White House: States Can't Use Stimulus to Pay Off Debt

clipped from www.mcclatchydc.com White House Budget Director Peter Orszag on Monday rejected South Carolina Gov. Mark Sanford's request to use up to $700 million of his state's economic stimulus funds to pay down state government debt. Orszag, responding to a letter Sanford sent to President Barack Obama last week, said the $787 billion stimulus bill Obama signed into law last month doesn't allow governors to use money intended for other purposes to instead make debt payments. "During this severe economic downturn, Congress and the president wanted to provide states and localities with emergency funding in order to prevent the layoffs of teachers, police officers and other vital public servants," Orszag wrote to Sanford.

"Congress has not authorized the executive branch to waive any of the above statutory requirements governing the State Fiscal Stabilization Fund," Orszag wrote. "Accordingly, states' spending... must satisfy the statutory requirements."

It looks like states who want to fill their budget holes with federal taxpayer dollars will have to push for separate legislation. Somehow, I don't see Sanford begging for a taxpayer-funded bail-out for S. Carolina -- it'd look bad when he runs for president in '12.