State Aid Measure Survives Senate Vote

Aug 5th, 2010 | By businessnews | Category: Business

August 04, 2010, 7:00 PM EDT

By Brian Faler

(Adds Tuesday House vote in fifth paragraph.)

Aug. 4 (Bloomberg) — A bill providing $26 billion in aid to state governments is set to win approval by Congress after Senate Democrats overcame Republican delaying tactics and the House announced plans to return to Washington next week to vote on it.

The Senate will put the matter to a final vote this week after Maine Republicans Susan Collins and Olympia Snowe joined all Democrats today in voting to advance the measure. The tally was 61-38, with 60 needed. Louisiana Republican David Vitter did not vote.

The measure would provide $10 billion to help prevent teacher layoffs and $16 billion to help pay states’ Medicaid bills. Democrats have been trying for months to move the legislation, saying that failing to act would force state governments to fire thousands of teachers and other public- service employees.

Senate passage would send the bill to the House, which has adjourned for its monthlong August recess. Speaker Nancy Pelosi of California said she would call the House back to Washington “early next week to save teachers’ jobs and help seniors and children.”

House Majority Leader Steny Hoyer, a Maryland Democrat, announced later the vote would take place on Tuesday.

President Barack Obama called today’s Senate vote “an important step towards ensuring that teachers across the country can stay in the classroom and cash-strapped states can get the relief they need.”

‘Scampering Back’

House Republican leader John Boehner of Ohio said “Democrats should be listening to their constituents — who are asking ‘where are the jobs?’ — instead of scampering back to Washington to push through more special-interest bailouts and job-killing tax hikes.”

Under pressure to avoid adding to the federal deficit, Democrats included cuts elsewhere in the government’s budget so the bill would reduce the shortfall by $1 billion.

“This is the last, best chance for teachers and the economic stability of so many of our states,” said Senator Patty Murray, a Washington Democrat.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, expressed frustration with states’ demands for aid, saying governors were refusing to make difficult decisions.

“The states are simply becoming completely dependent on us,” McConnell said. “When does it end?”

Snowe warned governors not to expect Congress to provide more aid beyond the pending legislation.

‘Final’ Payment

“This should be the final” payment, she told reporters after the vote. “Some hard choices are going to have to be made.”

Congress provided states with more than $200 billion in aid as part of last year’s economic stimulus package. Many states still face funding shortfalls stemming from slack income and sales tax revenue and increased demand for services from out-of- work residents. Unlike the federal government, almost every state is required to balance its budget.

Dozens of states assumed Congress would provide the additional Medicaid funding when they drew up their budgets, so lawmakers’ failure to act would exacerbate state shortfalls projected to total $84 billion nationwide, according to the National Conference of State Legislatures.

Pennsylvania Governor Ed Rendell, a Democrat, yesterday rejected suggestions that states were ducking hard decisions.

“We’ve made bitter choices,” he said in a conference call with reporters. “It’s not like we haven’t done anything and we’re coming to Washington and saying, ‘bail us out.’”

Unemployment Benefits

Snowe and Collins also provided the Republican votes needed to approve a stalled bill extending unemployment benefits in June and, before that, the stimulus package that passed in February 2009. The Democratic efforts to win their support in today’s vote included dropping plans to finance the bill with defense spending cuts that would have hit Maine.

The bill would be financed in part by clamping down on what Democrats called the abuse of foreign tax credits offered to multinational corporations. The provisions are projected to raise almost $10 billion.

That drew the opposition of the U.S. Chamber of Commerce, which said the bill would impose “draconian tax increases” that would “hinder job creation, decrease the competitiveness of American businesses, and deter economic growth.” The bill is also partially financed by cuts in food-stamp benefits beginning in 2014.

–With assistance from James Rowley in Washington and William Selway in San Francisco. Editors: Laurie Asseo, Don Frederick

To contact the reporter on this story: Brian Faler in Washington at

To contact the editor responsible for this story: Mark Silva at

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