STIMULATING THE STATES

The federal government’s obligation to help states can be made simply: It has money (though also a growing deficit) and the states don’t. The taxes raised at the federal level come from the same taxpayers as those who contributed at the state level, and 23 states in the last year or so have raised taxes to close record-setting budget holes. Whether it is called stimulus or a bailout, the states need help from Washington quickly.

An important way to do this can be found the Senate, where Sen. Susan Collins of Maine impressive bipartisan group of sponsors have reintroduced their plan to temporarily increase Medicaid money to the states. Recognizing that many states are considering cuts to their Medicaid programs because they do not have the revenue to support them, the senators doubled the amount of money originally available through the legislation, and over 18 months would provide $10 billion to increase Medicaid rates under the federal medical assistance percentage (FMAP) and $10 billion through social-service block grants. Maine’s share of this would be $128 million – real help at a difficult time. The bill passed the Senate overwhelmingly last year and has 22 co-sponsors this year.

Second, there is no better time for Congress to deliver on its promised funding for special education. The Individuals with Disabilities Education Act was passed in 1975 to broaden opportunities for students with special needs and recognized at the time that states would bear a substantial cost in providing them; the federal government promised to pay up to 40 percent of those costs but has had trouble paying half that. Full funding would provide $60 million to Maine and remove the current funding crisis in General Purpose Aid to Education.

Third, Congress has passed on new costs to states while removing revenue sources through tax conformity. The No Child Left Behind education act demands expansions in programs and testing, yet the funding to meet the higher standards is inadequate. Homeland security is taxing state budgets with costs that could not have been anticipated before Sept. 11, 2001 and have not been met with new revenue sources. Congress said these new costs are needed to meet a national emergency – but they are funded, or underfunded, as if they were just one more expense to let the states absorb.

The Collins bill on FMAP delivers the most important upfront help to the states to close budget holes and insure the poor, but the ongoing revenues from the federal government to the states matter too. Congress has an immensely difficult job directly ahead, with a war at hand, an unaffordable tax cut proposed and deficits as far as can be predicted. New money for states must be matched with reductions in the proposed tax cuts, but they are essential. And if Washington wants economic stimulus, providing immediate money for health care, education and security are good and useful ways to do it.