Governors Intend To Request $176B From Economic Stimulus Package, Including $40B for State Medicaid Programs

President-elect Barack Obama on Tuesday will meet with 40 members of the National Governors Association in Philadelphia to discuss how to provide economic relief, including additional Medicaid funds, to the states, the Washington Post reports. According to the Post, many states are facing large budget deficits and rising costs because of declines in revenue and increased enrollment in state programs (Connolly, Washington Post, 12/2). Vice President-elect Joe Biden also is scheduled to attend the meeting (Schatz/Hooper, CQ Today, 12/1).

Pennsylvania Gov. Ed Rendell (D) and Vermont Gov. Jim Douglas (R) -- chair and vice chair, respectively, of NGA -- on Monday met with congressional lawmakers to discuss the association's stimulus request (Taylor, AP/San Francisco Chronicle, 12/2). According to the Post, the governors are seeking about $176 billion (Washington Post, 12/2). They are requesting that Congress increase federal matching payments for Medicaid by at least $20 billion annually for two years (Reichard, CQ HealthBeat, 12/1). The governors also are seeking $60 billion for infrastructure projects, $3.5 billion in college grant money and $2 billion for a further extension of unemployment benefits. Rendell said he does not expect Obama or Congress to approve the entire request (Cooper/Haynes, Wall Street Journal, 12/2). Rendell said, "By no means are we looking for the federal government to relieve us of our responsibilities but we do need help," adding that otherwise, "we'll have to just make continuing cuts or raise taxes, both of which will have a deleterious effect on our states' economies" (Fitzgerald, Philadelphia Inquirer, 12/2).

Forty-three of the 50 states face budget shortfalls, according to Douglas and Rendell (Washington Post, 12/2). According to the Wall Street Journal, states' collective budget deficits could rise to $140 billion by mid-2010. States already have reduced their fiscal year 2008 and FY 2009 budgets by a collective $53 billion, according to the National Conference of State Legislatures (Wall Street Journal, 12/2). Douglas said, "The slowing economy is resulting in growing unemployment, increased demand for state services and significant declines in state revenues," adding, "It's critical this happen as soon as possible." Rendell added, "When the economy is bad, the social service net demands grow."

Obama and congressional Democrats have said that soon after Obama takes office, they plan to pass an economic stimulus package that could total more than $500 billion (Washington Post, 12/2). House Speaker Nancy Pelosi (D-Calif.) on Monday said she hopes to have the package ready for Obama's signature when he takes office on Jan. 20, 2009 (Cowan, Reuters, 12/1). Pelosi spokesperson Brendan Daly said she is "sympathetic to the need for infrastructure spending and helping the states with Medicaid" (Pear, New York Times, 12/2).

Medicaid programs face added stress during economic downturns, and as enrollment increases, states look to make cuts, according to Diane Rowland, executive vice president of the Kaiser Family Foundation and executive director of the Foundation's Commission on Medicaid and the Uninsured (Washington Post, 12/2). NGA said, "States feel the greatest impact on their budgets in the year after a recession ends, primarily because Medicaid growth occurs late in the recession and employment growth lags (behind) the recovery" (Barnes, Pittsburgh Post-Gazette, 12/2).