IMPACT OF RECESSION ON STATES AND LOCAL 

COMMUNITIES 

HEARING 

BEFORE THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

( 

Printed for the use of the Committee on Appropriations 


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IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES 


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IMPACT OF RECESSION ON STATES AND LOCAL 

COMMUNITIES 

HEARING 

BEFORE THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

( 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

46–227 WASHINGTON : 2009 


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COMMITTEE ON APPROPRIATIONS 

DAVID R. OBEY, Wisconsin, Chairman 

JOHN P. MURTHA, Pennsylvania 

NORMAN D. DICKS, Washington 

ALAN B. MOLLOHAN, West Virginia 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

CHET EDWARDS, Texas 

ROBERT E. ‘‘BUD’’ CRAMER, JR., Alabama 

PATRICK J. KENNEDY, Rhode Island 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CAROLYN C. KILPATRICK, Michigan 

ALLEN BOYD, Florida 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

MARION BERRY, Arkansas 

BARBARA LEE, California 

TOM UDALL, New Mexico 

ADAM SCHIFF, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

STEVE ISRAEL, New York 

TIM RYAN, Ohio 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

BEN CHANDLER, Kentucky 

DEBBIE WASSERMAN SCHULTZ, Florida 

CIRO RODRIGUEZ, Texas 

JERRY LEWIS, California 

C. W. BILL YOUNG, Florida 

RALPH REGULA, Ohio 

HAROLD ROGERS, Kentucky 

FRANK R. WOLF, Virginia 

JAMES T. WALSH, New York 

DAVID L. HOBSON, Ohio 

JOE KNOLLENBERG, Michigan 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New Jersey 

TODD TIAHRT, Kansas 

ZACH WAMP, Tennessee 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

JOHN E. PETERSON, Pennsylvania 

VIRGIL H. GOODE, JR., Virginia 

RAY LAHOOD, Illinois 

DAVE WELDON, Florida 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

BEVERLY PHETO, Clerk and Staff Director 

(II)


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APPROPRIATIONS FOR 2009 

IMPACT OF RECESSION ON STATES AND LOCAL 

COMMUNITIES 

THURSDAY, DECEMBER 11, 2008. 

WITNESSES 

HON. JIM DOYLE, GOVERNOR, STATE OF WISCONSIN 

HON. JIM DOUGLAS, GOVERNOR, STATE OF VERMONT 

HON. JON CORZINE, GOVERNOR, STATE OF NEW JERSEY 

JULIE MURRAY, CHIEF EXECUTIVE OFFICER, THREE SQUARE, INC., 

LAS VEGAS, NV, FOOD BANK 

DR. SANDY BAUM, SENIOR POLICY ANALYST, THE COLLEGE BOARD, 

AND PROFESSOR OF ECONOMICS, SKIDMORE COLLEGE 

MARCIA KREUCHER, EXECUTIVE DIRECTOR, COMMUNITY ACTION 

AGENCY OF JACKSON, LENAWEE, AND HILLSDALE, MI 

Chairman OBEY. Good morning. 

Well, as people who work on the Hill know, this is not our regular committee room; we had no idea whether we would have 66 

people showing up or six. I am glad we are somewhat above six. 

I appreciate the fact that everyone who is here is here despite the 

fact that we at least hope we adjourned last night depending on 

what the Senate does on the automobile bill. 

Let’s get right to it. This country is in what appears to be the 

most dangerous recession since 1932, and I think both parties are 

pushing different explanations for what happened. The Democratic 

Party seems to generally claim that this recession started because 

of nefarious activities on Wall Street, and the Republican Party 

seems to suggest along the lines that it started in the housing 

areas. And I think, frankly, that that narrative is wrong on both 

sides. 

To me, what has happened is that if you go back to 1980, from 

1980 through today, virtually 80 percent of all of the income 

growth that occurred in this country went to the wealthiest 10 percent of American families. And, in fact, in this decade, starting in 

the year 2000, about 95 percent of all of the income growth in the 

country has gone to the top 10 percent. And so I think average 

families have tried to respond to what was essentially a freeze in 

their real income over time by trying to borrow. 

So they borrowed more for student aid to send their kids to college, they borrowed more for housing, they borrowed more for 

health care, they borrowed more for a lot of things they needed and 

probably some things they didn’t need. And at the same time that 

that happened, you had all of these new instruments that were 


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being developed on Wall Street, accompanied by a substantial reduction in regulation of those activities. 

And so I will readily grant that housing and Wall Street finance 

were the triggering events, but I think the basic problem is, as I 

just described, the long-term erosion of the ability of average, working people to raise their income over time. And so now we are faced 

with the consequences of that problem. 

We were told by an economist from Moody’s, for instance, in the 

Democratic Caucus just two days ago that even if we pass the $700 

billion, so-called stimulus package, that we can still expect unemployment—which right now is hovering close to seven percent— 

that we can still expect unemployment in a year and a half to be 

hovering around nine percent. I think that is totally unacceptable, 

and I think that indicates just how serious this recession could be. 

We have lost two million jobs in the last year. The growth in population and labor force means unemployment has expanded by 

even more, by 3.1 million; one in eight persons in the labor force 

is either unemployed or underemployed, and we are getting very, 

very sad-looking predictions and projections and forecasts from 

economists throughout the country. Even many conservative economists who normally advise the Congress to leave it to the Federal 

Reserve to respond to the recession are now advising Congress to 

shore up the economy with more temporary—and I emphasize temporary—spending. The Federal Government, it seems, is about the 

only game in town to provide a lift to the economy. 

As the economy shrinks, we can anticipate more large reductions 

in the real revenues coming into the States and coming into the 

Federal Government. And falling revenues are going to force those 

States to either cut important services or to raise taxes, and that 

will create a major fiscal drag on the economy. 

And we also will be experiencing a human dimension. Losing a 

job and not being able to find a new one undermines the dignity 

of unemployed workers and puts a financial strain on the whole 

family and the whole community. 

And so I think there is generalized agreement, we have to make 

every reasonable effort to prevent things from getting much worse. 

The downward momentum appears to be very strong, but it is to 

be hoped that a well-designed economic recovery program could 

help slow it. 

And so we have two panels that will be appearing before us 

today—one a panel of Governors, a bipartisan panel of Governors 

to walk us through what is happening at the State level; and, secondly, a panel of people who are experienced at seeing what happens on the ground level to people who are the most vulnerable to 

these downturns. And I am happy that we have both of those panels here today. 

Before I call on them, let me call on the distinguished gentleman 

from California, Mr. Lewis, the ranking member, for whatever comments he would like to make. 

[The information follows:] 


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Mr. LEWIS. Thank you very much, Mr. Chairman. 

As we go about welcoming Governor Corzine, Governor Doyle, 

Governor Douglas, I had first thought that my colleague from New 

Jersey was going to be the only one with us today, because he 

wanted to make sure to greet his governor. But the economy has 

been improving in Georgia lately, so Mr. Kingston has decided to 

show up as well. But he has assured us he won’t be taking much 

of your time. 

In the meantime, what the Chairman said at the initial stages 

about the severity of our circumstances is felt by all of us; and it 

seems to me that it is really important for us to know that with 

the challenges that are out there across the country, it is very obvious that solving these problems has little or nothing to do with partisan politics. 

Indeed, we are in an environment in this country today where I 

have serious doubts about our ability to effectively encourage our 

children and grandchildren to become involved in public affairs because they look at the way our government is working, whether it 

be at the local or the State level, but certainly the Federal level, 

and they say, My goodness, there has got to be something better 

for us to have our children do. But the country’s future and, I believe, the world’s future is very dependent upon our being able to 

attract the best to our staff in a room like this, but also among the 

members, as reflected by many of the people in the audience. 

I was initially hopeful that today’s committee meeting was to resume our deliberations and mark up the remaining unfinished 

spending bills for the fiscal year 2009. We are now into our third 

month of the new fiscal year, and many critical functions of government are operating under a continuing resolution that expires on 

March 6th. 

It is my understanding that our Appropriations Committee staff 

is now negotiating with their Senate counterparts on the nine appropriations bills that have yet to be considered by the House and 

the Senate. Those spending negotiations, you should know, many 

involving only subcommittee-passed bills that have not been debated in the Full Committee, are occurring without any Member or 

Senate input whatsoever, to my knowledge. I have heard from a 

variety of sources that both minority and majority staff in the 

House and Senate are very uncomfortable making these policy and 

funding decisions that should be addressed at a Member and Senator level. 

I am told that it is the intent of the House and the Senate leadership to combine these nine spending bills into an omnibus package to be presented to President-elect Obama shortly after he is 

sworn into office in January. But why would we put our new President, elected on a promise of change in the ways of Washington— 

why would we want to ask him to sign a spending package like 

this? I don’t know. I can’t think of a single reason why he would 

reward Congress for failing to get its works done. 

Perhaps the new team just wants to put 2009 behind us, and certainly all of us can understand why that might be the case. With 

our staff working around the clock, including weekends, and with 

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tion between the Committee, the Majority Leadership, and the incoming Administration on the end game—the sooner, the better. 

If our next President plans to extend the continuing resolution 

for the full year, I don’t see any point in asking our staff to work 

right up until Christmas on a package that will never see the light 

of day. Frankly, I would rather see the staff enjoy time with their 

family over the holidays, and be rested and ready to go with the 

Committee’s work early this coming year. 

With regard to today’s hearing, there is no greater challenge facing working families than our Nation’s struggling economy. The 

ability of consumers to secure loans to buy a car or a home, start 

a small business, or to care for loved ones with medical needs is 

critically important. But in order for taxpayers to be confident that 

Washington can address these challenges, Congress must propose 

real solutions that produce real results. 

Like other fast-growing suburban areas across the Nation, my 

district has been severely impacted by the economic downturn that 

the chairman mentioned, that unemployment is currently, nationally, pushing 7 percent. In 2007, unemployment in my region, in 

my own district, was 5.9 percent; today, it stands at 9.5 percent. 

New home starts have fallen by 50 percent, and nearly 20,000 

home construction jobs have been lost. 

Thousands of families in our communities have lost their chance 

for the American dream. Nearly 100,000 homes are in foreclosure. 

And with the value of homes falling as much as 40 percent, even 

more mortgage holders are in danger of defaulting on their loans. 

The typical Washington solution to every problem is, what? You 

know it better than we: to throw money at it. 

I would argue that we can no longer afford the typical Washington solution. My constituents want Congress to deliver specific 

economic solutions rather than spending money on programs that 

sound good with no near-term results. 

My understanding is that the incoming Administration is work- ing with Speaker Pelosi and Senator Reid on a $500 billion or, as 

the chairman indicated, or more proposal for stimulus spending. 

While I have not yet seen any details of the proposal, members of 

this committee have an obligation to ask two very important questions: Will it work? And, where will the money come from? The typical Washington answer to a challenge of this magnitude is to write 

a blank check and hope for the best. But that is not good enough. 

Congress must demand results. 

A recent New York Times article made this observation: Government agencies usually don’t even have to do a rigorous analysis for 

transportation projects on how it would affect traffic, for example, 

before deciding to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited the project’s potential benefits. If Congress is going to approve billions in new road projects, 

for example, will it also demand that this new spending result in 

less congestion? 

If President-elect Obama is serious about change, he must insist 

that any Federal funding for infrastructure projects be linked to 

tangible results. When it comes to spending bailouts using taxpayer dollars, we must insist on measurable results. 


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Before turning to our panel, I would like to ask Chairman Obey 

if it is his intention to hold a Full Committee markup of this stimulus proposal in January. In other words, will the members of our 

committee have the opportunity to debate and amend the stimulus 

package before going to the House floor for consideration? 

Chairman Obey and I have had many an exchange regarding last 

year’s fiasco in which we essentially suspended all of our work. It 

is important that we have subcommittee expertise applied to these 

questions and, in turn, to have those lines of expertise come to the 

Full Committee where we can possibly even consider amending 

what has been proposed. That has not been our pattern recently. 

I hope we will see quickly a return to regular order. 

I thank the Chairman for his guidance. I yield back the balance 

of my time. 

Chairman OBEY. Thank you for those supportive remarks. 

Let me now call our first panel. First, Governor Jim Doyle from 

a place called Wisconsin; secondly, Governor Jim Douglas from the 

State of Vermont; and, thirdly, Governor Jon Corzine, Governor of 

the State of New Jersey, who, before he had the unfortunate judgment to leave Washington, also served us with great distinction in 

the United States Senate. 

Gentlemen, we are happy to have all of you with us. If you would 

take about five minutes or so to summarize your statement, we will 

insert your written statements in the record. And we appreciate 

your being here. 

Governor Doyle, why don’t you lead off? 

Governor DOYLE. Thank you, Mr. Chairman. 

And to Mr. Lewis and members of the committee, to my distinguished colleagues from Vermont and New Jersey, thank you for 

having us here today. And to the chairman in particular, I, of 

course, want to state my incredible appreciation for your leadership 

for the State of Wisconsin and your great leadership of this committee during very, very tough economic times, and your work to 

help move our State and this country forward. 

The country’s economic crisis has created very serious challenges 

for Wisconsin, and I believe that unless they are addressed correctly, these challenges to our States will impair our country’s ability to recover and to move forward. 

First, I want to acknowledge the attention to the State’s infrastructure, and let you know that Wisconsin has been working hard 

to line up projects that are ready to go and that will really add 

value to our economy. And let me say in response to Mr. Lewis, we 

would be delighted to have accountability for the expenditure of 

that money, to make sure it is doing what it is supposed to be 

doing. 

Let me also say a quick word about State budgets and how we 

handle ordinary economic downturns. Unfortunately, all of us, as 

governors, know how to handle ordinary downturns, and pretty severe downturns, but we are dealing with something of a different 

magnitude here today. 

Wisconsin’s budget is typical of, I believe, every other State in 

the country except, I think, Governor Douglas’ in that we have to 

balance a budget; and I know he does it every year, but we, by our 

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omy slows, we have to adjust. And until September, we were on 

course to meet revenue projections even in a very slow economy. 

