By Larry Jones
March 17, 2003

In a March 7 letter, five national groups joined with the Conference of Mayors in expressing support for The State and Local Aid and Economic Stimulus Act of 2003 (S. 201), a bipartisan proposal sponsored by Senators Charles Schumer (N.Y.) and Olympia Snowe (ME). This bill will provide a one'time grant of $40 billion to help financially strapped state and local governments. The endorsement is expected to generate momentum behind the bill, as all but one of the so called "Big 7" organizations that represent state and local governments have endorsed it. To generate grassroots support, these groups have alerted their members and asked them to contact their Senators and urge them to co'sponsor and support S. 201.

Groups joining the Conference in endorsing the measure include the Council of State Governments, National Conference of State Legislatures, National Association of Counties, National League of Cities and the International City and County Management Association. The National Governors' Association was unable to endorse the bill at this time due to what some believe is a partisan split in the organization that has caused some Republican governors to openly complain that the organization exists mainly to attack President Bush, according to a March 7 Wall Street Journal article.

The Schumer-Snowe bill is one of several economic stimulus packages introduced this year but perhaps the only bipartisan bill that provides direct general financial assistance to state and local governments. Almost all state governments and most local governments are currently facing a budget shortfall. This is due in large part to the downturn in the economy and an increase in federal mandates such as the No Child Left Behind Act, election reform, health care and homeland security. In the March 7 letter, the executive directors of the six groups explained that current estimates show state and local governments are filling funding gaps between $25 billion and $85 billion to meet these federal mandates and other expected activities.

Under the Schumer-Snowe bill, $20 billion would be provided directly to states and $20 billion would be provided directly to local governments based on relative population and unemployment. There would be no strings attached to how these funds may be used. States and localities would be granted broad flexibility in spending the funds.

It is uncertain when Congress will act on an economic stimulus package. The uncertainty about a possible war with Iraq is making a number of members in both Houses uneasy about supporting an economic stimulus bill before they have a better feel for how much the war will cost and how long it will take. There is growing speculation that action on a stimulus bill will not happen until members have a much better feel for these issues. In the meantime, state and local groups have written the leadership of the House and Senate Budget Committees urging them to include at least $40 billion in the fiscal year 2004 budget for a short'term economic stimulus package to assist state and local governments. If funds are included in the budget, we will have a better chance of getting Congress to approve funds for S. 201 in an appropriations bill later in the year.