Second Economic Stimulus Bill in the Works

It now seems likely that Congress will return to work in a “lame duck” session in mid-November. Leaders in both the House and Senate have indicated that another stimulus bill to address the deteriorating economy is in the works. Possible elements that could be included in the package include tax rebates, federal fiscal aid to states, a temporary boost in Food Stamp benefits, an extension of Unemployment Insurance benefits and an increase in funding for the Low-Income Home Energy Assistance Program (LIHEAP).

Declining tax revenues are also hitting the budgets of state governments hard. After closing a projected shortfall of $935 million during the last legislative session, Minnesota legislators will once again face a large projected budget shortfall when they convene in January 2009.

The Minnesota Budget Project sent a letter signed by 66 nonprofit organizations to the Minnesota Congressional delegation in September urging that federal fiscal aid to states be included as a key part of any second economic stimulus package. With Minnesota and other states facing new and deeper projected budget shortfalls next year, the need for federal fiscal aid to help the states is more urgent than ever. That is why we are reopening our sign-on letter to gather even more signatories. If your organization has not yet signed our letter, please join us today. Our new deadline is November 12.

In 2003, Congress provided $20 billion in fiscal aid to the states in the form of a temporary increase in the Medicaid match rate as well as general grants. This relief helped to avert deeper cuts in health care coverage and helped states address growing deficits. Unlike the federal government, virtually every state is required to balance its budget. Read more about federal fiscal aid to the states and why it should be part of an economic stimulus package.

We will keep you posted on further developments regarding a possible post-election session of Congress and a second economic stimulus package.

—  Steve Francisco

About Nan Madden

Nan Madden is director of the Minnesota Budget Project.
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