Last spring, we adjusted to a bad economy by making major cuts 

in State government. 

I have made $270 million in cuts to our State government since 

June of this year. And those cuts, in combination with earlier cuts 

that we have made, total a half billion dollars of cuts that we have 

made to the budget of the State of Wisconsin over the last year and 

a half. These actions were recognized as an ability to adapt and 

manage a challenging fiscal situation; and, in fact, as a result of 

those cuts, prior to September, Wisconsin saw an upgrade in its 

bond rating. 

Unfortunately, this economic crisis is unprecedented in recent 

decades. We had based our budget on very, very modest revenue 

forecasts. And to just give you a sense of the dimensions that we 

now face, we were predicting even on very, very minimal budget 

forecasts from last June that we would have about $28 billion in 

revenues for the next biennial budget. But after what happened 

this fall, we now predict only $25 billion in revenues over that 2- 

year period a significant decline from what were already predicted 

to be very flat revenues. 

The projected drop in revenue, combined with what happens with 

States in these kinds of times of expected increases in programs 

such as Medicaid, leaves us facing our largest budget gap ever: 

$5.4 billion over the next 2 years, or 17 percent of our biennial 

budget. 

Due to the cuts we have made over the last few years, we approach this challenge in a situation where, in the State of Wisconsin, one out of ten of our State jobs are unfilled. The budget deficit we face in this economic crisis stands, at a minimum, to double 

the number of State workers that will be out of jobs. And no matter 

how many workers we let go, the most basic fact is that these people only comprise a small percentage of our budget. I could cut the 

workforce of the State of Wisconsin in half, and we still wouldn’t 

be dealing with the full scope of the deficits that we now face. 

So what we are left with is cutting away our State’s ability to 

carry out the most essential expectations that people have for our 

government. We will be forced to cut the very tools and services 

that people depend on to pull them out of a recession and move 

them ahead. 

Specifically, State budgets let our communities hire police officers and firefighters. They allow kids to go to good schools. They 

allow students to go to universities and technical colleges with affordable higher education. State budgets also make sure that a 

child who breaks his or her arm gets the appropriate medical care 

that he or she needs. 

So that is what is threatened in the current situation: our 

schools, our universities, our technical colleges, our access to health 

care, our local police and firefighters. These are the areas that determine State budgets; approximately 80 percent of our State budget is in those areas. And aid to long-term capital projects, which 

is very beneficial to the future and which we truly believe will help 

stimulate this economy, will not close our budget shortfalls or ease 


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these devastating cuts. And these cuts could undermine years of 

careful progress. 

As you know so well, Mr. Chairman, and that you have been so 

helpful on, in Wisconsin we have worked hard together to make 

sure that every child in Wisconsin has access to affordable health 

insurance; and we have worked hard to make sure that families 

can get their kids a good education that they can afford. We have 

worked hard to build a great university system with affordable tuition and sufficient financial aid; and we have worked hard to put 

more police officers on the street to help turn some of our most 

troubled neighborhoods around. 

For example, in Milwaukee, State funding has allowed the police 

department to launch a new, highly strategic data-driven neighborhood task force which is credited for reducing total crime in the 

city by 10 percent and homicides by 33 percent. This program is 

saving lives, and it is making the city stronger. 

The magnitude of the budget shortfalls will also force States to 

consider tax increases. So we recognize, as States—and I am sure 

I speak for every governor—that we are going to have to make 

even more cuts, and we are going to have to make even more difficult choices. We don’t want to have to make those choices, but we 

are willing and will make those choices. There are more cuts coming in Wisconsin, painful cuts that will really matter. 

But we cannot allow our States’ revenue shortfalls to be an obstacle in our efforts to recover from this recession and to move our 

State and this country forward. So I am here to work with you to 

do everything I can to help move our country ahead; and it is my 

deep belief that our approach must allow States to meet our citizens’ most basic needs. 

It would be terrible if, at the end of this recession, that what we 

would find is that we have moved this country back 25 years; that 

our schools are hurting, that our universities have become so 

unaffordable that ordinary people can’t go to them. 

We all recognize that, unfortunately, this recession will move beyond this fiscal year. So far, the current estimates put the total 

State deficits at $150 billion in this fiscal year and the next. 

So, Mr. Chairman, again I thank you very much. And the committee, I thank the committee for listening to our concerns. We 

look forward to working with you to make sure that we assure that 

our schools remain good, that higher education remains affordable, 

that we have sufficient numbers of police and fire on the streets— 

safety on the streets, and that we are ensuring that people get the 

basic health care that they need. 

Thank you very much. 

Chairman OBEY. Thank you. 

[The information follows:] 


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Chairman OBEY. Governor Douglas. 

Governor DOUGLAS. Mr. Chairman, thank you very much. Congressman Lewis. We appreciate the chance to be here to talk about 

the current fiscal condition of the States and of our country, and 

how we might work together as State and Federal officials to speed 

the economic recovery of our country. 

I am the Governor of Vermont, of course—also vice chairman of 

the National Governors Association. I will offer a few thoughts on 

behalf of the entire association membership and some from my perspective as the chief executive of a small State. 

The residents of my State and all States, as you know, are anxious. They are hurting. In many cases, they are out of options and 

are really looking for help from us and the Federal Government. 

A week or so ago, 48 governors and governors-elect met in Philadelphia with the President-Elect and Vice President-Elect to talk 

about ways that we can work together as partners to spur economic 

growth and speed recovery. 

As Governor Doyle noted, the governors of our Nation are indeed 

making difficult choices now, and working with their legislatures to 

implement them. States have already cut $7.6 billion from budgets 

during the current fiscal year and could be facing shortfalls of 

nearly $180 billion over the next 2 fiscal years. As you noted, we 

don’t have the option of not balancing our budgets, so we have to 

find ways to keep them in balance in these very difficult and challenging fiscal times. 

Vermont is a small State, but our financial pressures are no less 

acute. We have already reduced our revenue forecast for the current fiscal year twice. We have pushed through two rounds of very 

difficult budget cuts. Another rescission is being developed now. We 

have cut our State workforce by about 5 percent, and for the next 

fiscal year, 2010, I have directed the departments to prepare budgets that reduce general fund appropriations by an additional 13 

percent. 

So we are working hard to address this downturn. We are looking at all options to reduce expenditures. But these reductions will 

undoubtedly impact important State services, including those that 

affect the most vulnerable in our States. 

These actions and those that all States need to take to balance 

budgets can slow recoveries and make downturns worse. So one of 

the most efficient mechanisms that the Federal Government can 

use to speed a recovery, as economists across the political spectrum 

agree, is investing in existing Federal-State programs. 

NGA urges the Congress to invest in States as part of any national recovery strategy, specifically to temporarily enhance the 

Federal Medical Assistance Percentage for at least 2 years; to invest in ready-to-go infrastructure projects with no State match to 

spur job growth; to consider changes in the Federal Tax Code that 

can spur economic growth; and to avoid policies that preempt State 

authority, that shift costs to States, or that impose new unfunded 

mandates that work against the goal of economic recovery. 

I want the expand on a few of those recommendations very briefly. 

An enhanced FMAP is most effective, as a counter-cyclical measure, to implement at the onset of an economic downturn in order 


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to boost recovery, but we believe it has to be in effect for at least 

24 months. That allows States to meet anticipated increases in 

Medicaid costs for the duration of this economic downturn. To 

achieve a maximum effect, the funding should be between a third 

and a half of the budget shortfalls that States are facing this year 

and next. 

Another important safety net program is unemployment insurance, and Vermont and at least 33 other States are facing challenges maintaining adequate balances in our unemployment trust 

funds. I encourage the Congress to reconsider a Reed Act distribution to the States for the purposes of bolstering these balances. 

This will help blunt the impact on already overburdened and struggling businesses if unemployment trends continue as projected. The 

chairman indicated the likelihood of that trend if no action is 

taken, and we have to do everything we can to provide that safety 

net to the people of our State. 

Chairman OBEY. If I could just interrupt. What I indicated was 

what the unemployment levels were expected to be even if we did 

take that action. 

Governor DOUGLAS. Even if we did. Thank you, Mr. Chairman. 

I have read some testimony of an economist before another committee of the Congress suggesting that the difference between action and inaction could be as much as 2.5 percent. So your point 

is certainly well taken that this is a serious situation, and everything possible should be done to keep it from being more serious. 

Investments in ready-to-go infrastructure projects are a cost-effective creator of high-paying jobs. Estimates are that for every billion dollars in transportation infrastructure there are about 35,000 

jobs created and about $5.7 billion in additional economic activity 

created as well. 

I think we should have a broad definition of infrastructure to 

have the most impact. That may be highways and transit systems 

and airports; it could be clean water and sewer projects; perhaps 

information technology, including broadband; environmental 

projects; higher education infrastructure, as well. 

And I want to emphasize, as my colleague Governor Doyle did, 

that we are not asking for a blank check. We want to work with 

the Congress to ensure that investments in infrastructure are tied 

to projects that are truly ready to go, and perhaps even include a 

use-it-or-lose-it provision to ensure that funds get into the economy 

as quickly as possible. These restrictions, though, ought to take 

into account regional limitations. 

For example, a 90-day requirement that I have heard discussed 

in some quarters to have shovels in the ground wouldn’t make 

sense in northern States where the construction season doesn’t 

begin until at least April and ends generally by November. 

I urge the Congress to temporarily lift the State matching requirements that would otherwise restrict the States’ ability to 

begin projects due to fiscal restraints. We support efforts that have 

been initiated by my State’s congressional delegation to extend a 

State match waiver to include all SAFETLU projects through next 

September. 

Just a couple other specific thoughts from our small State, Mr. 

Chairman: We practice what we call just-in-time delivery of bridge 


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paving and road projects. We don’t have a large number of readyto-go projects waiting for funding. So we suggest a reasonable time 

frame to obligate stimulus funds would be no less than 180 days. 

We generally don’t have large transportation projects in small 

States, but small projects come with large regulatory hurdles and 

red tape. So I would urge the Congress to streamline regulations 

and relax current eligibility criteria to allow stimulus funds to be 

used for maintenance-related activities. 

I might note that the President-elect in his comments to the governors last week talked about the need to cut through the red tape 

of the Federal Government to expedite these projects. 

A provision allowing or encouraging stimulus projects to be bid 

using Federal agency emergency procedures would allow States to 

use simplified bids and other procedures to expedite project delivery. And maintenance of effort or antisupplanting language should 

not be included, I would suggest. Any ready-to-go project ought to 

be eligible for stimulus funding, thereby allowing any displaced 

funding to be used for additional activities or projects. 

In my written comments, Mr. Chairman, I have included some 

thoughts about the Tax Code that I would urge you to take a look 

at. There is an EB–5 Immigrant Investor Visa program that we 

would hope is extended by the Congress to bring foreign equity capital into at-risk investments in our States. There are a number of 

ideas that I hope the committee will consider. 

I think it is quite clear that our Nation is at a crossroads at this 

very difficult time. Folks who are losing their jobs, their homes, 

and even their hope are looking to their leaders for help. I believe 

the timely targeted and temporary investments by the Federal 

Government that we have discussed this morning are needed now 

to get our economy going and put us on the road to recovery. 

Again, I thank you for the opportunity to be here this morning 

to offer these thoughts to this committee. 

Chairman OBEY. Thank you very much, Governor. 

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Chairman OBEY. Governor Corzine. 

Governor CORZINE. Thank you, Mr. Chairman, and Ranking 

Member Lewis. I am pleased to be here with my colleagues from 

New Jersey, Congressman Rothman and Congressman Frelinghuysen, who work very ably in a bipartisan way to represent the 

interests of our State. 

I think it is testimony to the Chairman’s leadership that we are 

focused very precisely on this very significant problem we have in 

the economy that is creating enormous dislocations at the State 

and local level. I have heard that from my colleagues already, and 

I am pleased to join them as well. 

Our story in New Jersey is not a lot different from what you 

heard from Governor Doyle. We face one of the biggest challenges 

we have had in history financially. We are constitutionally required, as 49 other States are, to balance our budget. The budget 

that ended last June, we collected $33.5 billion. In the current 

year, estimates are that it will be $31.5 billion; and if I am wrong, 

it will be less, with sharply declining revenue collections month 

over month by comparison. 

As we put together our budget for next fiscal year, which I have 

to deliver to the legislature in February, we are looking at $29.5 

billion as the likely target. That is $4 billion, in 2 years, in absolute 

dollar reductions, 12 percent. And as I like to emphasize, those are 

absolute cuts, not baseline numbers, which I think budgeteers understand. 

There are automatic increases in health care costs that we face, 

just as everybody else in the economy does, contractual wage hikes 

and automatic safety stabilizers that kick in during times of recession. If we were to look at baseline cuts, it is over $8 billion, more 

than 24 percent cut from what would have been expected over that 

2-year period. 

To compensate for the decline in revenue, we are doing the hard 

things that Governor Doyle talked about. We are cutting through 

the fat, and, frankly, I think we are dangerously into the bone. We 

have cut the State payroll by over 4,000 people. That is about a 6 

percent decline in the last 2 years. We have changed collective bargaining arrangements, increased pension contributions, mandated 

cost sharing. I could go on. 

We have cut aid to our colleges, universities, and municipalities 

already. We will be more challenged on that area in the next round 

of cuts. It will hurt people and the economy. And, frankly, a lot of 

our budget is not open to cutting in a civil society. 

We are not going to shut down our prisons. There is only a minimum amount of cuts that you can make to public safety. Eliminating services to the developmentally disabled and mentally ill 

doesn’t seem like a likely or proper direction. I could talk about 

child welfare agencies and others. And we have contractual obligations on debt service that go forward. 

So we are left with a very limited set of places where you can 

go cutting—programs like Medicaid, higher education, aid to municipalities are the most likely. And coming up with $4 billion of 

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dren and our future. These cuts are sapping an economy just as we 

ought to be strengthening the economy. 

And as I say, we are just one state. If you multiply it, 4 billion 

times 50, you get an idea of what we are talking about. We are medium-sized, and so some of the bigger ones have larger and some 

of the smaller ones a little less. 

