WASHINGTON — Tennessee and Georgia may turn down some of the economic stimulus money if the restrictions outlined in the package cause budgetary hardship in the future, the governors said Monday.
After meeting with President Barack Obama, Tennessee Gov. Phil Bredesen said some provisions in the package for unemployment benefits would force states to expand their programs permanently, even though the stimulus funding only lasts for two years.
“We are evaluating this piece of money, whether it makes sense for us to take it,” he said. “We may well be one of the states that say we can’t take on that portion of it.”
Of issue is the package’s unemployment modernization provisions, which require states to update their unemployment insurance systems and provide jobless benefits to workers who now don’t qualify for benefits.
Tennessee will receive $141 million for the modernization program, while Georgia will receive $216 million, if the state legislatures approve the funding.
“We have an unemployment fund which is not in good shape right now,” Gov. Bredesen said. “We’re in the position of going back to our Legislature this year for changes in our tax structure just to keep our fund whole, and taking it to a new level may be too much of a lift for the Legislature this spring.”
Georgia Gov. Sonny Perdue said he is examining all aspects of the stimulus bill to determine whether his state should accept any funding. The unemployment funding, in particular, could cause Georgia to raise unemployment taxes when the stimulus money runs out, he said.
“We won’t compromise if we’re left with filling a hole that requires higher taxes for Georgia businesses at the end of it,” Gov. Perdue said.
Georgia Labor Commissioner Michael Thurmond estimated the extra federal funds should help shore up Georgia’s unemployment insurance fund more than it will cost the state, despite reservations from Gov. Perdue.
“It will strengthen our unemployment trust fund and reduce the probability of increased taxes on our employers in 2010,” Mr. Thurmond said.
Both governors stressed that they still are evaluating all the details of the bill and that no decisions have been made yet on rejecting any funding.
Overall, Tennessee is slated to receive $4.3 billion and Georgia will get $6 billion from the $787 billion package that Congress passed Feb. 13.
“Most of this money is usable, but I want to be able to look my grandchildren in the eye 20 years from now and tell them what they got when they’re paying the bill,” Gov. Perdue said.
Gov. Bredesen took issue with some Republican governors who emerged from the National Governors Association meeting with Mr. Obama on Monday and criticized the stimulus package as wasteful, focusing mainly on the unemployment funding. Louisiana Gov. Bobby Jindal and South Carolina Gov. Mark Sanford led the criticism at an impromptu news conference outside the West Wing, as other governors looked on.
“I’m sorry the way this developed out here,” Gov. Bredesen said. “The conversation with the governors of South Carolina and Louisiana in the room, I would say, were more supportive and more conciliatory about these things than they were in front of the cameras here.”
President Obama, in his remarks to the governors, said the complaints overshadow the agreement between Republican and Democratic governors on 90 percent of the bill.
“I think there are some very legitimate concerns on the part of some about the sustainability of expanding unemployment insurance,” he said. “What hasn’t been noted is that that is $7 billion of a $787 billion program.”
Jim Brown, the Tennessee director of the National Federation of Independent Business, said the group would “absolutely” oppose accepting the unemployment insurance funds if the state would be obligated to continue providing the new benefits after the federal dollars ran out.
“You got new benefits and no (permanent) funding for it with the state holding the bag,” he said. “I think there are concerns.”
Republican Alabama Gov. Bob Riley told The Associated Press on Monday that accepting $100 million from the stimulus would lead to higher taxes on businesses and possibly workers when the federal money runs out in about four years.
His estimate: $28 million annually.
“Increasing taxes is not my idea of stimulating the economy,” Riley said.
To accept the money, the Legislature would have to rewrite Alabama’s unemployment compensation laws to expand who is covered, including many low-income and part-time workers. Riley said he will not recommend legislators do that.
Staff writers Dave Flessner and Andy Sher and The Associated Press contributed to this story.