Federal money coming to the state won’t meet nearly all the needs

Make no mistake: The federal aid coming to the states as a result of Congress last week passing a tax-cut package will arrive at a crucial time.

But make no mistake about this, either: Despite the fact that the state is line for about $270 million in federal money over the next two years, the windfall will do only a little for the state’s financial needs.

Gov. Bob Riley has proposed a $1.2 billion revenue package that he hopes to send to the voters in September. Of the total, the state needs about $600 million to $675 million to meet a budget shortfall this October. The rest of the package will go to address needs that have been unmet for too long.

Even if the $270 million were to be entirely unrestricted, it would amount to only a fraction of the overall need. And the money is not unrestricted: A major portion of it, though not all, will be designated for Medicaid. While the Medicaid problem is real, other problems remain.

To his credit, Riley says he will do everything he can to use the federal money, if possible, to trim the size of the tax package he has proposed. But even if he were to maximize the use of every cent of the $270 million, more money is still needed at the state level.

The money coming to Alabama is part of some $20 billion in the $330 billion federal tax-cut package. Although all 50 states have needs, just as Alabama does, this state lags the nation in most key economic categories. The money, naturally, will come in handy.

Huntsville Times

May 27, 2003