Senators reject Palin's plan for stimulus

Posted: Wednesday, April 15, 2009

Members of the Senate bipartisan majority said Tuesday that Gov. Sarah Palin's latest idea of using federal stimulus dollars to replace state spending on education and other programs has little to no traction in the state Legislature.

Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

Senate Finance Committee co-Chairman Bert Stedman, R-Sitka, said Palin's proposal does not meet the spirit of the act, which was to funnel money to states in order to stimulate the nation's faltering economy.

"The stimulus is just that. It's a stimulus, not a supplanting, concept coming out of Washington," Stedman said at a news conference.

Palin first floated the idea at a news conference last week, calling it prudent and fiscally conservative. Palin said she planned to explain her idea to lawmakers "to get them to see the light on how this is doable, technically and legally. They, at the end of the day, have fulfilled their resolution of accepting the dollars and I'll feel better about it."

Her budget director, Karen Rehfeld, gave lawmakers a package of proposed amendments at Tuesday's Senate Finance Committee hearing on a bill to accept all the non-transportation related stimulus dollars.

But Senate President Gary Stevens, R-Kodiak, said the governor's proposal arrived too late and was too risky to consider.

"The concern on our side is, first, whether it fits the intention of the stimulus bill and, secondly, whether we can get away with it with the federal government," he said.

Stevens added that the federal act could be a real benefit to the state, particularly school districts "to help train teachers in special education and Title I and to get equipment that we've not been able to get for kids in special education."

"There are some real advantages and we'll be in a much better position when this is over," Stevens said.

Larry Persily, an aide to House Finance Committee co-Chairman Mike Hawker, R-Anchorage, has reviewed the issue. In an e-mail to lawmakers, Persily wrote that an informal opinion from the U.S Department of Education said Palin's proposal could put at risk almost a third of the $114 million in federal stimulus dollars going to education and other discretionary spending.

Persily said the first two-thirds of the money would be sent to the state within two weeks of receiving an application from the governor for the money. But the federal government could withhold the second portion - about $38 million - if the state has not used the first check as intended, he said.

Palin and lawmakers have been at odds over the matter since the governor announced in March that she would not be accepting a large portion of the stimulus package, prompting the House and Senate to pass resolutions requesting whatever she does not ask for.

Palin said the American Recovery and Reinvestment Act signed in February would create a future burden on the state and the nation. She said the money comes with too many strings attached, a claim lawmakers have denied.

Though all sides agree the state should accept federal stimulus money for transportation infrastructure projects around the state, Palin's beef is with the non-transportation portion of the stimulus, such as $93 million for education and $21 million that lawmakers propose using as additional revenue sharing for communities, that would be distributed on a per capita basis.

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