Capitol Alert

Dear Speaker Pelosi, Senator Feinstein and Senator Boxer:

We write to strongly encourage the prompt adoption of a federal economic stimulus plan that will provide direct assistance to the states. During this historically challenging economic time, the states--especially California--need the federal government's help.

According to the National Conference of State Legislatures (NCSL), twenty-seven states will begin the 2009 Fiscal Year with deficits well exceeding $100 billion collectively. A recent report by the Center on Budget and Policy Priorities concludes that states are facing "a great fiscal crisis," with 41 of 50 states projected to be facing budget shortfalls over the next two fiscal years. In the midst of this crisis, states are forced to drastically cut essential services (services that more citizens rely on when economic times are tough), raise taxes, or do both.

The fiscal challenges for the state of California are great. According to our non-partisan Legislative Analyst's Office (LAO), California is facing a 20-month deficit of $28 billion. The Governor has called a Special Session in which lawmakers are contemplating a plan that would close the deficit by imposing tax increases on all Californians and slashing more than $10 billion in essential services in education, healthcare, aid to seniors, the blind and the elderly, public safety, and transportation. The impacts of such a plan are particularly harsh in an economic climate in which each month more than 13,000 Californians are suffering job loss.

California needs its federal partner to help its citizens weather this economic storm. A "States Economic Stimulus and Fiscal Relief Act," akin to that recently passed to assist the nation's banking system, is what California needs now. While federal aid will not solve California's fiscal problems, an infusion of flexible federal funds would provide necessary relief to millions of Californians, by limiting the magnitude of tax increases and cuts to essential services otherwise required to balance our budget.

In addition to the infusion of federal funds, many provisions of the $60.8 billion economic stimulus bill, H.R. 7110, passed by the House of Representatives in September, 2008, are helpful to California. For example:

1. An increase in the Federal Medicaid Assistance Percentage (FMAP) match with the trigger points for state eligibility like those contained in the bill (i.e., home foreclosures, food stamp caseload level and unemployment level) means nearly $2 billion for California;

2. The extension of federal Unemployment Insurance benefits provides needed assistance to Californians suffering job loss. California's unemployment rate now stands at 7.7% and is projected to rise well above 9% in 2009.

3. The investment of federal funds to improve public infrastructure is meaningful to California. In 2006, Californians passed a $42.3 billion bond package to invest state funds to improve our roads and bridges, expand public transit, strengthen levees and improve water quality, provide affordable housing, and build or modernize school facilities. Many of the projects and programs funded by the state bond package require federal matching funds to become fully funded.

While H.R. 7110 represents a good start, we agree with Speaker Pelosi's assessment that as the nation's economic crisis has worsened since September, so has the need for a greater magnitude of economic stimulus. Clearly, more is better.

As we continue our work to develop a comprehensive plan to close this state's staggering budget deficit, we hope we can count on our federal partners to provide needed relief to millions of Californians suffering through an economic crisis of historic magnitude. Working together, federal and state policymakers can help the country and the state get through this difficult period.

Your prompt attention to this request is certainly appreciated.

Respectfully,

Don Perata
President Pro Tem
California State Senate

Karen Bass
Speaker
California State Assembly

Darrell Steinberg
President Pro Tempore-elect
California State Senate