My central point: A Federal stimulus package targeted to States 

must include, in my view, help on the operating side. I am an enthusiastic advocate for infrastructure spending. As a matter of fact, 

a month ago in the same hearing room I testified to the proper use 

of that if it is properly metricized and responsible. But we need 

help on the operating side if we are not to have the kind of cuts 

that I have outlined and Governor Doyle did. I must say, we could end up having a $300 billion or $400 bil- lion—maybe a $500 billion—program to help the States and other 

stimulus activities, but it could all end up being a wash if we don’t 

get help on the operating side of the state budgets. And we haven’t 

accomplished a lot if that is the case. 

We are not looking about blank checks. The fact is that States 

and the local government already have the delivery systems, already have the programs in place, the infrastructure to deliver the 

broad-based stimulus program. The Federal Government has access 

to the resources, and we would love to be a partner in that process. 

We have already made significant cuts, but—I would support the 

FMAP kind of investment that has been previously talked about, 

but there are other places, some of them in the mandates that the 

Federal Government lays upon the States. I think everybody knows 

that IDEA, we are only funding 17 percent of a mandate that we 

are required to carry. Everyone knows that No Child Left Behind 

is putting unfunded mandates on the States. We need help along 

those lines. 

And the reality on Medicaid is real. In the last 5 months, we 

have had 40,000 increase in the number of people signed up for 

Medicaid. It is exploding in front of our very eyes. So I do hope that 

we get to FMAP; that we work in some of the other programs like 

‘‘DISH’’ with respect to our hospitals, particularly in front of some 

hoped-for long-term fix for the uninsured. 

I do hope also that we don’t lose track of the fact that creating 

jobs with our infrastructure program is real. It can make a huge 

difference, and I think it can be delivered in a very solid context. 

We have, for instance, spending ongoing in the State of New Jersey, about $2.8 billion of accelerated transit projects and another 

$1.6 to -7 billion in school construction that we have moved up 6 

months to try to stimulate the economy today. 

But there are many things that we are not doing. Case in point, 

the State has already committed $5.7 billion towards one of the 

largest transit projects in the country, a new transit tunnel under 

the Hudson River, would create 6,000 jobs if we could get it funded 

today; 50,000 permanent jobs in the New York-New Jersey region 

is the estimate of the economists once it is completed, and it will 

carry 45 million passengers annually. There are real metrics and 

real positive elements associated with that. 

Just as the New Deal put together programs that have short-run 

benefit, those projects like the Lincoln Tunnel and Golden Gate 


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Bridge, and the electrification of the Northeast Corridor that I took 

today with Vice President Biden, these projects put people to work 

then and they are paying dividends to our citizens today. 

There is enormous need on both the operational side and the infrastructure side, and I would encourage both the Committee, the 

Congress, and all of us to work as partners to offset what is a very, 

very severe decline in our economy. 

I would just close with: We had an antipoverty network hearing 

in Trenton this week. The use of our food banks is up over 30 percent in client usage. Applications for unemployment are so large 

that we had to shift 150 people out of other departments to actually deal with the ongoing crisis of servicing those who are applying for unemployment. 

It is time for us all to pull together, join hands together, and be 

partners, address this not only to stimulate the economy, but to 

service the basic, core needs of our communities. 

I appreciate having the chance to talk. 

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Chairman OBEY. Thank you very much, Governor. 

Just one observation, and I will be frank about it. A number of 

my colleagues on both sides of the aisle will say to me in private, 

‘‘Well, yeah, I know these States have a lot of deficits.’’ But if the 

governors are of the opposite party, some Members are saying, ‘‘I 

don’t want to help him. I want to deal with my problems.’’ And others are saying, ‘‘Well, why? This is the State’s problem. I am a Federalist. Why should the Federal Government weigh in to give 

money to governors?’’ 

My friends know I like to quote Archy the Cockroach, and Archy 

once said, ‘‘There is always a comforting thought in time of trouble, 

if it is not your trouble.’’ What others have said to me is: ‘‘We are 

seeing at the State level, or will see at the State level, that because 

of the actions you have to take to balance your budgets, the result 

will end up being a fiscal drag on the economy of somewhere 

around $200 billion.’’ 

And I have heard even higher estimates. And if that is the case, it means that if the Congress doesn’t appropriate $200 million to 

at least counter that, we are not only not staying neutral, we are 

making the problem worse. Or, at least, the problem is becoming 

worse. 

And so it seems to me that what we need to do is first, provide 

a reasonable balance between what the Federal Government does, 

what the local governments do, what State governments can do, 

and what the private sector and organizations can do in order to 

create jobs to counter the jobs we are going to be losing with what 

is happening in the economy; second, stabilize the budget situations at the State and local level; and, third, help the most vulnerable victims of this recession. 

And hopefully, at the same time, while we are at it, it would be 

nice if we could do all of those things in a way which would modernize and streamline and make more efficient some of our delivery 

systems and services around the country. 

So I appreciate your comments here today. And to give other 

members more time, I will decline to ask any questions at this time 

and turn it over to Mr. Lewis. 

Mr. LEWIS. Thank you, Mr. Chairman. It is not my intention to 

ask any questions, but I do have a unanimous consent, if you will, 

to enter into the hearing record the additional materials. And it includes an op-ed from Governor Sanford, who is the chairman of the 

Republican Governors Association, and Governor Perry of Texas. 

Chairman OBEY. Without objection, so ordered. 

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Mr. LEWIS. Mr. Chairman, if I could take the balance of my time 

and yield it to my colleague from New Jersey, Mr. Frelinghuysen. 

Chairman OBEY. Sure. 

Mr. FRELINGHUYSEN. I thank the gentleman for yielding and I 

thank the gentleman for the time. 

And let me share—initially, I share the concern of our ranking 

member, Mr. Lewis, that so many of our appropriations bills were 

not debated and passed on the floor. I think in many ways that 

could have been a stimulus to get those bills through and money 

out on the street. 

I share with Mr. Mollohan oversight of the Department of Commerce, Justice, and Science portfolio, and there is a lot in those 

bills that would do a lot to stimulate the American economy. 

Having said that, gentlemen, thank you for being here. And particularly, it is a pleasure to welcome my own Governor Jon Corzine. 

The advertised topic of this hearing is the need for an economic 

stimulus package. I think we can all agree that we have an obligation to act to ensure that the current economic slowdown is as shallow and as brief as possible. There may be a need for targeted infrastructure investments as many of you have outlined. I am certainly familiar with those that need to be done in the New YorkNew Jersey area. 

The question that this Congress needs to debate is how we structure an assistance package that will be designed to stimulate or— 

will we structure an assistance package that will be designed to 

stimulate our economy or will it be structured in some ways to 

stimulate the growth and the size of our government? From my 

way of thinking, we must spur growth by using the traditional resilience of our economy and not relying on the sheer size of our 

U.S. Treasury. 

I understand that all of our States and our cities are hurting; as 

a result of the year-old recession, revenue collections are down. As 

Governor Corzine has stated, in New Jersey the revenue shortfall 

is expected to be at least $400 million and could reach nearly $1 

billion, based on projections produced by the nonpartisan Office of 

Legislative Services. My Governor’s administration estimates that 

the revenue shortfall for fiscal year 2009 to 2010 could be nearly 

$4 billion. 

Let me say, some of the problems here are self-inflicted: too 

much spending, too much incurring of debt, and, quite honestly, too 

much borrowing, which has contributed. But I do think the Federal 

Government needs to step up to the plate. 

I have to say for the record, even in the State, in States’ investments, the State investment portfolio is down $23 billion. And that 

may be a nationwide trend. That is a huge impact. 

But I served in the State legislature for a number of years. One 

of the reasons that we have this is because things have been given 

away to a lot of the public employee unions, and it has been reflected in the municipal budgets—the pension benefits, the health 

benefits for employees. And so the question is whether we have the 

courage to sort of revisit those areas and gain some sort of fiscal 

stability. 

So I thank the gentleman for yielding, and I thank the Chairman 

for the time. 


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Chairman OBEY. Mr. Murtha. 

Mr. MURTHA. Governors, I read through your statements. And I 

just want to say, we had this problem 25 years ago in western 

Pennsylvania. We lost steel and we got a lot of help from the government, and it made a hell of a difference. 

I hope you are making suggestions how to streamline, because 

we started sewage and water, where it took 4 or 5 years to get 

through the process, there are so damn many agencies involved. 

So I hope to the committee, the Appropriations Committee, and 

to Oberstar’s committee to make suggestions about what would 

help streamline, so you can get that stuff out there. I know you 

have got all kinds of sewage and water projects and infrastructure 

projects, but we need to know from you what would help you get 

it out as quickly as possible. 

Chairman OBEY. Mr. Kingston. 

Mr. KINGSTON. Thank you, Mr. Chairman. And I wanted to associate my remarks with Mr. Lewis in terms of last year’s budget. 

Here we are, having the hearing on anticipated legislation; yet, 

we have not finished up the fiscal year appropriation process for 

the year. And one of the reasons why we are unable to finish that 

had to do with offshore drilling. And I believe that an abundant 

supply of domestic oil would actually be a long-term solution to 

some of our economic woes. 

So I think we could revisit some of these issues that we came 

apart on last summer, and it can be and should be part of this 

package. 

But I am also wondering, in terms of some of the unfunded mandates—and I had served in the State legislature as well, and know 

that one of the great difficulties of State government is that there 

are so many unfunded Federal mandates on it; and yet, in your remarks, they are mentioned, but not specifically. 

It would appear to me that the National Governors Association 

might say, ‘‘Here is a list of very serious unfunded mandates that 

are very costly and well-intended. They are all well-intended, but 

some aren’t practical, and many could be handled by State and 

local government discretion anyhow.’’ 

You pointed out in your comments that Vermont, while it doesn’t 

have a balanced budget amendment, always balances its budget. 

Just because we don’t mandate it doesn’t mean that you are not 

going to do it anyhow. So I think on so many of these mandates 

we could get the word ‘‘Federal’’ out of there, and the States would 

do it, but the States could probably do it a lot more efficiently and 

inexpensively. And I hope that maybe today or in the coming weeks 

you can enumerate some of those mandates and, on a bipartisan 

basis, we can get rid of some of them. 

Governor CORZINE. Mr. Chairman, if I might make a comment on 

unfunded mandates, and then I would also like to reemphasize that 

all governors are asking for accelerated processes, as we did with 

President-elect Obama last week with regard to streamlining of 

some of the processes that are associated with infrastructure 

projects. 

But make no mistake, almost every State has already gone 

through this prioritization process. We have in the State of New 

Jersey. We have ready-to-go shovel-ready projects that would meet 


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both the Transportation Department standards that have to be met 

for matching funds. We have accelerated a large number of those 

in New Jersey, but we have a much longer list than what we have 

actually been able to fund with the resources that we have. 

The same goes with our school construction efforts that we have 

in place in the State. It is a $25 billion project. If we were to do 

what we have already identified as a responsible addressing of that 

issue, we would only cover, on our dime, about $5 billion of that. 

So I don’t want people to come away saying that States haven’t 

been doing their homework in getting prepared for shovel-ready, 

ready-to-go projects. I think we have that. And so—and I know that 

is the case on some of the water and sewer issues. 

There are a number of those same things that would be associated with energy projects, that conversion of public buildings. Most 

of that has been identified in a lot of the States. There is a huge 

backlog of maintenance and repair issues at our public universities 

that are identified that I think could be included in any kind of infrastructure. 

On the unfunded mandates, I think that some of them may be 

very appropriate. IDEA, which most people would strongly support 

in helping our at-risk children, our special needs kids, nobody 

thinks it is a bad program. The problem is that, since 1975, we 

have never gotten to full funding or anywhere close to full funding 

of what the Federal committed share is. 

For us it is about $500 million, we estimate, what we are getting 

in shortfall relative to it. The same thing on Leave No Child Behind. Now, you are right, there are some mandates that a lot of us 

would just, you know, there is no funding for at all. And mistakes 

happen, and we can work on that. But a lot of the mandates are 

the Federal Government has not put its partnership share into 

those and the States are picking that up. And that gets into that 

displacement issue that helps us funding. 

Chairman OBEY. Thank you. Governor? 

Governor DOUGLAS. Mr. Chairman, you did not pose a direct 

question at the outset of this part of the hearing, but I wanted to 

comment on whether this is an appropriate step for the Congress 

to take. And I think part of the answer is that this is a shared responsibility to administer most of the programs that we are discussing. Transportation programs are funded substantially by the 

Federal Government, administered by the States. That is true of 

Medicaid and other safety net programs. So as I have suggested in 

our meeting with my colleagues last week, we are all in this together from a Federal and State perspective. 

And secondly, I would not be here asking for the entirety of the 

budget gaps that the States are facing, because I think, and economists have weighed in on this, it is important to require some 

streamlining of State administration and programs. As we have 

noted today, we have been doing some heavy lifting in terms of cutting back and tightening our belts and doing things more efficiently. So we are certainly doing everything we can, and would 

welcome your participation in this effort so our mutual constituents 

can continue to get the service and benefits they deserve. 

Chairman OBEY. Thank you. Mr. Dicks. 


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Mr. DICKS. Well, I want to welcome the Governors here and congratulate our Chairman for having this hearing. I think this is 

great, to allow the American people to understand the problems 

that the States are facing. And after all, we are all in this together. 

We all represent the same people. And we have to be concerned 

about those people. 

I happen to be the Chairman of the Interior and Environment 

Appropriations Subcommittee, and we have jurisdiction over the 

EPA, clean water, and safe drinking water revolving funds. It has 

been my impression that loans are good to a certain extent, but at 

some point you got to have grants. We are now reduced to about 

600 million or 700 million in STAG grants. During the Nixon administration, when Bill Ruckelshaus was the administrator of EPA, 

we had $6 billion a year in water and sewer construction grant programs. I think it was like 80 percent or 80–20 or 90–10, some number like that. And to me, representing—I have urban areas in my 

district and rural areas. The rural areas simply are unable to do 

these projects because they cannot—the cost of paying back the 

loans gets to be so high that the constituents cannot pay the bill. 

