Obama, governors confer on economy

State transportation projects, social programs part of wide-ranging discussions of stimulus plan

Obama's Transition

December 03, 2008|By Laura Smitherman and Michael Dresser | Laura Smitherman and Michael Dresser,laura.smitherman@baltsun.com

Philadelphia - The nation's governors met with President-elect Barack Obama yesterday to help craft an economic stimulus plan that would include money for ready-to-go transportation projects and programs for the poor stretched thin by increased demand.

Several dozen governors gathered here for the pre-inaugural summit as the country has officially fallen into recession, and as many state budgets have seen widening deficits brought on by sluggish tax receipts. The conversation also veered from funding for alternative energy and updating the country's power infrastructure to investing in a high-speed rail system and health care technology, participants said.

"This is not a matter of us descending on his doorstep and saying 'Please help us,' " said Maryland Gov. Martin O'Malley, a Democrat. "It was a matter of the president-elect and the vice president-elect pulling the governors together to say, 'Look, we need your help in order to stimulate America's economy and get us moving again.' "

The governors met for nearly two hours with Obama and Vice President-elect Joe Biden. Pennsylvania Gov. Ed Rendell, chairman of the National Governors Association, said the leaders did not discuss specific dollar figures at the meeting, which he characterized as "unprecedented," but several governors said about $150 billion in transportation projects could get started immediately.

Many of the governors agreed a stimulus package is needed to create jobs and shore up programs like Medicaid. But some expressed reservations about more federal borrowing, and questioned whether the initiative would provide the promised economic jolt. Governors are in line with automakers and banks also seeking federal handouts.

Alaska Gov. Sarah Palin, who forged a national reputation as the Republican vice presidential nominee, expressed doubt that "incurring more debt" would solve the economic crisis.

Congressional leaders have said they would work on a package Obama could sign when he takes office Jan. 20, and governors yesterday pledged to build support for the plan.

Rendell noted that many economists contend that the need for economic growth outweighs the risks of running up the federal deficit, and that without federal support states might be forced to cut services or raise taxes - which could stall economic recovery.

"We're confident that we're going to get help," Rendell said. "What the amount is and what the final plan looks like I don't think any of us have a clue."

Obama pledged to create a "partnership" with governors, and said "my attitude is that if we're listening to the governors, then the money that we spend is going to be well spent."

Maryland faces a deficit of more than $1 billion in its operating budget next fiscal year. In the meantime, O'Malley is expected to cut about $200 million from this year's budget to keep it balanced. Separately, a legislative analyst recently estimated that the state may need to cut $2.5 billion from the transportation budget.

Obama and the governors also discussed the time frame for an economic stimulus package, with some governors, including O'Malley, advocating a two-year boost for social programs, and ways to speed up the federal regulatory process to more quickly get transportation projects started.

Because so many states are strapped for funds, governors also are asking that the federal government waive its usual requirements for matching funds. On highway projects, for instance, the federal government normally requires states to put up 20 percent of the costs.

Maryland Transportation Secretary John D. Porcari said the state has more than $300 million in planned projects that could get under way quickly, and that his department has been compiling lists of projects since July in anticipation of a possible federal boost. State leaders have informed federal officials that they are prepared to dedicate federal funds to infrastructure contracts within four months or give it back, he said.

"We would literally in 24 hours have additional resurfacing projects out on the road," Porcari said.

In addition to roads, Porcari said, Maryland has transit, port and airport projects that could get started in short order. While he declined to provide a detailed list, saying the status of projects changes all the time, he mentioned an upgrade of fire protections in the Metro subway, dredging in the port of Baltimore and runway improvements at Baltimore-Washington International Thurgoood Marshall Airport.

Like many states facing transportation revenue shortfalls in a weak economy, Maryland has put many projects on hold. Such projects, including the widening of Route 32 in Howard County and improvements at intersections affected by military base realignments, could be high on the list of projects to be funded by a federal stimulus.

Porcari said that for every $1 billion the state spends on infrastructure, it can generate 33,000 jobs. Many contractors, hoping to rehire laid-off workers, are looking to the new administration for a boost.

"That's the only light in the tunnel. The state is really kind of hog-tied," said Brian R. Holmes, executive director of the Maryland Highway Contractors Association. "There's a real eagerness to get back to work."

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