Obama Rejects SC Gov’s Bid to Use Stimulus on Debt

Jim Davenport, AP, March 16, 2009

The Obama administration on Monday rejected South Carolina Gov. Mark Sanford’s request to use $700 million in federal stimulus cash to pay down state debt. White House Budget Director Peter Orszag said in a letter to the Republican that the federal stimulus law doesn’t allow President Barack Obama to make an exception for that cash. Sanford spokesman Joel Sawyer had no immediate response, but the governor has said he would reject part of the stimulus money if Obama wouldn’t give him flexibility in spending it.

The $787 billion stimulus legislation sets strict rules for the $53.6 billion being sent to help state budgets, Orszag wrote. It calls for 82 percent of the money to be used for public schools and colleges and 18 percent on public safety and other government services.

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Last week, Sanford wrote Obama, saying he wanted to use the money in part to pay down future obligations in the state’s retirement system.

“If your administration determines that it is unable to grant us this flexibility, we will in turn opt not to pursue these funds,” Sanford wrote.

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Clyburn [Jim Clyburn, U.S. House majority whip and South Carolina’s highest-ranking Democrat in Washington] has lambasted Sanford and other governors who said they may not take some of the stimulus money, calling such a move a “slap in the face of African-Americans.”

South Carolina stands to see as much $8 billion during the next two years from its share of stimulus plan when tax breaks and non-state spending items, such as Pell grants, are included. Sanford says about $2.8 billion is heading to state programs and he’ll have control of the $700 million in question.

Last week, the South Carolina House, which is controlled by the GOP, passed a state budget patched together with the help of $1 billion in federal stimulus cash. Then, Senate Finance Committee Chairman Hugh Leatherman, a Republican, introduced a measure that would allow the state to spend the stimulus cash despite Sanford’s opposition.

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