South Carolina Governor Rejects Stimulus Money

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South Carolina Governor Rejects Stimulus Money
By Kate Phillips

Gov. Mark Sanford of South Carolina has just announced that he will reject about $700 million in federal stimulus money for his state, in his continuing battle with the White House over ways the money can be used.

Mr. Sanford was responding to the Obama administration’s second rejection of his requests to use about $700 million of South Carolina’s anticipated $2.8 billion in stimulus money to pay down some of the state’s debt. Peter R. Orszag, the director of the Office of Management and Budget, told him in a letter dated today that the new stimulus funds can only be used in these circumstances for government services, and cannot be applied to past debt.

Now, state legislators can overrule a governor’s wishes and seek the money themselves for the state, thanks to a section of the stimulus act insisted upon by Representative James Clyburn, the Democratic majority whip and longtime lawmaker from South Carolina. The two have feuded publicly over the stimulus money, and Mr. Clyburn made sure the language was inserted in part because of Mr. Sanford’s opposition.

In his statement, Mr. Sanford alluded to that provision by saying he hoped, if lawmakers went ahead to obtain the $700 million in stabilization funds (the state stands to get a total $2.8 billion), that they would offset it in other ways to pay down the state’s debt. He cited a recent study that ranked South Carolina as the fourth-highest of states in terms of the annual revenue used to pay debt.

Mr. Orszag’s office released another rejection letter. This time, Mr. Orszag not only said Congress hadn’t intended for stimulus money aimed at educational rebuilding or government services to be used this way. He also said he had consulted with other agencies to make the determination.

“Although payment of public debt obligations is a necessary governmental expenditure,the Department of Education, in consultation with the Department of Justice and my office, has concluded that the paying down of past debt does not constitute the use of Federal funds for “government services” under the plain meaning of those words in the Act,” Mr. Orszag wrote.

http://thecaucus.blogs.nytimes.com/2009/03/20/round-2-omb-rejects-sc-governors-stimulus-plan/?hp

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