Earlier some Republican Governors announced they would decline Federal Stimulus funds and the media and political opponents were highly critical. The State of PA is quietly considering whether to do the same thing. The Philadelphia Inquirer does a nice job of laying out the issues that point to why a state should consider rejecting "free money" to help unemployed workers.
The gist of the Inquirer article (cited below) is essentially this - the PA Unemployment Fund is broke. The downturn in the economy has outstripped the funds available. A panel was appointed to figure out what to do. One of the things they were asked to consider is whether the state should accept $273 million in federal funds from the Stimulus package.
Why would PA, or any state, reject free money from the federal government? Well primarily because it is not free. It will cost the Pennsylvania $300 million to get $273 million in federal funds.
As the Inquirer article does a good job of describing, to qualify Pennsylvania will have to change its Unemployment Compensation rules to make more people eligible for coverage. Over five years, the cost to PA for these additional beneficiaries will be $300 million. As one member of the panel stated - "It doesn't make sense to spend $300 million to get $273 million."
That is the question that every state is facing and that is why some Governors have said they will refuse the money. Some states, like NJ (as the Inquirer article mentions) already have rules in place meeting the federal standards so they qualify without any new costs. But other states, like PA, will end up paying a lot than they will receive from the Federal government.
Unfortunately, the media has done a very poor job of reporting that states would be irresponsible if they did not carefully consider the cost of these federal funds before rejecting them. Unfortunately, the media's blindness to anything that could be a criticism of President Obama was aided by the fact that some governors, like the Governor of South Carolina, engaged in political grandstanding in the manner in which they announced their decisions to reject federal funds. At this point in time, with the economy the way it is, that kind of grandstanding was not appropriate.
Nevertheless, states should carefully consider whether to take these federal dollars. See my earlier article about my concerns on federal spending policies and the future of the economy - if I am right and the economy is not going to rebound the way the Obama Administration thinks it will, then states will find their Unemployent Funds in a deep financial hole and they will have to levy job killing taxes to get out of it.
http://www.philly.com/philly/jobs/20090424_Pa__plots_strategy_for_unemployment_fund.html
The gist of the Inquirer article (cited below) is essentially this - the PA Unemployment Fund is broke. The downturn in the economy has outstripped the funds available. A panel was appointed to figure out what to do. One of the things they were asked to consider is whether the state should accept $273 million in federal funds from the Stimulus package.
Why would PA, or any state, reject free money from the federal government? Well primarily because it is not free. It will cost the Pennsylvania $300 million to get $273 million in federal funds.
As the Inquirer article does a good job of describing, to qualify Pennsylvania will have to change its Unemployment Compensation rules to make more people eligible for coverage. Over five years, the cost to PA for these additional beneficiaries will be $300 million. As one member of the panel stated - "It doesn't make sense to spend $300 million to get $273 million."
That is the question that every state is facing and that is why some Governors have said they will refuse the money. Some states, like NJ (as the Inquirer article mentions) already have rules in place meeting the federal standards so they qualify without any new costs. But other states, like PA, will end up paying a lot than they will receive from the Federal government.
Unfortunately, the media has done a very poor job of reporting that states would be irresponsible if they did not carefully consider the cost of these federal funds before rejecting them. Unfortunately, the media's blindness to anything that could be a criticism of President Obama was aided by the fact that some governors, like the Governor of South Carolina, engaged in political grandstanding in the manner in which they announced their decisions to reject federal funds. At this point in time, with the economy the way it is, that kind of grandstanding was not appropriate.
Nevertheless, states should carefully consider whether to take these federal dollars. See my earlier article about my concerns on federal spending policies and the future of the economy - if I am right and the economy is not going to rebound the way the Obama Administration thinks it will, then states will find their Unemployent Funds in a deep financial hole and they will have to levy job killing taxes to get out of it.
http://www.philly.com/philly/jobs/20090424_Pa__plots_strategy_for_unemployment_fund.html
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