Topeka ? Facing a growing state budget deficit, Gov. Kathleen Sebelius on Friday formed a group to plan for the implementation of a possible federal economic recovery package that is being worked on in Congress.

“While we cannot rely on Washington to solve every challenge we face in Kansas, we can make sure our state has a strategic and responsible approach to implementing new federal policies,” Sebelius said.

Congressional Democrats have proposed an $825 billion package of governmental spending and tax cuts called the American Recovery and Reinvestment Act. They have vowed to pass a plan by mid-February.

A preliminary analysis of the proposal by the National Conference of State Legislatures indicates Kansas could receive nearly $1.7 billion in funding over the next two years under certain areas of the proposal. Not all funding levels have been identified as of yet.

“Though the timeline for enactment of this stimulus package is unclear, it is crucial that we begin planning for implementation of the Act now, to ensure funds directed to Kansas are used most effectively within the framework of the legislation,” Sebelius said.

Much of the proposal’s spending would go toward infrastructure improvements and increasing aid to states to pay for health care for the poor.

Because of the national recession, Kansas faces an immediate budget shortfall of $186 million that could increase to $1 billion later this year.

State lawmakers said they are cautiously watching developments in Washington.

“That would be nice if that comes,” said Senate President Steve Morris, R-Hugoton. But, he said, lawmakers shouldn’t depend on getting the federal assistance.

Democratic state legislators said they believed the state would get some federal funding under a recovery program, but that there was no guarantee.

The panel formed by Sebelius will be led by Lt. Gov. Mark Parkinson, and include Cabinet members, Kansas Education Commissioner Alexa Posny, Kansas Board of Regents President and Chief Executive Officer Reginald Robinson, State Treasurer Dennis McKinney and several other high-ranking officials.

Sebelius has also asked legislative leaders to appoint members to the group.

The panel will communicate with Congress about how parts of the plan would affect Kansas, and advise state officials on implementing the package.

The proposal introduced by House Democrats in Congress includes $550 billion in government spending and $275 billion in tax cuts.

It includes increased federal dollars for Medicaid, unemployment insurance, infrastructure investments, such as highways, and general assistance to states to help them avoid harmful budget cuts.