WASHINGTON — Virginia, Maryland, and District of Columbia officials are making plans to use their portion of the federal stimulus package — about $10 billion in total — to close budget gaps, move infrastructure projects forward, and provide funding for schools.

Even with the release of the federal dollars, the district’s and the states’ budget woes are far from cured.

Virginia became the first state to officially designate stimulus dollars as part of its budget after the General Assembly on Saturday passed a $77 billion, two-year spending plan that will use about $1.5 billion of federal dollars to help close a $3.7 billion budget gap for fiscal 2009-2010.

“I am proud to have worked with the legislature to keep Virginia moving forward, even in an undeniably challenging fiscal environment,” Gov. Timothy Kaine said in a release. “Despite the economic realities facing Virginia, we have continued to protect the health of Virginians and we have found ways to encourage environmentally responsible economic development while creating green jobs. We also have addressed a significant budget shortfall in a targeted way that will minimize impact to services while positioning the commonwealth for future successes.”

The expected federal funds will “prevent an additional $800 million of spending reductions to key areas, including Medicaid, education, and the state workforce,” Kaine said. For example, without the federal recovery funds in fiscal 2010, Virginia would have had to close a $400 million budget hole.

While details and regulations attached to the funds are still being analyzed, the state is expected to receive about $4.8 billion from the stimulus package and will compete for additional grant funding. But the state still had to make cuts to schools, tap $490 million from its rainy-day fund, and issue $350 million of bonds instead of using general funds for capital projects.

Kaine last month launched stimulus.virginia.gov to gather ideas from localities about which projects the state should fund with the federal money.

Localities can suggest projects on the site and then Kaine and members of his cabinet will comb through the proposals and select the projects to receive funds. Lawmakers will return to work to consider Kaine’s line-item vetoes and amendments to the budget on April 8.

Maryland Gov. Martin O’Malley created a similar stimulus site — recovery.maryland.gov — that will allow Marylanders to track recovery projects in the state from the $3.7 billion that it is receiving.

One of the state’s transportation projects was the first in the nation approved by the Federal Highway Administration under stimulus act — a $2.1 million road resurfacing and improvement project along New Hampshire Avenue in Montgomery County. The state is receiving more than $610 million of stimulus funds for transportation projects.

“Just two weeks after President Obama signed the Recovery and Reinvestment Act into law, we are putting people to work in Maryland,” O’Malley said. “With the start of this project, we begin the aggressive investment in our roads, bridges and transit systems that has the potential to support up to 17,500 jobs.”

O’Malley last month said that he will use $365 million the state is receiving from the package for the first wave of transportation projects, which include the purchase of an additional 100 hybrid buses, replacement buses for rural transit systems, and station improvements to Maryland’s commuter rail system, MARC.

In addition, O’Malley also announced that education funding throughout the state will not be cut because the stimulus package provides $720 million for it and will help to close the state’s projected $2 billion budget shortfall. O’Malley has had to cut more than $500 million from the budget since last summer.

The District of Columbia, which is expecting a budget shortfall in fiscal 2010 of more than $800 million, will begin to designate federal dollars for projects in the coming weeks. The District Council will hear from the offices of the chief financial officer and the city administrator on March 17 during a public oversight hearing on how the strategy for applying for competitive grant awards will work.

Mayor Adrian M. Fenty also introduced a Web site this week, recovery.dc.gov, to provide information and resources on how the stimulus package will impact district residents and businesses.

While the district and its agencies will receive nearly $1 billion of stimulus funds, most of those will be used for projects rather than for closing budget gaps. CFO Natwar Gandhi said about $145 million of stimulus funds will be used to close a budget gap in 2009, $178.4 million will go toward closing the $802 million gap in fiscal 2010, and about $71 million will go to the $967 million fiscal 2011 gap.

Eric Goulet, director of the District Council budget office, said the city may benefit from ancillary effects that stimulus funds may have on it, such as money for upgrading federal buildings, which will create jobs. Another windfall may be the thousands of new federal-level employees and lobbying groups that will be based in the district seeking funding.

The Washington Metropolitan Area Transit Authority, which oversees the region’s Metrorail system, unveiled a list of projects in the region’s six-year transportation improvement program that will use stimulus dollars. The projects, which will total about $230 million, include replacing the system’s oldest buses and crumbling platforms, rehabilitating the oldest stretch of track in the rail system, and updating the train arrival signs on platforms and mezzanines.

 

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