Governor David A. Paterson sent a letter today to the leadership of the United States Senate and House of Representatives. The letter urges Congress to consider including several items in a second economic stimulus package ranging from supplemental Medicaid funding to investments in infrastructure such as increased federal funding to reduce water pollution by upgrading sewage treatment plants to funding for criminal justice initiatives.

The Governor’s letter follows:

Dear Speaker Pelosi, Majority Leader Reid, Minority Leaders Boehner and McConnell:

I applaud the results Congress was able to achieve with the first economic stimulus package. The tax rebates have clearly softened the impact of the nation’s economic downturn for millions of American families. Yet with job growth remaining stagnant and gasoline and food prices steadily rising, it has become clear that middle and low-income families need additional assistance to weather the economic storm. It is imperative, therefore, that Congress moves quickly to pass meaningful measures that stimulate economic growth and provide relief for families and communities across the nation.

Accordingly, I urge you to include the following items in a second economic stimulus package:

State Fiscal Relief

During this economic downturn, states are facing increasing demands and costs for programs such as Medicaid while simultaneously attempting to balance already strained budgets. In State Fiscal Year (SFY) 2009-10, New York State will be forced to close a budget gap of more than $5 billion while at the same time providing Medicaid coverage to increasing numbers of uninsured New Yorkers. A temporary boost in Medicaid (FMAP) to prevent further cuts to health care and other essential services would provide immediate fiscal relief to New York and other states. A similar bill was passed in 2003, which provided a 2.95% increase in the FMAP rate over 15 months.

Infrastructure

Infrastructure spending is one of the best investments the federal government can make during an economic downturn because it has the dual effect of modernizing our nation’s deteriorating infrastructure while also stimulating the economy through job creation.

Transportation spending puts money directly into the economy through ready to go projects, makes critical and lasting improvements in the network needed to support economic activity, and creates thousands of good paying jobs. In fact, it is estimated that for every $1 billion invested in transportation projects, 42,000 jobs are created, and every dollar that is spent on infrastructure projects generates about $5.70 in economic activity. For New York $410 million in funding could put people to work immediately on over 40 highway, transit and rail projects that are shovel-ready.

Similarly, investments in our nation’s deteriorating wastewater infrastructure would allow projects already in the queue to get underway. Recent dramatic cuts in the Clean Water State Revolving Fund (CWSRF) mean that the ability of states and municipalities to address critical wastewater infrastructure needs is compromised. In New York State, there is an immediate need of over $4 billion for 390 separate projects. In the long term, the need is much greater: $36.2 billion over 20 years. Congress should include significant funding for the CWSRF, to help close the gap between the CWSRF’s historical high funding level and President Bush’s FY2009 request.

Housing

The subprime crisis has affected countless numbers of Americans, including thousands of homeowners in New York. In the first quarter of 2008, foreclosure filings in New York represented one in every 256 owner-occupied households, or one in every 167 owner-occupied households with a mortgage. In some neighborhoods, there are multiple homes under foreclosure on nearly every block.

The Senate included a provision in its version of the housing bill to provide $3.9 billion in Community Development Block Grants for communities to buy and fix foreclosed properties. Unfortunately, it appears that this vital provision will not be included in the final version of the housing bill to be sent to the President. In New York, the state could use the funds to leverage state and local investment in foreclosed properties to sustain and stabilize neighborhoods hit especially hard by high foreclosure rates.

LIHEAP

Record high home energy prices are placing a tremendous strain on households. As such, New York’s LIHEAP program has experienced unprecedented demand. Without a significant increase in funding, New York State will struggle to provide a meaningful benefit to families in dire need of assistance. Reducing the program’s funding from the $5.1 billion authorized level inhibits states’ ability to adequately and effectively plan and serve the home heating needs of low-income and other vulnerable populations. New York supports LIHEAP funding at the $5.1 billion authorized level.

Criminal Justice Funding

As you are aware, Congress cut the Byrne Justice Assistance Grants (JAG) program from $520 million in FY07 to $170.4 million in FY08. State, local, and tribal jurisdictions in New York depend on the Byrne JAG program to provide critical funds to fight violence and drugs, with 75 percent of each Byrne JAG dollar flowing directly to local law enforcement agencies. The FY08 cut means that New York’s share of Byrne JAG program has been reduced from $25 million to $8 million. Consequently, New York has already been forced to freeze new crime fighting initiatives and several current programs may need to be eliminated entirely, including prosecution services in the greater New York City boroughs and legal defense services across the state. Currently, New York is not in a position to make up the 67 percent cut to the Byrne JAG program. All states would benefit from the restoration of Byrne JAG program to no less than FY07 levels in a second economic stimulus measure.

Congress has an opportunity to provide an immediate boost to the economy and provide fiscal relief to American families. The State of New York – and indeed the country – will benefit greatly if these programs are included in a second economic stimulus package. Thank you for your consideration and I look forward to working with you to craft a stimulus measure.

Sincerely,

Governor Paterson