So I think this is one area where we need—you know, Christine 

Todd Whitman, when she was Administrator of EPA, did a review 

of the whole situation; we have a $388 billion backlog nationwide 

in our wastewater treatment facilities. And if we are going to clean 

up the Chesapeake Bay and the Great Lakes and the Puget Sound, 

San Francisco Harbor, all these major estuaries in the country, we 

are going to have to do these projects. 

So I just do not know if you have any comment on that, about 

the fact that all we have today seems to be loans, with a few very 

modest grant programs. I think this is one area that we could 

change that would make a dramatic difference, create jobs, and 

also help us deal with some of our fundamental environmental 

problems. 

Governor DOYLE. Mr. Chairman, could I—— 

Chairman OBEY. Governor Doyle. 

Governor DOYLE. I agree wholeheartedly. In fact, we have in our 

list of ready-to-go projects identified a whole section of clean water 

and water treatment projects. The reason they are ready to go is 

they have been sitting, in many instances, just sitting there because of a municipality or sewage district not being able to finance 

the project. But in our list of ready-to-go projects, that is a very 

major section of them. 

Mr. DICKS. Thank you, Mr. Chairman. 

Chairman OBEY. All right. Mr. Mollohan. 

Mr. MOLLOHAN. Thank you, Mr. Chairman. Mr. Chairman, thank 

you for having this important hearing. I would like to join other 

members of the committee in welcoming the Governors here. I am 

chairman of the committee that funds law enforcement—served 

with Mr. Frelinghuysen—and the Federal Government has a program for State and local law enforcement that I am sure all of you 

are familiar with. Governor Corzine served with distinction in the 

Senate and is familiar with the COPS program, which was very robust during his tenure. 

I wonder, moving from the infrastructure side to the operations 

side, if you all would discuss a bit for us the impact the economy 


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is having on your ability to fund State and local law enforcement 

and what extraordinary needs the economic condition has placed in 

that area on you and how we might step up and help in those 

areas. 

Governor CORZINE. Thank you, Congressman. First of all, at the 

State level we have already pared back State police classes. So we 

are delaying and shrinking the number of people that we are offering into the workforce. And you can only go so long in that process 

or you end up having a major undermining of broad public safety 

in the State. This actually is part of the trickle-down problem that 

comes from this issue. This is a major problem among local communities. State aid is cut with broad general aid, and then the local 

communities have to look for the places to make their cuts. And the 

first and foremost, largest part of their budgets, go to public safety, 

fire and police. And while there can be arguments about whether 

the benefit packages are excessive or too attractive, the fact is that 

we need people in our communities. 

All of us are struggling with a gang problem. When you put dedicated police officers and technology into the streets, as Governor 

Doyle talked about, you get results and improvement in the quality 

of life in these communities. And I only hope that people understand that it is fine for us to adjust our budgets, our adjustments 

are going to be right out of the local support for law enforcement. 

That is why the COPS program was such an important ingredient, 

certainly would be something that I think most Governors, and certainly mayors, would be supportive of. 

Governor DOYLE. If I could add, I agree with everything that was 

just said. In Wisconsin at least, the way we are structured, large 

parts of our municipal budgets come through local aids that the 

State provides. And when you are talking about the kind of deficits 

we are looking at right now, you know, 80 percent of our budget 

is made up of K–12 education, of higher education costs, of Medicaid, of local aids, and of corrections. And of those last two, local 

aids and corrections, obviously that is major public safety and law 

enforcement concern. 

I was the Attorney General of the State of Wisconsin during the 

years of the COPS program. I saw the enormous advantage that we 

saw throughout the 1990s, a steady and significant decline of our 

crime rates throughout that entire decade. There were a number 

of reasons for it, but I believe the COPS program was certainly 

one. 

But now we face these huge cuts to the Byrne grant program 

that have really affected not only our local law enforcement, but 

our juvenile prevention programs and other things in the State. 

And when we look at what our budget is really made up of, at 

these levels it means you have to cut local aids. And I gave an example in my remarks that I do not want to repeat, but it is exactly 

that kind of specific program that is at stake when the city of Milwaukee comes to the State and says we need help on more police 

overtime pay in order to have a targeted program directed specifically at reducing violent crime, and homicides in particular, in particular areas of the city, data driven, community-based police kind 

of efforts, we were able to do that with very demonstrable results. 


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With this kind of deficit in front of us, and just trying to make 

sure kids can go to school, it is going to be very hard for us to be 

able to deal with those kinds of challenges. 

Governor DOUGLAS. Mr. Chairman, could I respond to Mr. Mollohan’s question as well? 

Chairman OBEY. Sure. 

Governor DOUGLAS. It is a little different in our State, because 

we have been through the cycle that Governor Corzine described of 

smaller classes at our police academy and underfunding our State 

police resources. So we are now increasing those resources. And despite the fact that we are having to make these tough budget cuts, 

I am actually recommending additional funding for our State police 

in the current and next fiscal year. We just have to, because although we are a small State, we are one of the safest in America, 

we have seen an increase in some areas of criminal conduct. And 

because we are on an international border we have drug smuggling 

that comes across. And in addition to the great work that the Border Patrol does, our State and local law enforcement agencies play 

a key role. 

It has gotten to the point in one small city in the northwest part 

of our State where they are having a very difficult public debate 

about whether to provide adequate support for the police department or the fire department. This is a serious situation because, 

as my colleagues have suggested, with cutbacks at the State level, 

it is going to have an impact on local agencies. So the Federal support for the COPS program and other similar appropriations is certainly welcome. 

Mr. MOLLOHAN. Thank you, Mr. Chairman. 

Chairman OBEY. Ms. Kaptur. 

Ms. KAPTUR. Thank you, Mr. Chairman. Thank you so very much 

for holding these hearings. 

And welcome, Governors. I am really glad to have you here this 

morning. I wanted to say that I believe getting our economy growing requires that transfer payments, Federal transfer payments to 

our States, be targeted in a manner that achieves as much economic growth as possible, at the same time as the Federal Government tries to assist the States. 

And in that regard, if I look at, for example, the area of energy, 

I would guess maybe 10 percent of your State budgets, I am not 

sure, would go into paying energy bills for everything from Guard 

bases to the Governors’ offices. 

And one of my questions really is it would seem to me that an 

investment in green energy in your respective States would have 

a long-term payout. If you could save 10 percent for the next 25 

years, every year, it would get priority maybe over investments 

that would be dead in the ground, even though they might be important. And I wanted to get your comments on green energy. 

And then Governor Corzine, my question to you, New Jersey’s 

economy is more like Ohio’s than the other two States that are represented on the panel this morning. Do you agree that the mortgage foreclosure crisis has really helped to precipitate the situation 

we are facing today? And as a former CEO of Goldman Sachs, let 

me ask you to comment how you view the administration of the 


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TARP and what we might do to deal with this mortgage foreclosure 

issue more effectively. 

So, first, on green energy and, secondly, on what you view as the 

precipitating factors that have tripped our economy into the downward spiral that we are all experiencing. Thank you. 

Governor CORZINE. Thank you, Congresswoman. First of all, I 

think all of us, when we talk about infrastructure—and I tried— 

in my formal remarks that are a part of the record, I emphasized 

that green energy investments, conversion and efficiency of buildings, particularly public buildings and others, as one of those 

things that is ready to go. We know how to do it, we just do not 

have the resources to bring people in to do it. 

We are actually changing some of the structure, working with 

public utilities to try to get resources to do that on a broad basis 

across the State as a both an economic stimulus, but also for the 

long-run benefits that you suggest. And I absolutely believe it 

should be part of an overall comprehensive economic stimulus program. And I think I am hearing that talked about, and there 

should be in any $500- or $600-billion program, some allocation 

that I think actually primes the pump with regard to these directions. 

Ms. KAPTUR. Governor, may I interrupt you? Do you know what 

percentage of the budget of New Jersey goes to energy costs? 

Governor CORZINE. I think it is a little less than 10 percent. You 

know, what most of us do in our budgets, and you have heard it 

from us, is we pass through, we either pass through to the educational system, our K through 12 or to our higher education. So 

some of those same kinds of questions, when you accumulate it, 

how we are spending the money that goes to education, how we are 

spending the money that goes to our municipalities, is going to energy. We just give a flat-out. 

So I think that there is a lot of work in the area that you are 

talking about that can create tremendous stimulus with long-run 

dividends. 

I am going to identify with the Chairman’s remarks at the open. 

I think I might arrange them just a little bit different. I do think 

that there is a long-run problem in the country about the failure 

to have income, real income, grow for individuals for a very long 

period of time. And that has led to a build-up of debt, consumer 

debt. 

Same sort of thing has happened in government. It is a bigger 

problem at the State and local level than it is at the Federal, although I think we will, long run, have problems there. There is this 

accumulating debt that has grown because there has been a concentration of growth of wealth in a very narrow segment. That is 

a big strategic problem that I think the country has to address. 

But there is no question that the housing market, in my view, 

which is such a fundamental part of our overall economy, that is 

where savings exist for most people in America. The broad majority 

of folks, 70 percent, roughly 70 percent of people have home ownership. They save through their home. And when that fell apart, for 

lots of different reasons, including the greed that somewhat exists 

in various parts of our economy, both at local and on Wall Street, 

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lems. And you have to remember you are talking about probably 

about 20 percent of our economy associated with that. It impacts 

our consumer, which is about two-thirds of our economy. And I 

think unless we get to the roots of that problem, actually get into 

the mortgage modification and all those kinds of things—and I 

think that should be done with TARP money—I think we are just 

going to be suffering from those problems that have resulted in the 

weakening of the balance sheet of financial institutions as we go 

forward. I could talk for hours on this. I am sorry. 

Governor DOYLE. If I could say something about the green energy, we could get to you the percentage, and I am not sure exactly 

what it is. I think it is a little less than 10, but it is huge. 

I tell you this, when I look at the University of Wisconsin’s budget each year, the biggest lift in that budget is energy costs. So before you even start dealing with other issues that you need to deal 

with at the University, you have to just cover the increased heating 

bill. And particularly for us in cold-weather States, it is enormous. 

And let me add, particularly if you are a major research university. 

University of Wisconsin-Madison is always one of the top two or 

three NIH fund receivers in the country. Huge medical research 

building. And those institutions take up a lot and growing amounts 

of energy. 

On the green energy, I would like to bring up one other point to 

you that you might want to consider. I just recently had a discussion with a major utility. We have very significant RPS standards 

in Wisconsin. By 2015 they have to be 10 percent renewable. By 

2020 they have to be 20 percent renewable. Right now they have 

a project ready to go, a major wind farm ready to go, that they cannot because of the restrictions in the credit market. The amount of 

money that they would have to pay in order to go forward with 

that project is so high that the cost to our ratepayers in Wisconsin 

would be enormous. The result of this economic crisis in our State 

is slowing our ability or may well slow our ability to hit the legally 

stated RPS standards that we have in place. 

Ms. KAPTUR. Mr. Chairman, I want to thank the Governor. And 

I want to say that both Chairman Obey and I spent many years 

in those cold-blooded Wisconsin winters trudging up Bascom Hill. 

So I just have to put that on the record, and it is great to have 

you here, Governor. 

Chairman OBEY. Let me ask the cooperation of the members of 

the committee and the witnesses. We are trying to hold the time 

frame for both the question and all of the answers to 5 minutes per 

Member so that every Member gets a chance to ask a question who 

desires to. With that, Mrs. Lowey. 

Mrs. LOWEY. Thank you, Mr. Chairman, for holding this hearing. 

And I want to thank the Governors for their excellent testimony. 

You mentioned so many good points. I particularly want to thank 

you for your focus on FMAP. And certainly we saw in New York 

that during the last significant economic downturn, a temporary increase in FMAP resulted in an additional $600 million for New 

York, generated more than $1 billion in additional economic activity. 


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So I appreciate your shaking your heads, and I do hope that an 

increase in FMAP will be an important part of our economic stimulus, economic recovery package. And I thank you. 

On a related issue, in 2005 for the first time, health care exceeded manufacturing as a percentage of all jobs nationally. Unfortunately, despite the fact that hospitals are often the largest employer in a community, many of them are barely surviving, although we are asking them to expand emergency rooms and prepare, God forbid, we ever had an incident again that needed their 

involvement. They do not have the capital to do what they really 

have to do. 

So my question, gentlemen, do you agree, number one, that helping hospitals access capital to improve their facilities and operations will ultimately improve health care, reduce costs, and generate jobs? And secondly, would you support a new Federal program to provide grants and low-cost loans to hospitals to make desperately needed upgrades and improvements? And if you could respond, I would appreciate it in the minutes that we have left. 

Governor DOUGLAS. Well, as my colleagues and I have suggested, 

Mr. Chairman, I would hope the Congress would be flexible in its 

definition of infrastructure, because the priorities differ from State 

to State. It may be a renewable energy project, as Congresswoman 

Kaptur noted, and we are proud of the fact that we have more 

wood-chip boilers in school buildings in Vermont than any other 

State. And we have three buildings heated by geothermal systems 

that are very cost-effective. And I hope we can do more. 

And obviously in terms of health care facilities, the better the infrastructure, the better the quality of care, means that there will 

be a favorable impact on the rates that are charged to customers. 

And of course the State government is a large payer of health care 

costs. So that certainly would indeed be beneficial. 

Mrs. LOWEY. Thank you. 

Governor CORZINE. I would concur with Governor Douglas’ comments. But I would also emphasize that aid to the hospitals on the 

operating side, probably through the DISH program, disproportionate share issue, is also fundamental. 

Right now, as you all know, when people go through economic 

stress, one of the first things to go is the remaining folks in our 

society that have health insurance. That goes fast. They go to the 

emergency room. We end up picking up charity care. And it is just 

a vicious circle that is undermining the operating economic health 

of our hospitals. 

And so looking for ways to help get across this bridge, bridge this 

recession, I think is an important element with regard to the operations of hospitals, as well as their capital plans. 

