Aid to state governments in the $787 billion economic stimulus signed by President Barack Obama this week won't be enough to balance budgets as costs rise and tax revenue shrinks, governors meeting in Washington said, Bloomberg reported.
"States have a cumulative deficit that is more than double the money we get," said Pennsylvania Governor Edward Rendell. Even with the stimulus, "there's not a state in this union that's going to be able to wipe away all its problems."
The U.S. economic crisis dominated talk as the National Governors Association held its annual winter meeting in Washington this weekend. The Dow Jones Industrial Average hit its lowest level since 1997 yesterday. Government reports showed industrial output sank in January for a sixth time in seven months and housing starts plunged 17 percent. Companies from General Motors Corp. to Alcoa Inc. are slashing jobs and cutting production as the recession threatens to become the worst slump in the postwar era.
Rendell, chairman of the governors group, said Pennsylvania cut $1 billion from its budget and raised $218 million in additional revenue with taxes on tobacco and other products. The stimulus, even with about $100 billion in infrastructure spending for states, is no cure-all, he said.
"States are not off the hook," Rendell, a Democrat, told reporters.