WASHINGTON — States responsible for more than a third of President Barack Obama’s $787 billion stimulus program will be able to tap some of the recovery money to cover costs of managing the new spending, Vice President Joe Biden told Congress today.
Biden sent a letter to the Senate Homeland Security and Government Affairs Committee summarizing new rules that will, among other things, offer states flexibility to use stimulus money to cover the costs of handling their share of Obama’s spending program.
Sen. Joe Lieberman, the committee chairman, welcomed the change, saying state and local governments have struggled to find ways to pay for the increased scrutiny and reporting required for the recovery money.
“In this balance that we’re trying to strike, it seems to me that this makes a lot of sense,” the Connecticut independent said during a committee hearing today.
Biden sent the letter in response to a congressional watchdog report delivered to Lieberman’s panel today urging the Obama administration to help states. The Government Accountability Office report also said the administration must move faster to explain how states should count jobs created or saved by recovery money, and how they should manage much greater accounting responsibilities created by the stimulus program.
Biden’s letter promised that the Office of Management and Budget would begin releasing new rules for states in early May “that will address several points that GAO has touched on,” including state auditing requirements and flexibility to focus more on recovery money.
But it could be June before OMB explains how states should juggle accounting for billions of new federal dollars with their existing federal audit responsibilities, said Gene L. Dodaro, GAO’s acting comptroller general.
“That’s way too late,” Dodaro told the committee.
State and local leaders have asked OMB for weeks to clarify the rules they must follow when managing the stimulus money.
Lawmakers expressed concerns that the administration is not moving fast enough to clarify how state and local governments are supposed to monitor the billions dumped in their agencies. Lieberman said he will urge OMB to move quickly.
States will handle $280 billion of the spending plan, distributing the money through a series of existing programs. Obama placed strict requirements on accounting for the new money, and states have said they don’t have the resources to cover the costs of the additional oversight required.
The recovery program included about $250 million for federal agencies to monitor how they handle the money, Lieberman said. But nothing was set aside for states.
GAO is monitoring how 16 states and the District of Columbia are managing the stimulus money. Its report found those states already have tapped nearly $8 billion in additional Medicaid money and are applying for billions more in transportation and education funds.
But the huge infusion of cash comes with its own problems, including accounting for where the money goes and managing how it flows to required programs, state and local leaders have said.
OMB estimates that about $60 billion of the recovery money has been committed so far to federal, state and local projects.
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