The Fed to State Economic Connection

The news is fast and furious this morning – yesterday the House passed its version of the federal economic stimulus package, and the Governor simultaneously released his proposed Fiscal Year 2010 budget and significant cuts to the budget for the current budget year.

How are these two things related? Pretty significantly, as it turns out. A little more than a quarter of the $819 billion estimated cost of the House’s economic plan takes the form of aid to states, according to the Boston Globe for expenses like highways, drinking water, weatherization, child care, school construction, help with Medicaid, and the largest category – fiscal stabilization. The National Council of State Legislatures has broken down the numbers for most states (but not Massachusetts) here.

Critics of the House bill are citing high costs, a rejection of additional tax cuts proposed by Republican members, and a shortage of investments in infrastructure and transportation. The bill definitely seems to have traded off some of the market-stimulating investments (especially infrastructure and tax cuts to businesses) for direct benefits to individuals and families – extended unemployment benefits, child care assistance, and one time $500 per person tax rebates – to ease the immediate effects of the economic crisis.

How these numbers come out in the end remains to be seen, but I’m thinking state legislators everywhere are feeling at least a little relief as they approach state budgets for next fiscal year. The Senate has released its version of economic stimulus plan from its Appropriations Committee, and is expected to debate it on the Senate floor next week. You can bet that state legislatures will be staying tuned to the federal debate in hopes of some help in handling their own budget woes.

In other, not completely unrelated news, President Obama signed his first bill into law today with fair pay icon Lilly Ledbetter at his side. The two people who I bet she wishes could be at the signing of the Lilly Ledbetter Fair Pay Restoration Act with her? Her husband who passed away last year, and the insightful and brave co-worker who passed her that note in 1998, telling her that she was being paid less than the 16 men who did the same job, some with less experience. Here’s a particularly lovely quote from President Obama from his speech at the signing:

And I sign this bill for my daughters, and all those who will come after us, because I want them to grow up in a nation that values their contributions, where there are no limits to their dreams and they have opportunities their mothers and grandmothers never could have imagined.