WASHINGTON - South Carolina Gov. Mark Sanford became the last governor in the nation to certify his acceptance of federal stimulus funds before the deadline Friday, but said he will not request $700 million of the funds until the legislature agrees to use the funds to pay down debt.
Hours before the deadline expired, Sanford sent a certification letter for the funds to Peter Orszag, director of the U.S. Office of Management and Budget.
But Sanford is expected to quarrel with the General Assembly over $700 million the state is to receive from the $48.6 million State Fiscal Stabilization Fund portion of the American Recovery and Reinvestment Act that is required to be used for education. Sanford told Orszag that his certification letter "in no way represents an application for" those funds. He told reporters that he believes those funds can be requested through 2010.
"We are not going to request that $700 million ... unless state Senate budget writers, House budget writers, and this administration come together on a plan to pay down debt," Sanford said Friday.
The state can spend the money on debt and still fund education and health care programs with other state and stimulus funds, he said.
"I think you have a very clear picture of where we stand on the $700 million if there is debt repayment," Sanford said. "We can create a meaningful budget with the other $2.1 billion with the stimulus money coming into our state in addition to the tax cuts."
The governor argued that the economic recession, now in its 15th month, could last longer than economists expect. South Carolina would be "prudent" to pay off liabilities should the state need to spend money if conditions worsen, he said, adding that if the recession lasts longer than 24 months, "it becomes incredibly important we take some steps to shore up our financials."
On Thursday, lawmakers in Columbia, S.C., and Washington feared that South Carolina could lose all $2.8 billion of its stimulus funds if Sanford did not formally request them before the Friday deadline.
A provision inserted into the stimulus law by Rep. James Clyburn, D-S.C., requires governors to accept the funds within 45 days of enactment. Clyburn's office sent out a memo late Thursday saying the provision applied to all stimulus funds, and that Sanford's inaction would put all of South Carolina's economic stimulus "in jeopardy."
The South Carolina Senate Finance Committee estimated last week that 6,000 to 7,000 jobs could be lost if the funds were not received. But Sanford played down those estimates and said the Senate was failing to take into account $578 million of stimulus funds the state will receive that were included in the state House version of the 2010 budget.
Sanford had asked the Obama administration if he could use stabilization fund money, which governors can direct toward education and health care spending, to pay off $579 million of state general obligation bonds or to fund the state's pension plan. But administration officials said the funds are to be used for stimulus projects.