Governor DOYLE. If I could just add how important FMAP is to 

economic stimulus. Because if in fact, if you are just looking out 

over the next couple of years, if we have to cut our Medicaid budgets by 20 percent, the result of that in practical terms is that some 

fairly low-paid person working in a nursing home in the State of 

Wisconsin will be out of work. Somebody at the hospital, somebody, 

a technician, others, will not be working there. Those are jobs that 

are spread all across our States in every community and every 

place. 


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And I love the people who build our roads, and we love the operating engineers and the people that do all that, but there are people who hold a lot of other kinds of jobs. And as you pointed out 

very, very aptly, many of those jobs are in the health care sector, 

and many are very, very dependent, particularly in long-term care, 

are very dependent on the Medicaid program. 

Mrs. LOWEY. Thank you very much, and thank you, Mr. Chairman. 

Chairman OBEY. Mr. Serrano. 

Mr. SERRANO. Mr. Chairman, thank you for holding these hearings. And I want to call your attention to today’s Daily News to 

contrast: The bottom is the Sinking City, Mike Bloomberg cutting 

a million and a half, and the top is the Yankees gave CC Sabathia 

$161 million. If I was not a Yankee fan I would be outraged, but 

since I am a Yankees fan—— 

Governor DOYLE. You know you are saying that to a Brewers fan. 

Mr. SERRANO. I just noticed that. I probably should not have said 

that. I apologize. 

But my question speaks somewhat to what I mentioned here. 

And that is I spent 16 years in the New York State legislature, so 

I know how difficult it is to put budgets together during difficult 

times, and these are not just difficult, these are devastating in 

some ways. The people or the groups that suffer the most in these 

times, or suffer a lot, are the ones that do not have a constituency 

to lobby for them: the cultural institutions, the arts, beaches, tourism, recreational programs. 

Are we in danger of perhaps devastating our cultural institutions 

during this period of time to the point where they can never recover? And let me preface my last comment by saying that we understand what the priorities have to be. But at the same time, in 

the case, for instance, of New Jersey and New York, we worked 

jointly with our cultural institutions in both States, and they not 

only provide jobs but they provide a quality of life. And in many 

cases during difficult times they can make people just feel a little 

bit better. Are we in danger, as we focus on the needs that we have 

to deal with, of just having our institutions die to a point where 

they cannot recover? 

Governor CORZINE. Well, I was with you until the last comment. 

I do not think that we will get ourselves into a position where we 

eliminate or pull entirely away from cultural and community-based 

activities. But at least in New Jersey we have made a very clear 

choice that educating our kids is the priority that we are going to 

protect the most significantly. Public safety is going to be protected. 

And that we are going to do as much as we can to protect the most 

vulnerable. 

And these cuts that Governor Doyle and I talked about include— 

I mean I do not know about in Wisconsin—but they include serious 

cuts for a lot of those things that you just mentioned, culture and 

arts. And we are trying to do it in a way that we again bridge until 

we have resources to come back. But you have to make incredibly 

agonizing choices, and making sure that our kids get educated, 

that we protect folks on the streets of our cities and communities 

and do everything we can for the most vulnerable. And that is why 

we are here to say we need to be partners in this process or we 


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are going to have a very, very serious outcome at a human level, 

even on those most important priorities. 

Mr. SERRANO. Thank you so much. 

Chairman OBEY. Ms. DeLauro. 

Ms. DELAURO. Thank you, Mr. Chairman. And I want to say 

thank you to the Governors for being here today. Mr. Chairman, 

to you let me say I believe that this is the first hearing where we 

have focused on what is happening to those who are unemployed. 

They are not nameless, they are not faceless, they are not statistics. We focused on an industry, we focused on financial institutions. This is the first time we have said, What is going on in the 

lives of people who have lost their jobs? 

I want to focus in on the infrastructure piece if I can. I am supportive of FMAP, of food stamps, but on infrastructure—and I have 

three very quick questions, and one specifically that has to do with 

Governor Corzine. We have legislation up here that—we are trying 

to deal with an economic recovery program, not just stimulus, jobs 

that will look toward growth in the future. 

The legislation—and I will be self-serving in this sense—since 

1994 something called the National Infrastructure Bank, which examines infrastructure projects in an objective way, uses proceeds 

from bond issues to fund the projects. I believe it ought to be part 

of an economic recovery package. 

Governor Corzine, you talked about the New Deal programs, 

Tennessee Valley Authority, which is similar to the entity that we 

have been proposing here. As Governors, I would like to get your 

thoughts on the extent to which your States would take advantage 

of such an entity that would provide loans for a host of these infrastructure projects. 

Specifically, Governor Corzine, what would the global markets 

do? Do we have an opportunity to get investors to deal with such 

an entity where they would be attracted to public benefit bonds? 

And again to the three of you with regard who is going to get 

these jobs in your State, do you have the capacity and the workforce development programs to create the opportunities for men, 

women, and minorities and young people to be able to get these 

jobs? 

Governor CORZINE. Congresswoman, I believe that if you have 

the U.S. Government imprimatur on an infrastructure bank, which 

I presume in most models that I have seen, you will get significantly lower-cost financing than I think what we are doing at the 

States and authorities that are associated with the States, in coming together in raising capital in the capital markets. And yes is 

the short answer. I think it will actually improve it. 

I think the infrastructure bank actually will address some of the 

needs or concerns that the Ranking Member talked about. We 

ought to have to scrub to real metrics about the viability and the 

rates of return that are associated with the projects that go 

through that. So I am very supportive of that concept. I think it 

is one whose time has come. 

You know, the other questions, I believe that we work all the 

time in most of our States on our workforce development and to 

broaden access to encourage our labor unions to make sure that 

there is equal access to those jobs. Yes, the construction industry 


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is on its back. Housing is down two-thirds in construction from 

where it was. There are plenty of people to go to work on infrastructure rebuilding. We just have to make sure that we are putting pressure, that it is a diversified workforce, that everyone has 

access to it. 

That is not to criticize organized labor, but we need to make sure 

that the apprentice programs are open to women and minorities as 

well as others. And we need to obviously be updating workforce 

skills for the 21st century. And all of those things are in place. We 

just cannot fund it to the degree we would like. 

Governor DOYLE. On the first point let me, if I could, just tie it 

back to energy conservation as well, which I think, I hope, is part 

of infrastructure. 

Ms. DELAURO. Absolutely. 

Governor DOYLE. And to talk about how such authority would be 

helpful. One of the things we have done in the last month of trying 

to really look at how you jump-start an economy is look not only 

at the public infrastructure needs, but the private needs as well. 

And we identified over $600 million of energy conservation projects 

that Wisconsin companies are prepared to do immediately. 

The reason we know this is because we have a fund that works 

through our public utility commission comprised of money that the 

utilities pay in. That goes out to businesses that come in and say 

this is how we want to retrofit our factories, this is what we want 

to do to save energy. And so we have a queue of those proposals 

and we can fund so many of them. But there is a list of about 600 

million of those that are really not able to move forward because 

of lack of financing right now. 

So there are public opportunities, but I just give you this as an 

example of where we could put a lot of people to work for private 

companies in energy conservation on projects that they have ready 

to go. 

On workforce development, a huge issue, but I want to just say 

we recently have completed the biggest public works project in the 

history of the State of Wisconsin, the rebuilding of what we call the 

Marquette Interchange, which is the main interchange in the middle of the city of Milwaukee, about a billion-dollar project. 

We worked very hard, we figured out ways to get the contracts 

out in smaller lets so that minority- and women-owned businesses 

are able to build. And I am very proud to say that 23 percent of 

the contracts that we bid on that project, which came in under 

budget and under time, went to minority, women-owned businesses, and that 25 percent of the workforce that worked on that 

road was minority as well. 

So we have developed some real efforts at how we let the bids 

and how we get them in a way that we are able to make sure that 

a lot of people are enjoying and having the opportunity to go to 

work. 

And we are now in another huge infrastructure project, which is 

the whole rebuilding of the Interstate between Milwaukee and Chicago. It is going to be a $2 billion project over the next 6, 7 years. 

We will do the same kind of work to make sure people who are 

ready to come and work hard have an opportunity to work on that 

road. 


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Governor DOUGLAS. Mr. Chairman. 

Chairman OBEY. The gentlewoman’s time—Governor? 

Governor DOUGLAS. Very briefly—— 

Chairman OBEY. Briefly, go ahead. 

Governor DOUGLAS. Our contractors believe they have the capacity to get the job done. We have energy projects, as Governor Doyle 

does, ready to go. And we launched a program we call the Next 

Generation Initiative a couple of years ago to provide more resources for scholarship, for loan forgiveness programs, and also 

workforce training. And I attended the launch of one recently to 

train workers specifically to install solar panels, solar installations 

as a renewable energy project. So I think we have got a lot of work 

to do to get the job done. 

Ms. DELAURO. Thank you, Mr. Chairman. 

Chairman OBEY. Mr. Moran. 

Mr. MORAN. Thank you very much, Mr. Chairman. And I appreciate Mr. Lewis and Mr. Frelinghuysen being here, but it is particularly encouraging that we have had more than two dozen members on our side of the aisle stay all day today, even though votes 

have concluded, showing the importance of this. It is encouraging. 

Mr. Chairman, clearly State and local government needs have 

been largely excluded from any of the assistance Congress has already adopted. And I note that both Treasury and Federal Reserve 

are pointing the finger at each other now for who is responsible for 

that. But the fact is no serious recovery package will work absent 

our efforts to focus on their short- and long-term access to the financial markets. 

While the TARP and Fed have generously backed corporate access to short-term debt for the corporate sector, both agencies have 

refused the State and local sector. While the legislation we adopted 

specifically directed the Treasury to give consideration to cities and 

counties, no such consideration occurred. I think a key goal of this 

package ought to include language to free up or at least ease and 

reduce the cost of access to the State and local credit markets. 

I see Governor Corzine vigorously nodding his head. I know he 

understands the importance of this. It is the single highest priority 

for a number of municipal leagues and Governors. It will be a prerequisite to any State and local capital investment, not to mention 

the ability and capacity to meet the matching requirements of Federal programs that we will be considering funding in this effort. 

With the Chair’s permission, I want to submit statements for the 

record from the Government Finance Officers Association and the 

Bond Dealers Association showing the importance of this issue to 

State and local credit markets. 

[The information follows:] 


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Mr. MORAN. But if any of our witnesses would like to comment 

on their problems with getting access to State and local credit markets, particularly through municipal financing, I would like to hear 

from them. But that is the principal point I wanted to put on the 

record, Mr. Chairman. Thank you. 

Governor CORZINE. Congressman, you hit a very sore point. Just 

last week the Port Authority of New York-New Jersey tried to issue 

$300 million worth of taxable bonds and did not have any bids. It 

is with strong double A, very, very secure funding source. State of 

New Jersey, which is not on the upgrade list, but not on the downgrade list either at Moody’s and S&P, has good solid double A credit, is paying about 300, 325 basis points over Treasury’s at a 10- 

year yield. There is no benefit to the tax exemption. And the market is very narrow. And it is not just New Jersey. It is those experiences. 

One of the most effective housing finance agencies are State 

mortgage finance agencies, which are basically shut out of the market. They have very low default rates. They could be actively involved in mortgage modification and other elements, and it is basically without ability to access capital. The breakdown of the bond 

insurance, what previously was mono-line and turned into multiline, has undermined the cost structure of, in addition to the general concerns about it, and as you suggest, the Treasury and the 

Fed and others have looked at almost every other credit market, 

but one that is fundamental to the kinds of topics we are talking 

about in infrastructure today has been ignored. 

Mr. MORAN. Thank you. 

Governor DOYLE. If I could just add, at a time of the housing crisis, in addition to everything that Governor Corzine has said, I 

mean we have been out, we have been successful, but at prices we 

are going to pay for for years to come. But our Housing Authority, 

a very strong, solid organization, has not been able to get financing 

at all. And we have actually had to, at the most critical time that 

people need it, we have actually had to shut down our Housing and 

Economic Development Authority’s ability to go out with new loans. 

And that has been entirely because of their inability to get access 

to the credit market. 

Governor DOUGLAS. I might just add to that, student loan agencies are having trouble accessing the markets as well, so it is really 

across the board. 

Mr. MORAN. Thanks very much, Mr. Chairman. It is interesting 

that Treasury’s are paying virtually no interest, and yet States and 

municipalities are having to pay hundreds of basis points to get the 

access that is really not a credit risk for the lender, and yet you 

cannot access it. And it really is something that Treasury and Fed 

are going to have to help us with. Otherwise, even stimulus packages like this are not going to have the effect that they need. So 

thank you. 

Chairman OBEY. Mr. Olver. 

Mr. OLVER. Thank you, Mr. Chairman. And I too thank the Governors for your testimony today. I have a two-part question. In this 

recessionary economy, does your State need help to preserve and 

expand affordable rental housing? And if the answer to that is yes, 

what would be the most effective mechanisms available for the 


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Federal Government to deliver economic recovery dollars for you to 

expend on affordable housing? 

Governor DOUGLAS. Well, we certainly have difficulty, for the 

reason we just cited in response to Congressman Moran’s question, 

access to the capital markets by our housing finance agencies both 

for single-family homes and for multifamily units. So access to capital I think is the most important problem that we are confronting 

with our housing finance agency now. 

Governor DOYLE. I agree with that completely. We have very 

good programs in place. And this is a place where with adequate 

access to capital markets, we have strong housing rehabilitation 

programs directed at low or moderate home ownership and rental 

housing, and much of that has just stalled out right now because 

our Housing Authority cannot get to the market. 

Governor CORZINE. Ditto that. But I would say that there is a 

way that also there could be significant help to tenants and renters. The line, the queue for section 8 vouchers, is so extended in 

the current environment, and it is growing. As people foreclose and 

they are unemployed, the application list gets to a point where you 

are talking 4 and 5 years. 

So I would hope that people would look. This is something we administer, it is not a State program, but is administered through the 

States, could be very helpful to the human beings that are actually 

struggling with the current market. There is rehabilitation work 

that needs to go on. And public-financed housing across the country 

is also a place where infrastructure spending could go. 

