficult steps to balance their budgets, if additional action is not taken hundreds of thousands of additional jobs could be lost,” he said in a letter to House and Senate leaders.

Senate Democrats would need 60 votes to avoid a filibuster against the bill.

There is uncertainty about whether Democrats can rally support for the bill by the time a vote is schedule this morning, Sen. Debbie Stabenow, D-Mich., warned in the call with reporters.

For reprint and licensing requests for this article, click here.
Healthcare industry Washington
MORE FROM BOND BUYER