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Archive for Monday, February 9, 2009

Stimulus funds to test fiscal agility

Agencies must have plans for quick, efficient spending

February 9, 2009

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— While struggling with budget deficits in Kansas, state officials are preparing a plan to take advantage of new federal dollars should Congress approve an economic stimulus package.

Depending on how the legislation is drawn, some Kansas programs may receive so much new money they wouldn’t be able to spend it fast enough, while others will have to fight with other states, according to officials.

“We want to make sure that every major item is being looked at by some agency,” said Lt. Gov. Mark Parkinson, who is chairman of the newly formed American Recovery and Reinvestment Act Advisory Group.

The group started by Gov. Kathleen Sebelius includes leaders from nearly all areas of state government, and it is responsible for making sure Kansas receives its share of the proposed federal stimulus, which is in the $800 billion range.

Estimates, so far, show that Kansas would receive $1.4 billion to $1.7 billion in funding. These funds would be channeled into numerous programs, covering education and workforce development, energy and natural resources, health and human services, and infrastructure and economic development.

Having a state plan of action in place is important because if and when the package is passed, states will be required to spend the money quickly in hopes of injecting life in the economy, officials said.

Officials say the state could receive more than $400 million for Medicaid and $300 million in school funding over two years.

“It’s an incredible infusion of dollars,” said Kansas Education Commissioner Alexa Posny.

Her comment came after the House approved its plan. The Senate proposal would be less generous to schools, but what shape the final bill would take is unknown at this time.

Steve Weatherford, president of the Kansas Development Finance Authority, said some programs, such as funding for weatherization of homes, would double. He said there is some concern about whether “we could get the money out fast enough with the time constraints.”

Adam Nordstrom, a Washington, D.C., lobbyist for the state of Kansas who is tracking the stimulus plan, said states also will be required to guarantee the dollars are being spent wisely, and that states must maintain their own “maintenance of effort” in spending. The thinking in Washington is that a stimulus package doesn’t work if it is simply replacing state dollars with federal dollars, he said.

Some lawmakers say that while they welcome assistance from the federal government, the state still needs to put its financial house in order because the federal money will someday expire. Kansas legislators are facing a $200 million budget deficit that could grow to $1 billion by July 1.

Senate Majority Leader Derek Schmidt, R-Independence, said he welcomed help from the federal government but warned that the federal stimulus could be like “a narcotic that offers a short-term high but the risk is long-term addiction.”