Federal funding would come at a critical time

Update (Aug. 10, 2010): The U.S. House joined the Senate in approving this critical aid to states.

The U.S. Senate voted this morning in support of $26 billion in additional federal assistance for states -- including $338 million for Washington.

The bill, which is moving toward final passage in the Senate, comes at a critical time.

Given declines in the state’s revenue forecast and in recent revenue collections reports, this amount would likely be enough to barely balance the current state budget -- obviating any immediate need for a special session or Governor-ordered across-the-board cuts.

The much-needed funding comes at a time when the state has already cut $4 billion in cuts in response to the effects of the recession and faces an additional shortfall  in maintaining essential services in the coming biennium.

Without the funding, the state would have faced an even bigger budget challenge in preserving priorities like education, health care and environmental protection.

The bill would also include an additional  $200 million to prevent teacher layoffs at a critical time.

As part of last year’s Recovery Act, states received federal assistance through an increase in federal matching dollars on state Medicaid spending.  This aid has helped our state weather the impacts of the national recession by preventing damaging cuts to health care services and saving jobs in the public sector.  The increased FMAP provisions are currently set to expire at the end of 2010, but the Senate bill would extend the funding through the end of the state fiscal year (June 30, 2011).

Congressional Budget Office (CBO) estimates released Tuesday night show the revised bill would pay for itself, even reducing future deficits by $1.37 billion over the next decade.