NEW YORK — Cash-strapped states from Maine to Hawaii are tearing up the pink slips — for now — relieved that the $26 billion state-aid bill passed by Congress this week has saved hundreds of thousands of jobs. But it might be the last time the federal government comes to the rescue.
The legislation is a stopgap for long-term budget problems, letting states put off hard choices at a time of record federal deficits. Although appetite for such cash infusions is wearing thin, some analysts say the latest package is essential to preserving the fragile economic recovery.
“What states are experiencing is the largest drop-off of revenues they’ve ever faced, so to suggest they shouldn’t get help overlooks the magnitude of the problem,” said Jon Shure of the Center on Budget and Policy Priorities, a Washington think tank. “State and local government is a huge driver of the economy, especially when the private sector is faltering. The last thing this economy needs is people not working.”
The legislation, signed Tuesday by President Barack Obama, provides $10 billion to school districts to rehire laid-off teachers or to ensure that more teachers won’t be let go before the school year begins. An additional $16 billion would extend for six months increased Medicaid payments to the states, freeing up money for other state programs. The bill is expected to protect 300,000 jobs, just over half of them teaching positions.
In Colorado, the bill is expected to save 2,700 teaching jobs.
About 1,400 teachers in Nevada will avoid pink slips, as will 1,800 in Iowa. In California, where 16,500 teaching jobs were saved from the chopping block, top education official Jack O’Connell called the federal help “an urgently needed Marshall Plan” for his state’s hard-hit schools.
The money is a relief to officials in states that had crafted their budgets assuming they would receive the additional funds, while those who hadn’t counted on the cash infusion cheered an unexpected windfall they hoped to use to plug future budget holes.
In Massachusetts, lawmakers drafted two versions of the state budget — one including the federal help and one that did not.
Not all state officials are happy about the legislation. Some Republican governors have been reluctant to accept the money because of federal strings attached.
Mississippi Gov. Haley Barbour said his state would have to rewrite its budget to qualify for an additional $98 million in federal aid. Texas Gov. Rick Perry threatened a lawsuit over a state-specific provision in the legislation requiring Texas to use the money for education and not divert it to other programs.
