Napolitano wants stimulus package for state

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Gov. Janet Napolitano wants any new federal stimulus package to go not to individuals but instead to the state. Napolitano said Tuesday she believes that such direct aid to states will do more to kick start the nation's economy than the $600 checks that most taxpayers got earlier this year.

"The plain fact is that historically where you get an immediate stimulus is supporting infrastructure investment and in supporting health care,'' Napolitano said.

The first part of that would be money for states to use on construction projects such as roads and bridges, which she said would create jobs.

But Napolitano said the economy also would be stimulated if the federal government increases its share of what it pays states for Medicaid programs. The Arizona Health Care Cost Containment System, this state's version of Medicaid, gets about two thirds of its funds from Washington.

That would help Arizona out of its own financial hole: An increase in federal dollars could decrease what state taxpayers have to spend. And that could reduce the potential $1 billion gap this year between anticipated tax revenues and expenses.

Brian de Vallance, the state's lobbyist in Washington, said that is the key to how it would stimulate the national economy.

He said states that run into financial problems have three options: raid reserves, raise taxes or cut spending.

Arizona has already pretty much drained its own "rainy day'' fund. And the requirement for a two-thirds vote of the Legislature makes raising taxes politically impractical.

That leaves cuts, which de Vallance said means laying off workers and canceling contracts. That, he said, would send ripple effects through the economy.

The governor's request for direct aid comes as Congress is considering a second stimulus package to jump start the economy.

In February, federal lawmakers approved a $168 billion package, the most visible portion was those checks mailed to taxpayers. That, however, has not had the desired effect. Since that time Congress has approved a $300 billion housing rescue plan and a $700 billion bailout for the finance industry.

Proposals for a new stimulus package start at $150 billion and run up from there.