U.S. official: Only governors can apply for stimulus funds

McClatchy Newspapers

WASHINGTON — A state legislature can’t apply for funds from a key pot of education money in President Barack Obama’s $787 billion economic stimulus plan if the state’s governor fails to do so, the White House budget director said in a letter released Wednesday.

With governors facing a deadline of this Friday to seek their states’ shares of $48.6 billion in the recovery package’s State Fiscal Stabilization Fund, White House budget director Peter Orszag’s opinion puts more pressure on a handful of Republican governors who oppose the stimulus plan, which Obama signed into law Feb. 17.

South Carolina Republican Gov. Mark Sanford cheered Orszag’s opinion Wednesday.

“We’re glad the White House concurred with the state attorney general in validating what the governor has long believed — that he should be the one directing this money,” said Joel Sawyer, Sanford’s spokesman.

South Carolina has become a central battleground in the struggle over State Fiscal Stabilization Fund money, which makes up about a tenth of all federal spending in the stimulus package.

Sen. Lindsey Graham, a South Carolina Republican, and the White House on Wednesday each released Orszag’s response to Graham’s request for an Obama administration ruling on the issue.

“For a state to access its allocation of the State Fiscal Stabilization Fund, the governor must submit an application to the secretary of education, and there currently is no provision in the Recovery Act for the state legislature to make such an application in lieu of the governor for a state’s allocation,” Orszag wrote to Graham.

Sanford’s rejection of $700 million in stimulus money intended for schools in his state has raised his profile among conservative activists and fed speculation that he’s weighing a 2012 presidential run.

At the same time, however, Sanford’s stance has angered some fellow Republicans in South Carolina, where the 11 percent unemployment rate is the nation’s second highest after Michigan.

Graham, who along with all but three other Republican senators voted against the economic recovery bill, urged Sanford to request the stimulus money, saying that South Carolina taxpayers would foot the bill even if the money goes to other states.

“We can refuse to accept it, but we cannot refuse to pay it back,” Graham said. “Based on that dilemma, I believe it is in South Carolina’s best interests to apply for these funds.”

Republican Govs. Sarah Palin of Alaska, Rick Perry of Texas and Haley Barbour of Mississippi also have said they would reject some of the stimulus money. Sanford, though, is the only governor to date who’s said he would refuse the education funds.

At a Maryland elementary school Wednesday, Education Secretary Arne Duncan said states could begin applying for the stimulus money, most of which must be used to prevent teacher layoffs, hire new instructors, repair schools or build new ones.

Duncan released $44 billion in separate education money from the stimulus plan that Obama and Democratic lawmakers pushed to revive the flagging economy. States will get that money automatically under standard federal appropriations formulas.

The Republican-controlled South Carolina Legislature has crafted legislation requesting the State Fiscal Stabilization Fund money, but Orszag’s letter suggests that the Obama administration wouldn’t recognize or act on such a law were the Legislature to pass it.