Mr. OLVER. I think you have answered as concisely as I put the 

question. But I was surprised that the first thing was credit, provide credit, which is largely in the private market. And Governor 

Corzine, you got around to what I was wondering, what were the 

more public programs that would be involved. Thank you. Thank 

you very much. 

Chairman OBEY. Mr. Price. 

Mr. PRICE. Thank you, Mr. Chairman. Let me add my thanks to 

our three Governors this morning for your helpful testimony. As 

each of you described the cuts that you are being forced to undertake, it seems to me two things are clear. First, that these cuts, 

as Governor Corzine put it, are dangerously cutting into the bone. 

And secondly, that they are likely to have a contractionary effect 

with respect to the overall economy, an effect that is precisely the 

opposite of the stimulus that we need. So for both of these reasons, 

we need to tend to this. And your testimony is very helpful. 

One item that was not mentioned as much as I thought it might 

be is your school construction needs. I am aware that this is not 

traditionally an area of primary Federal responsibility. On the 

other hand, if your State is like my State, there is a backlog of 

these school construction needs. There often is not the money available needed to initiate these projects. And where bond issuances 

have been approved, there are often issues about ratings and the 

marketing of those bonds. In any event, it has been identified by 

my State as an area of great need. 

And Mr. Chairman, if I might, I would like to insert in the record 

a couple of memoranda that I think are quite helpful, one from the 


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State of North Carolina’s Governor-elect, and the other from the 

Town of Cary, North Carolina. 

[The information follows:] 


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Mr. PRICE. In any event, it has been identified as a great need 

by my State, and also as an area where many construction and 

renovation projects are ready to go. I mean ready to go as quickly 

as they could be approved. 

So I wonder how one or any of you would evaluate the potential 

of school construction as a component of a package. And to pick up 

on Mr. Olver’s approach, what would be the mechanism? What 

would be the best device for rendering some assistance in this regard? 

Governor DOUGLAS. We certainly have a backlog in our State. I 

expect that is not uncommon. We commit 30 percent of the construction costs of a school project to the municipality that undertakes it, and we have not been able to keep up with that in our 

capital budget. What has happened in a number of cases is that 

school districts have undertaken that responsibility entirely on 

their own; and at some point we will pay them, but they are carrying that extra debt service in the meantime. 

So I think, as I suggested earlier, a broad definition of eligible 

infrastructure projects would be very welcome so that States can 

establish their own priorities and allocate those resources where it 

is most important. 

Governor DOYLE. I really want to echo that comment. We have 

identified, by taking all of the districts that have recently passed 

referendums on school buildings, meaning that they have projects 

ready to go—under Wisconsin law we put these out to the voters, 

they have been approved, and they are not currently being built. 

That is all ready to go. 

In addition, we have identified those where referenda did not 

pass, which probably did not pass because of the costs of the building. But those projects are ready to go. 

I will say this, though. I really urge flexibility, because in Wisconsin we have had a very, very major school building program 

over the last 5 to 6 years. You should go to Mr. Obey’s hometown 

and look at Wausau East High School and see the quality of the 

school. So we have done a lot of really good school building in Wisconsin. We have a lot more to do. But I believe, you know, if the 

program were strictly school building, States that have made the 

huge investments in school buildings that we have may sort of lag 

a little bit behind other States. So I hope we have that flexibility. 

But that having been said, there clearly are school projects that are 

ready to go here, ready to go here today. 

Governor CORZINE. I think I made the remark, Congressman, in 

my testimony that we are in the midst of a very significant longterm project of reconstructing schools, particularly in our urban 

communities. We have already executed a $8.5 billion program that 

ended about a year ago, and we are in the midst of another $5 billion tranche. And there are $25 billion worth of identified needs. 

And we have prioritized those already. We already have the blueprints and the plans on most of those. This is a ready-to-go area. 

The same thing could be said for higher education. In every one 

of our State colleges and universities and community colleges, deferred maintenance is a huge problem. Every time anybody gets in 

trouble, they just put off maintenance and capital expenditures, 


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particularly in our higher educational units. And this is a place 

that I think is fertile for getting stimulus into the system quickly. 

Mr. PRICE. Thank you. Thank you, Mr. Chairman. 

Chairman OBEY. Mr. Kennedy. 

Mr. KENNEDY. Thank you, Mr. Chairman. Following up on that, 

on higher education, don’t you think if there is ever a time when 

our young people could use a chance to go to get a higher education, this would be an excellent time? We are finding in my 

State, tuition fees are skyrocketing because of the lower reimbursement to our State colleges and universities. As you mentioned before, Governor Douglas about the fact that student loan assistance 

is increasingly difficult because of the markets out there for student loans. Shouldn’t we take this opportunity to increase Pell 

grants and increase other forms of student aid and loans as an opportunity for us to increase the access for education to those students who want to take this time to get an education? You know, 

we are trying to create jobs on the one hand, but this would also 

be a good time for people to be getting an education. While we are 

in a kind of a downturn and a recession, people could also be getting an education. Could you comment on that? 

Governor DOYLE. I believe this very strongly. We worked very 

hard to build more affordable higher educational access. Huge issue 

all across the country, certainly in our State. We have a great university system. The biggest pressure on it now is how do people get 

access to it? And you know, this is an area where if we were to impose the kind of across-the-board cuts people are advocating, just 

take the 17 percent, put it all across the budget, a 17 percent cut 

to our university would mean about a 30 to 35 percent increase in 

tuition. It would be devastating for higher education. 

I just would make one point about this that is really important. 

You know, we maintained good schools through the Great Depression. My parents went—my mother went to high school in Wausau, 

Wisconsin, and my father in Oshkosh, Wisconsin. They both went 

to the University of Wisconsin in the middle of the greatest depression our country knew. And thank God we made that investment, 

because those were the people who maybe it did not pay off for immediately, but they went out and won a world war and they came 

back and built our country over the next 40 years. And that is why 

it is so essential. And if we are forced to make these kinds of cuts— 

I am all for the Pell grants, and please do whatever you can on 

that, but in addition, State budgets, as you cut what you put into 

a university, it is a dollar-for-dollar increase in tuition; you either 

limit access or you increase tuition on the other side of that equation. 

Mr. KENNEDY. Well, if you could get to us ways—as I said, obviously infrastructure and deferred maintenance is always a way 

these universities try to make up their deficits. So I know this is 

one way we could help. But I think a direct pass-through for students and entitlement support for education maybe for State universities and colleges, community colleges, you know, that might be 

the way to do it alone. 

But if you could get us some ideas, because this is the time for 

us to be educating our people for the workforce for tomorrow and 


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for today, and also a good time for us to keep people, you know, 

busy when they cannot find work otherwise. 

And finally, I could not agree more, Governor Corzine, section 8, 

forget about it. All I hear is all my constituents who are trying to 

find affordable—the lists are too long. We need to increase that 

number substantially. In terms of public housing repair, you know, 

we have the deferred maintenance has been long overdue; and we 

need to make a major improvement in our public housing units; 

and that we have to put more money in as well. So thank you for 

that. 

Last question on the food stamp eligibility. What would you say 

is the percentage of use in your States of food stamps of those who 

are eligible? 

Governor CORZINE. Well, the eligible is exploding. This is one of 

those places where unemployment goes up, or people shift jobs to 

lower paying jobs, then the food stamp usage goes up dramatically. 

And we have better metrics on the number of people that are actually using food banks, which are at now over 30 percent, and increase year over year. And the lines again, not unlike the unemployment lines, are just swelling dramatically with regard to applications for food stamps. This is a big issue. 

Mr. KENNEDY. My big problem in Rhode Island is we do not have 

our people signing up for them. That is the problem, for those who 

are eligible. A lot of it is stigma, obviously. But we do have a big 

turnout at the pantries, but it is a big problem getting all those 

who are eligible to sign up for them. And that is a lot of missed 

Federal dollars being put into our economy. 

Governor DOUGLAS. We have that problem, too, Congressman. 

We just expanded eligibility from 130 percent of poverty up to 185 

percent and eliminated the asset test, thanks to the flexibility the 

Federal law allows. So we are trying to get the word out. But you 

are absolutely right, there are a large number of eligible families 

who for one reason or another do not participate. And we just want 

to try to reach them and encourage them to do so. 

Chairman OBEY. Mr. Hinchey. 

Mr. HINCHEY. Thank you, Mr. Chairman. Governors, I want to 

thank you very much for being here, for your testimony, and for 

the very articulate responses to the questions that have been 

raised. 

There is no question that we are facing a very, very serious set 

of circumstances here in this country, one of the most difficult that 

we faced in history. And the examples are becoming more and more 

clear. We will have lost probably more than 2 million jobs by the 

end of this year, and that job loss is going to continue on into next 

year, and probably not just continue, but accelerate. The number 

of job losses is likely to continue. The impact that this is having 

on States all across the country is very severe. 

The budget deficits in the States now constitute I think more 

than half of the States. Something in the neighborhood of 27, close 

to 30 of the States have now budget deficits, many of them very, 

very severe, including the State of New York. So we are dealing 

with a major problem here. 

And the attention that you have been paying to the basic infrastructure I think is very important. Obviously transportation, 


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health care, education, and investment in new technology, technology that is going to deal with the energy issue particularly I 

think is very important. 

The big question that we are going to have to deal with, that this 

Congress is going to have to deal with coming up early next year, 

is going to be how much of an investment are we prepared to make 

in our own country? And that is a question that is very significant, 

because we have not made any major investment in this country 

internally in a long time, for decades, many decades. And we know 

that the last major investment we had was the Interstate highway 

system back in the 1950s. And we had some water treatment and 

sewer treatment investment back in the 1960s, when people became aware of the environmental issues that we had to deal with. 

So we are overdue. We are facing a country that is falling apart 

physically, internally, at the same time that we are losing huge 

numbers of jobs. And the decline in the gross domestic product is 

going to continue to go down. The estimation is now that by the 

end of next year, the gross domestic product will have lost at least 

4 percent. And if things continue to get worse, that number is likely to be higher. 

So the big question that we have to be able to answer here and 

engage in is, what kind of economic development package program 

are we going to be able to put together and how big is that going 

to be? If it is just tiny, it is not going to do anything. So it needs 

to be significant. Some are suggesting something in the neighborhood of 600, $700 billion, which is going to be probably less than— 

well, something in the neighborhood of 5 percent of the GDP. Others believe that we need at least 10 percent of that gross domestic 

product, something at least as high as a trillion dollars, or maybe 

something close to a trillion-and-a-half in order to make the difference that is going to have to be made to stop the decline of the 

economy, to stop job loss, and turn that into job creation and 

upgrowth, and to rebuild, maintain and rebuild the basic infrastructure, all of the things that you have been focusing our attention on very appropriately. 

I am wondering if you will give us any advice as to what we 

should do and to what extent we should do it. I am worried, frankly, that doing a little bit is not going to be nearly enough. And if 

we only do a little bit, we are going to be very unhappy about that 

over the course of time. So what do you think? What do you think 

we should do and how much should we do it? 

Governor CORZINE. Fools rush in. Last week when we were with 

President-elect Obama, I made the statement that whatever big is, 

make it bigger. Because I think that what you are hearing from us 

is that the deterioration of the economy, not only as reflected in our 

budgets but within the reality of what we see on the ground in our 

communities, is really quite substantial. And whether it is a 3 or 

4 percent decline in GDP or something larger—and I see people revising up, at least for this quarter and next quarter, numbers fairly 

substantially and looking for a decline through most of 2009, a 3 

or 4 percent offset, if you would, would back into about a 450–, 

$500 billion program just to stay even. And I certainly would 

argue, if making a recommendation on a macroeconomic basis, that 

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ties, the trouble lags even after the economy turns with regard to 

revenue flows and where we stand. 

And so when I am forced to answer that question, I do talk about 

7- or 800 billion, but if I made a mistake I think it ought to be larger over 2 years; a trillion-dollar program would not be unreasonable in my mind, 75- to $100 million in operating and support programs for States, 150- to $175 million for infrastructure, and 225-, $250 billion in tax relief in different programs is sort of 

the kind—certainly those are the buckets I hear. 

And I would argue that a 2-year program, and this is just personal, it is not—no NGA or anybody else is associating with it— 

I think makes sense. You need to have this be substantial enough 

that it offsets the decline that is going on in the economy, and 

hopefully sets in place multiplier impacts that will end up growing 

the economy. 

Governor DOUGLAS. I think, Congressman, we do agree. 

Chairman OBEY. If you could respond very briefly, because the 

gentleman exceeded his time. 

Governor DOUGLAS. A 2-year program is critical. Mr. Zandi, the economist from Moodyseconomy.com suggested a $600 billion figure, the number that you cited. But I think the key is, as Governor 

Corzine said, some of these safety-net programs really begin to increase their demand toward the end of the recessionary period. The 

people begin to sign up for food stamps and other benefits. So 2 

years is critical, and at least that figure that Mr. Zandi suggested 

I think is appropriate. 

Chairman OBEY. Mr. Boyd. 

Mr. BOYD. Thank you, Mr. Chairman. Mr. Chairman, this is a 

very productive discussion. Thank you, sir, for holding this public 

hearing and welcome. Thank you, Governors. 

I want to shift the discussion just to a different element of this 

whole issue. 

Mr. BOYD. All of your States, maybe with the exception of you, 

have a balanced budget requirement. The Feds do not and most of 

our States do, as I understand it, many of the States though in the 

last 8 or 10 years, including my State of Florida, which does have 

a budget requirement, have followed the Federal Government 

budget management plan of drastically cutting taxes, revenue, 

while significantly increasing spending programs and our promise 

as public officials to provide lots of programs and services on one 

hand, and less cost on the other. You guys are chief executives unlike us, we are legislators. So you get to sign both sides of the 

check. We only get to sign the back. You sign the front and the 

back. 

So my question, as we move through this, what is your counsel 

and advice to us about how we deal with that? Do we take the 

States and ask them to remove their balanced budget requirements 

or do we put a balanced budget in place at the Federal level? How 

do we join hands and work together to do this very important 

project that is going to be done? 

