$516B spending bill vs. State budget cuts? - Mercedes-Benz Forum

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post #1 of 2 (permalink) Old 12-18-2007, 02:10 AM Thread Starter
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Senate to take up $516B spending bill

Senate to take up $516B spending bill
By ANDREW TAYLOR, Associated Press Writer
47 minutes ago

The Senate is poised to take up a $516 billion measure to fund 14 Cabinet agencies and troops in Afghanistan, with President Bush likely to sign the measure if his GOP allies can add up to $40 billion for the war in Iraq.

Senate leaders would like to wrap up debate Tuesday, though GOP conservatives may balk, unhappy with spending above Bush's budget and a secretive process that produced a 1,482-page bill with almost 9,000 pet projects sought by lawmakers.

Despite opposition from conservative hard-liners like Tom Coburn, R-Okla., and Jim DeMint, R-S.C., the stage is set for a year-end budget deal ending a monthslong battle between the White House and congressional Democrats over domestic spending.

Democrats have succeeded in smoothing the rough edges of Bush's February budget plan, which sought below-inflation increases for domestic programs other than military base construction and contained numerous cutbacks and program eliminations.

But Democrats were able to fill in most of the cuts by shifting money from the Pentagon and foreign aid budgets, adding "emergency" funding above Bush's budget "cap" and adding future-year funding for federal education programs.

The bill passed the House late Monday after an unusual legislative two-step aimed at easing the bill's movement through a gauntlet of anti-war Democrats and Republicans unhappy with the measure's price tag and the process that produced it.

The House first voted 253-154 to approve the omnibus spending bill funding domestic agency budgets and foreign aid; they then voted 206-201 to add $31 billion for troops in Afghanistan to the measure and sent the combined spending package to the Senate. Democrats are generally far more supportive of military operations in Afghanistan than they are of the unpopular war in Iraq.

Republicans generally opposed the omnibus measure, arguing it's unfair to provide money for troops in Afghanistan but not Iraq. They also opposed $13 billion in spending above Bush's "top line" request for the one-third of the budget passed each year by Congress.

Senate Minority Leader Mitch McConnell, R-Ky., has vowed to add up to $40 billion more for Iraq to the measure, with Democratic leaders recognizing the money is the key to averting a GOP filibuster and obtaining Bush's signature.

"We're making some pretty good progress toward coming up with a fiscally sound budget, one that meets priorities, helps on some emergencies and enables us to say that we've been fiscally sound with the people's money," Bush said Monday.

The Senate is expected to approve the bill after adding money for Iraq. The complicated plan calls for the House to then clear the bill for Bush after a vote limited to the war funding, with Republicans supplying the winning margin. That vote, if successful, would free lawmakers to go home for Christmas.

The result would be a twin defeat for Democrats, who had vowed not to allow additional Iraq war funding without conditions and had spent months on legislation to add $27 billion to domestic programs, an almost 7 percent increase.

Democrats succeeded in reversing cuts sought by Bush to heating subsidies, local law enforcement, Amtrak and housing as well as Bush's plan to eliminate the $654 million budget for grants to community action agencies that help the poor.

To find the money, lawmakers shifted $6 billion from Bush's plans for defense, foreign aid and military base construction accounts. Veterans would get $3.7 billion more than Bush requested, supplied on an "emergency" basis above Bush's budget cap.

Democrats were able to put their imprint on the bill, restoring Bush-sought cuts to state and local law enforcement grants, aid to community action groups and airport modernization grants.

Democrats also added funding for food programs, subsidies to community development banks and Homeland Security Department grants to first responders.

Taxpayers for Common Sense, a Washington-based watchdog group that opposes so-called pork barrel projects, counted 8,983 such "earmarks" worth $7.4 billion. These hometown pet projects include economic development grants, aid to local transit and police departments, and clean water projects, among many others.


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post #2 of 2 (permalink) Old 12-18-2007, 02:16 AM Thread Starter
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AP Exclusive: State Budgets Slide

AP Exclusive: State Budgets Slide
By ANDREW WELSH-HUGGINS, Associated Press Writer

Tuesday, December 18, 2007

For the third time in a month, an analysis of state finances is warning that budget deficits and spending cuts are on the way.

Thirteen states say they could face shortfalls for the fiscal year that begins July 1 in most states, including large states like California and New York.

The deficits could reach a total of $23 billion, according to an analysis by the Center on Budget and Policy Priorities released Tuesday.

The report says another 11 states expect problems with their budgets over the next two years, suggesting a return to the bleak economic outlook states faced at the beginning of the decade.

"We're really teetering on the edge," said Iris Lav, the center's deputy director. "With the deficits this large already before there's actual evidence we're in a recession, that seems quite serious."

The report mirrors findings earlier this month in two other surveys, one by the National Conference of State Legislatures and the other from the country's governors and state budget officers.

The report by the National Governors' Association found that states already are spending less in the current budget year than in fiscal 2007, with leaders in a few states talking about tapping their rainy day funds to address budget shortfalls.

NCSL found that states' revenue growth is slowing and several states have either lowered their predictions for revenue or cut spending.

The wild card is whether the country enters a recession.

"We're at the early stages of some pretty serious problems and whether or not those get worse depends on what happens with the national economy," said Corina Eckl, NCSL's fiscal program director.

The policy center's review of states found:

_ Ten states are projecting deficits next year and three are predicting shortfalls in revenue that could lead to budget deficits. They are Florida, Kentucky and South Carolina.

_ Another 11 states say their budgets are likely to see holes open in their budgets next year, or in the financial year beginning July 1, 2009, including Alabama, Ohio and Texas.

_ Fourteen of the states facing shortfalls have structural deficits, meaning revenue regularly grows more slowly than the cost of providing services. These include Illinois, Missouri and Virginia.

The report also suggests states' rainy day funds are too small. Total state balances declined to 9.6 percent of overall budgets by June 30 and are projected to decline to 6.7 percent by next year.

The policy center said a rainy day fund of 15 percent of annual spending is preferred.

"This decline is another indication of the extent to which states have used one-time resources to balance their budgets in good fiscal times," the report said. "It also leaves many states ill-prepared to face an economic slowdown."

All three reports say the crisis in the housing market is a major culprit, as weak sales reduce tax revenue from the purchase of big-ticket items like furniture, appliances and construction material.

In Florida, state economists are forecasting a $1 billion shortfall. Florida lawmakers recently cut spending to offset an earlier $1.1 billion shortfall.

California is addressing a deficit that could range from $10 billion to $14 billion, while New York budget officials are projecting about a $4 billion deficit for the fiscal year beginning there April 1.

"Our problem is we've just been spending too much," California Senate Republican leader Dick Ackerman said in an interview. "Our income has gone up every year, but the rate of spending has gone up greater than the income."

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