Obama Signs State Aid Bill Into Law
This afternoon, President Obama signed the $26.1 billion state aid bill into law — meaning local governments will get some immediate fiscal relief. The bill is estimated to save or create 300,000 jobs. The House had reconvened, interrupting the six-week August recess, to pass the provision earlier today.
Most states’ budget-years started on July 1. And most states had counted on receiving Medicaid funds from the federal government to balance their budgets. Congressional delays — and the prospect that Congress might not allocate the funds — would have forced local governments to slash hundreds of thousands of workers, including teachers and police officers.
All states except for Vermont are barred from running deficits. Combined, the state fiscal shortfall might total $140 billion this year. Thus, the bill will help to ease the worst of the fiscal crisis for states. But they still will layoff tens of thousands of workers. Last month alone, states shed 48,000 jobs.