Governor Douglas, it actually frightens me when I hear you say 

that you have a community that is making a decision whether to 

cut police services or fire services. Those are very basic services 

that the community, people should willing to pay for. 


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Governor DOUGLAS. I don’t know if I can offer any counsel in 

terms of Federal budget policy. Frankly as an American, it is disconcerting to see the level of debt that the national government has 

incurred, but economists across the political spectrum have made 

it very clear at this point in the economic cycle an infusion of resources to the States is essential for recovery and will improve the 

outlook in terms of unemployment, as the chairman indicated in 

his opening comments, and allow the States to make fewer of those 

difficult choices, in terms of service cutbacks that we have described. So for the long-term I hope there will be, with all due respect, more discipline in the process into the future. But for the immediate term, where we are really facing these crises, I think the 

infusion of these resources is essential. 

Governor DOYLE. Let me just say I don’t think it is practical to 

say you can take the balanced budget restrictions off the States 

that are in our constitutions and, frankly, are probably very good. 

Nor do I think that deficit spending at the State level has any real 

effect on stimulating the economy. We are talking about a national 

and international economy, so we are just dealing with the practical side of it. 

And let me just emphasize I believe we’ve got to do our part in 

this. I don’t think any of us are here saying here is our deficit, just 

pay the bill. We have and we are going to continue to make very 

deep cuts. We have, and a number of States are going to have to, 

looked at revenue increases. We are going to have to do our share 

of this. I guess I would really like to emphasize that. 

We we are not here saying, you know, here is how much our 

shortfall is here, please make it up. We are going to do very, very 

difficult things. But at the end of the day, you get to this point, are 

you really going to cut schools? Are you going to cut Medicaid so 

severely that people lose jobs and people can’t get health care? Are 

you going to cut higher education costs to a point where tuition 

goes up? Are you going to raise State taxes so high that you actually have a negative effect on what you are trying to accomplish 

getting more money? I will give you an example in Wisconsin—I 

don’t want to belabor it, but we have made some tax cuts in recent 

times, but they are exactly the kind that you would want. We no 

longer tax Social Security income. And I am not going to allow 

right now for us to go back to doing that because these are people 

that actually need the help. We now exempt health insurance premiums. They are fully deductible. And that is not one where right 

now we want to go back to the people in Wisconsin. We now allow 

families to deduct child care costs. These are exactly the areas that 

families in Wisconsin are really struggling with, health care costs, 

child care costs, obviously older citizens with Social Security. 

So we may, I hope not, have to do something on the revenue side. 

We may well come to that point because in the end I am not going 

to let our schools fall apart and I am not going to let our universities become so expensive. But we have to do our part to help out 

in this as well. 

Governor CORZINE. I have to concur with everything Governor 

Doyle is saying. It would be a huge mistake to have the States take 

off fiscal governors like mandated balanced budgets. I think it 

would lead to a very sharp deterioration in credit quality and unVerDate Nov 24 2008 04:02 Jan 15, 2009 Jkt 046227 PO 00000 Frm 00076 Fmt 6633 Sfmt 6602 E:\HR\OC\A227P2.XXX A227P2

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dermining elements of it. I think it is a Federal Government responsibility. And we do have a responsibility to cut our budgets 

and adjust our priorities accordingly in times of stress. I think a 

lot of us are doing it, and I think a lot of us are actually taking 

this difficult environment and actually reforming a number of elements within our operations in government at the same time. I 

think that is good. But we still need to make sure that the Federal 

Government is a partner in the process and since you don’t have 

that balanced budget amendment I think you need help from it. 

Mr. BOYD. Thank you, Governors. Thank you, Mr. Chairman. 

Mr. OBEY. The gentleman’s time has expired. 

Mr. BOYD. For 15 seconds think about as we move through this, 

how we finance it and who finances it and who pays it back. We 

could look at history and gain some good ideas. Thank you. 

Chairman OBEY. Mr. Fattah. 

Mr. FATTAH. Thank you, Mr. Chairman. Let me thank you for 

holding this hearing. Let me first ask for unanimous consent to 

enter into the record a statement from the mayor of the City of 

Philadelphia, Michael Nutter, about the economic circumstances 

and how they are impacting our home City of Philadelphia—— 

Chairman OBEY. So ordered. 

[The information follows:] 


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Mr. FATTAH [continuing]. In a broader statement, and, Mr. 

Chairman, a broader statement from the U.S. Conference of Mayors around 11,000 infrastructure projects in America’s cities that 

are ready to go if funding was available. So I ask unanimous consent that they be entered into the record. 

Chairman OBEY. Without objection. 

[The information follows:] 


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Mr. FATTAH. Thank you, and I would say that it is a pleasure 

to see the Governors here today. I got a chance to sit through the 

entire meeting with President-elect Obama and the Governors. 

They met in my home City of Philadelphia on December 2nd, and 

clearly it was very productive dialogue. First things first, we do 

have one President at a time and I wanted to know about interaction with the present administration with our Nation’s Governors 

on these critical issues. There seems to be almost selective amnesia 

at work. We have difficulties for State Governments getting into 

the credit market and no action by the Treasury Department to respond to these needs. 

I used to chair the board of the student financing agency in 

Pennsylvania, PHEAA, student aid entities, locked out of the market, housing finance agencies. So I am wondering about the absence of President Bush in the middle of this crisis, and rather the 

Governors who have been on the front line, and I have seen the action that, you know, your program in Milwaukee, which is reducing 

the crime or Governor Douglas setting aside 400 positions in 

Vermont, Governor Corzine really led the way in terms of turning 

this to an economic recovery effort with a job creation, tax credit 

of $3,000. Would you comment about whether we are wrong, 

whether the administration is acting, whether the President is not 

at some undisclosed location, is actually interacting with you as 

you are dealing with these challenges. 

Governor DOUGLAS. Well, the National Governors’ Association 

has a continued relationship with the administrative agencies as 

well as with the Congress and your staff and we continue to do 

that, but I think at this point everybody is looking forward, looking 

forward to the new Congress, the new administration and doing 

what we can to get through this, and so I appreciate the time that 

the chairman has set aside for this conversation today and hope 

that we can get the job done. 

Governor DOYLE. Well, I guess I just speak for me personally. 

There hasn’t been any contact, but I do want to say the new administration has been incredibly attentive and focused on this 

issue. They have been open to us. They have been discussing this 

with us in great detail. You know, I guess we believe hope is on 

the way, and certainly there has just been great attention being 

paid to this issue by the incoming administration, by the Presidentelect himself and certainly the people around him and the transition team, for which we are very grateful. 

Mr. FATTAH. Governor, you know we just sold Treasury notes at 

auction yesterday at a negative benefit, and we have doubled the 

national debt. We have 10 million Americans without jobs. I want 

to know, I understand we have hope for the new administration. 

They don’t have the reins of power right now. And so while you are 

dealing with these very challenging circumstance, I am just trying 

to figure out whether the impression that the present Commander 

in Chief is missing in action is accurate or not. Has he been helpful 

to you, Governor Corzine, in New Jersey? 

Governor CORZINE. I think that the actions that the Congress 

and the President’s administration took at the time of the explosion 

in the financial markets, while not anything anyone wanted to embrace, was actually a positive response to try to settle credit marVerDate Nov 24 2008 04:02 Jan 15, 2009 Jkt 046227 PO 00000 Frm 00090 Fmt 6633 Sfmt 6602 E:\HR\OC\A227P2.XXX A227P2

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kets. I think there continues to be a philosophical concern about 

the involvement in broader aspects of the economy, and that is 

probably true with respect to some of the things that we have spoken about here, financing in municipal and State finance. I would 

like to see more action there. I would like, whoever it is, and I am 

one of those that would like to join my Governors, we are looking 

forward. But the Treasury should be, I think, seriously focused on 

the undermining of our ability to use traditional financing mechanisms to support a lot of the things that we have talked about 

today. 

Mr. FATTAH. Thank you. 

Chairman OBEY. Mr. Rothman. 

Mr. ROTHMAN. Thank you, Mr. Chairman. I want to say good 

morning to all the Governors and thank you for being here, particularly my own Governor, Governor Corzine, who is one of the 

hardest working, smartest people I know and doing a great job for 

New Jersey. If I have heard you all correctly, there are two sides 

in relation to our jurisdiction here on the Appropriations Committee of the coin for you that need to be addressed if the Federal 

Government is going to help the States, and that is, number one, 

that what everybody has heard about, these infrastructure projects, 

roads, sewers, bridges, tunnels, rail, school construction, affordable 

housing, and other things, and people can sort of identify with that. 

We did it in the fifties. It was a real shot in the arm. And it had 

a lasting effect. As the Governor mentioned, the Golden Gate 

Bridge, the Lincoln Tunnel, although they were done not all in the 

fifties, but these major projects have a short-term positive effect for 

the country and long-term. 

But you also mentioned the operating side as well; in other 

words, the States need money to pay for critical services, police, 

fire, public colleges, food for the hungry who are lining up more 

than ever, 30 percent increase at our food pantries in New Jersey, 

30 percent increase in the food pantries. That is just shocking. 

But it is true. And that indicates that there are terrible problems 

that people are suffering with. And if the States don’t get their 

money, some help, well, I want to say a couple of things. If you get 

to the money that is talked about, aren’t you still going to have to 

cut these services anyway? Or are you just going to take this 

money and just say let’s continue things as usual and let everybody 

get extra bonuses and vacation time? 

I think I know the answer but I want to hear it from you, and 

I would also like to hear from my own Governor. We have this ARC 

tunnel project which we have invested in from New Jersey, billions 

of dollars in. Could you tell us about this ARC tunnel project that 

crosses the Hudson River from New York to New Jersey, a little 

more about school construction, and why you think affordable housing is a critical infrastructure need? 

Governor CORZINE. First of all, there really are three areas 

where the Federal Government interacts with the State. One—— 

Mr. ROTHMAN. We don’t have the tax part. 

Governor CORZINE. Infrastructure, on the subject that we are 

talking about today, the infrastructure issue, including the ARC 

which is a program or a project of national significance that, as I 

said, would service as much as 45,000 commuters. That gets at conVerDate Nov 24 2008 04:02 Jan 15, 2009 Jkt 046227 PO 00000 Frm 00091 Fmt 6633 Sfmt 6602 E:\HR\OC\A227P2.XXX A227P2

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gestion, that gets at freeing up the ability of northern New Jersey 

and New York to get cars off the roads, all kinds of green energy 

kinds of related elements, but it puts 6,000 people to work today. 

Mr. ROTHMAN. 45 million passengers. 

Governor CORZINE. In a year. Operating budgets, we have talked 

about FMAP and a few other areas where some people would have 

just argued that we should have block grants for some piece of operating budgets, not all of them as Governor Doyle talked about. 

But then there are these whole host of State-administered Federal 

programs like section 8, like food stamps, where we are the tool of 

the Federal Government to provide those services. Those are really 

different. 

I am not saying we are mixing apples and oranges here, but the 

work on infrastructure and the work on the operating budgets is 

different than State-administered programs where there is a huge 

need, and so the unemployment compensation funds and other 

issues all fall into that category. And so I hope that when you sit 

down and put together a program it is taking into account all three 

of those areas and recognizing that they need to be comprehensively fit together. 

Governor DOYLE. I agree generally on the categories. One of 

them is economic stimulus and what we can do as states. We clearly have delivery systems that are available as Congress really is 

working to get a stimulus going, jobs going, and people working. 

We have an infrastructure built up to—— 

Mr. ROTHMAN. But if you get the money you have to continue to 

cut. 

Governor DOYLE. Exactly. The stimulus, while very important, 

isn’t going to help us with our education costs and it isn’t going to 

help us with paying for our universities and Medicaid and those 

sorts of things. So yes, I think in times of scarcity you have to really determine what your priorities are and, as I tell people in Wisconsin now, you are all going to be affected in some way or another. 

We have to make sure that in the areas that really matter they 

maybe don’t take the hit quite as hard and don’t take cuts in a way 

that really does permanent damage. And I say schools are the 

number one priority. So schools, they are not going to have a rosy 

2 years no matter what you do. They are going to have a very difficult time in these next 2 years. But we have to make sure there 

are at least good schools and that there are teachers in the classrooms and classroom sizes don’t explode and basic education goes 

on in this country. That is where you and the Congress and the 

States have to work very, very closely together. 

So no, this isn’t going to be a great time. In fact, to the contrary, 

everybody is going to have to do with less over the next couple of 

years. But for these basic institutions such as education, which I 

think most important, we just can’t cut funding to a point where 

the kids going to school right now, who have had nothing to do 

with overspending or too much credit, are the ones that pay the 

price for the predicament that this country finds itself in. 

Governor DOUGLAS. Housing specifically, Congressman, I talk 

with a lot of employers in my State who say that because of the 

rural nature the Vermont and the fact that people have to drive a 

long distance to get to work that a lack of an affordable place to 


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live is more critical to them than health insurance right now because they just can’t find a place to live that is within their price 

range anywhere near where the job is and, although fuel prices 

have come down a little bit lately, they are still an important part 

of the family budget. So I think facilitating more affordable housing 

through access to capital through the section 8 program is critical, 

and it has the added benefit of stimulating the economy by creating 

jobs in the construction sector. 

I think, as we have suggested earlier, support for a Federal-State 

shared program like Medicaid is critical not only because of the increased caseload in that program itself but because it allows us to 

moderate the cuts that will be necessary in other programs in our 

State budgets. 

I also indicated earlier that I don’t think it is all bad to force 

some efficiency and economy of administration of these programs. 

We have combined several divisions and departments within our 

administrative structure, and I expect my colleagues are finding 

ways to deliver services more efficiently than before. So we do need 

your assistance in this time of economic crisis, but we are certainly 

willing to do our part. 

Chairman OBEY. Mr. Bishop. 

Mr. BISHOP. Thank you very much. Let me echo my welcome to 

you Governors and let you know that my State of Georgia certainly 

faces the same challenges that you face. But let me, I appreciate 

all of the comments that I have heard this morning with regard to 

the infrastructure that is needed in the States. I am particularly 

concerned about rural infrastructure and of course, Governor Douglas, you are peculiarly sensitive to that. And of course all of you 

of course have rural areas. But I have a large rural area and of 

course the transportation and affordable housing is greatly needed. 

But as we look at bricks and mortar versus innovations in the future that—I mean obviously bricks and mortar will create immediate jobs, but we want to put the bricks and mortar there, but 

there has got to be some other non-brick and mortar infrastructure 

such as broadband that will allow accessibility in rural areas, for 

example. We have got to somehow marry the needs for innovation 

in our educational system not just to school buildings but into processes for educating our youngsters, improving the quality of teaching for our teachers, particularly the STEM disciplines, science, 

mathematics, technology, engineering, where we are falling woefully short, we are falling woefully short now. And without some 

rapid, rapid attention being given to that on a national scale with 

a national will with all 50 States and the Federal Government, we 

will quickly lose our status as a superpower because we don’t have 

the expertise. We don’t have the generations coming up that are 

trained in those disciplines. 

Don’t you think that as we invest in bricks and mortar for immediate infrastructure that we also need to give you the flexibility 

that you were talking about to also invest in these kinds of longrange innovations? And so that whatever we do, make it flexible 

enough so that States, and particularly States that have poor rural 

areas, where they don’t have that kind of tax base, to make every 

aspect, every area in your States, capable of being able to participate now in this global and flat world that we are in. 


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Governor DOUGLAS. Congressman, I want to thank you for reemphasizing that point. I mentioned broadband infrastructure in my 

statement for the reasons you articulated. It is important to have 

that available in rural areas, especially where it is difficult for, or 

not cost effective, for a telecommunications company to make that 

investment. We established a telecom authority in Vermont this 

past year empowering it to issue some tax-supported debt to build 

out that infrastructure, but we could even do more with some support from the Federal Government. So flexibility is indeed the key. 

And as you noted, it may be more cost effective in rural areas not 

to build that additional school building or enhance one that is already there, but to have distance learning through interactive 

learning experiences. So I agree. 

Mr. BISHOP. The same thing with telemedicine. 

Governor DOUGLAS. Yes, and NGA has, I should note, a health 

alliance that we have undertaken to work with the public and private sectors to build out electronic medical records infrastructure 

that I think would be an important part of our health care future. 

Governor DOYLE. Green energy is another area of technological 

advance that we can make major investments in that has huge advantages in rural areas. Just an example of one that we are very 

interested in building, a wood chip processing plant, for use of 

biofuels in an area of the State that is largely forested. It is an 

area that spreads out not just in our urban areas but across rural 

areas as well. 

Mr. BISHOP. It is a job creator? 

Governor DOYLE. It has proven to be a very big job creator, and 

so far green energy and particularly ethanol production in our 

State has been one of the great sources of strength in rural areas, 

and as we move into using our forest, much of, again, Congressman 

Obey’s district is forest land, and as we look into its use to really 

be part of our energy solution, a lot of jobs are involved in that as 

well. 

Mr. BISHOP. A lot of cellulosity. 

Governor CORZINE. I just concur with the folks. I don’t think I 

have much I can add. 

Mr. OBEY. Thank you. Mr. Honda. 

Mr. HONDA. Thank you, Mr. Chairman, and let me add my 

thanks to you for your leadership and having this hearing and the 

presence of the ranking member, also. And I would like to ask for 

unanimous consent to enter into the record a document that represents the California delegation and also add to the document a 

discussion on the issue of school modernization, school bonds and 

new school construction. I think that has been discussed before, but 

I will ask unanimous consent to have this entered into the record. 

[The information follows:] 


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Mr. HONDA. Mr. Chairman and Governors, thank you. Thank you 

very much for being here. I think that one of the things that I 

think is a positive outcome with this kind of discussion is that not 

only the folks who are here and the members who are present find 

this hearing instructional, but hopefully it is instructional for those 

viewers out there who are watching this and are starting to understand that governments cannot work in isolation, and when things 

don’t work at one level, that stuff rolls downhill and eventually if 

you don’t pay for it now you pay for it later. And I think this is 

a good example of a crisis that has occurred because of different 

kinds of missteps by certain industries, and also governments’ 

misstep on how we create or don’t create Federal revenues for the 

kinds of projects we are talking about today. We can disagree on 

the size of government, but I think that government has a role in 

people’s lives, and I think it has become evidently clear though 

what role we do play because of the kinds of issues that the Governors are bringing up and the kinds of issues that we concur with. 

So I just want to thank the chairman for allowing us to be able 

to do this and then also prepare for the beginning of the next session. I can’t think of anything more than this to be the very first 

step of the new administration. Although there may be results of 

the past administration, we still have the responsibilities to take 

care of people. 

These kind of issues are issues that are not evident on a daily 

basis to the public when times are good. It only rears its head 

when times are bad and we have to start talking about cutting 

back on services, and this is when people start to feel the pressure 

of what happens when we don’t have a good economy or we don’t 

have the necessary revenues to fulfill our obligations. 

One of the things I heard by the Governors, and particularly by 

Governor Doyle and Governor Corzine, is the comment about 

States can be efficient and they have delivery services that can deliver these kind of funds to the rest of the State. But having come 

from local government also, are there suggestions or are there efficiencies that we can realize in both time and costs by looking at, 

from the Federal Government’s point of view, sending money out, 

funds out to localities, and municipalities and county governments 

that have a large size that can do their own distribution and thereby save time and money? And I would like to have some sort of response on that. 

Governor DOYLE. I can speak for Wisconsin. There are certainly, 

if we were going to go in for sort of a wholesale change of our State 

laws on what is the responsibility of municipalities and counties in 

the State, it may be very worth doing that but in terms of if you 

are looking for a quick economic stimulus, we will be locked up in 

a political battle that will tie us up for several years. We have very 

clear lines of responsibility of what municipalities can bond for and 

what their infrastructure needs are and what they do independently and then what comes through the States. As State Governments, our capital budgets dwarf the municipal and county budgets 

by a large factor. So we can move much more quickly. But I do believe there is a significant role here for municipalities, sewage districts, and others that have their own bonding authority and their 


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own capital budgets to be part of this effort and that they can get 

jobs moving as well. 

Mr. HONDA. I understand that there is that large responsibility, 

infrastructure, like transportation and others, where it makes 

sense to award to the States but there are other arenas where 

counties and cities that are large enough, they have their own 

mechanisms. Those duties are passed on to local governments anyway, and it seems to me it would save time and money if we figure 

out how to do that more efficiently. 

Perhaps the other Governors have comments. 

Governor DOUGLAS. Congressman, there is, as I understand it, a 

procedure where Federal agencies can proclaim an emergency and 

use emergency procedures that allow a simplified bid process, and 

I would think it would be useful in this discussion to allow for that 

so that the projects can be delivered as quickly as possible. 

Chairman OBEY. The gentleman’s time has expired. 

Mr. HONDA. Thank you, Mr. Chairman. I just want to thank you 

for this opportunity, and this is a prerequisite to the next session 

and if we paid attention to this kind of hearing, Mr. Chairman, as 

we pay attention to Super Bowls, World Series, Olympics, I think 

that our country and our citizens will understand better the workings of what we try to do on a daily basis. Thank you. 

Chairman OBEY. Mr. Schiff. 

Mr. SCHIFF. Thank you, Mr. Chairman. Thank you, Governors, 

for your testimony today. I find myself on the issue of infrastructure torn between two competing impulses, the one to want to get 

money into construction jobs as quickly as possible. Just look at 

those projects that are ready to go. California, as my colleague I 

am sure alluded to, is having a Herculean task trying to balance 

a budget that may be up to $40 billion out of whack in the next 

year and a half. So we have a tremendous challenge. But between 

wanting to put money into construction projects that are ready to 

go and can immediately stimulate the economy on the one hand 

and on the other hand wanting to be strategic looking at what the 

State’s greatest needs are, looking at things that we have not been 

able to invest in for decades, building more institutions of higher 

learning, investing in the State and in the country in a way that 

we haven’t done in half a century, this is going to be an opportunity we won’t see again for maybe half a century. How can we 

deal with these competing priorities, to pick things that are ready 

to go on the one hand, stimulate the economy on the one hand, but 

on the other hand to be a little bit more strategic about what we 

invest in so we can look back on this period and say, yes, it was 

an awful recession but look at the good that has come out of it, look 

at the investment in the America we were able to make? How do 

we deal with those competing priorities? 

Governor CORZINE. First of all, I think that you have a responsibility in a legislative and deliberative process to try to identify the 

things that have priority, and I don’t think one particular bucket 

actually covers that. We need a comprehensive infrastructure program. One of the reasons that a lot of folks have expressed support 

for an infrastructure bank is to have the discipline of screening and 

reviewing those, and one of the metrics that might be asked for 

that infrastructure bank to review projects on is how do they fit 


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into an overall plan, not just with regard to transportation but also 

energy, maybe even health care, and obviously, help education. So 

I think that some judgment with regard to how you allocate those 

priorities is a perfectly reasonable thing for the Congress to do, and 

then setting down what metrics would be used would be the kind 

of debate that I think would go on with respect to what an infrastructure bank would end up accomplishing so that we don’t end 

up with lower priority or at least we have made an effort to try to 

do the prioritization of the various elements. 

But it may very well be, and I know there is a debate about, you 

know, if you pave roads that is a bad thing or maybe that is not 

how we spend our money relative to broadband and you know there 

is some element of that is true, but if we don’t have the paved 

roads, we are not going to have the ships that unload in Long 

Beach and metropolitan New York be able to get to the areas that 

are going to deliver the services in the private sector to our community. We need to make sure that we are maintaining our universities in a state of good repair so that our students can actually accomplish it. 

So I think there has to be a judgment about how much we want 

to put into so-called innovation versus making sure that our infrastructure is actually working to accomplish what we want today. 

Governor DOYLE. In many of our programs, particularly transportation and building in Wisconsin, I am sure I speak for the States 

here and others, we have prioritized those projects. I mean you 

could look out for the next—in transportation in Wisconsin—the 

next 8 to 10 years, and we basically have the projects that for various rating systems we have determined to be most important, and 

then we just work down that list as money is available. Same is 

true with building our capital and university and other State building projects. So I think you can have some faith that in some of 

those areas that this prioritization has been done. But I really 

agree with you on some others. 

I will just give an example. We have under court order and I 

think we all support it, trying to get rid of a coal fired heating and 

cooling plant that sits right in the middle of the City of Madison, 

and it is at the University of Wisconsin’s heating and cooling plant. 

So we are under the order and if we could get that moving quickly, 

we know that over the next 5 to 7 years it is going to be a huge 

drain, it is going to be a big problem, issue that we are going to 

have to deal with. Now we don’t have the design work done. We 

don’t have the engineering work done. So I really do hope, and I 

think Governor Douglas alluded to this, that while it is important 

to get us going in 90 or 120 days, although some of us with snow 

on the ground would have to wait a little longer most economists 

agree this isn’t going to be over in the next year, and so if we can 

have a way as well that some of these other big term projects that 

if we can get them done over the next 3 or 4 years instead of the 

next 7 or 8 years, it will greatly benefit the State of Wisconsin for 

years and years to come. 

So I hope we aren’t going to see this just strictly as, boy, this is 

a 90-day problem, but that we understand this is a multi-year 

problem we are dealing with. 


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Governor DOUGLAS. I agree with my colleagues, Congressman. 

We certainly go through the prioritization process. When a capital 

budget is formulated in our State the agencies’ requests are always 

multiples of what is available for the coming fiscal year, and so I 

and ultimately the general assembly have to make those decisions 

on what is most urgent. And I might suggest again that one size 

doesn’t fit all, that situations do vary quite a lot around the country. Infrastructure and transportation is older in the northeastern 

part of the country in many cases. We had a devastating flood in 

1927 that destroyed huge numbers of bridges and rail tracks in our 

State. So a lot of our bridges are now 80 years old, having been 

built right after that flood and beginning to show their wear. 

So I believe, as Governor Doyle suggested, that the States can be 

entrusted with responsibilities of determining their priorities. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

Chairman OBEY. Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Mr. Chair. And I want to thank you 

all for being here and the fact that you don’t just discount, kind 

of paraphrase what you said, the impact of a Federal stimulus 

package. And like you I am ready to invest. I am ready to invest 

in our infrastructure, public works, roads, bridges, water systems, 

sewer systems, and I am ready to invest in people and education 

and in health care. And to a statistic that was just handed me 

today that there are three people waiting for every job now in this 

country, three people for every job. So we are ready to go. And I 

understand fully what you have been saying about the States are 

facing some major, major difficulties right now. But I need some reassurance here. I need to know that the funds that I am going to 

vote for for reinvestment are going to do just that, they are going 

to be used to reinvest, not to fill all the gaps that the States are 

facing; that is, it is not going to be used to balance the budget. And 

I will tell you, one of the reasons why I am concerned, and my Governor is not here, but I am going to quote from him from the paper, 

Governor Pawlenty, the former head of the Governors Conference, 

seems to have a change of heart in recent days for what he thought 

the stimulus could do. And he says he is going to, he has doubts 

about the Democratic plan to bolster spending on public works, in 

fact, and I am going to quote him directly, he doesn’t see it doing 

anything for the looming budget deficit in Minnesota. So this stimulus plan is not supposed to be plugging the holes of the budget 

deficit. And we have kind of skirted around the issue a little bit 

in some of the conversations that we have had. 

What do I need to do to make sure that the stimulus package 

doesn’t fail; in fact, it does stimulate the economy, it does create 

jobs, that it is not just used to fill budget holes? Gentlemen, I am 

asking you what can you tell me that you will do to reassure me 

that that won’t be the case? And to Congressman Honda’s point, if 

it is not going to be the case from the States, should I be looking 

at direct infusion for investments at cities, at counties and at 

school districts? Do we need strings? 

Governor DOUGLAS. Well, first of all, I think all three of us have 

said at different times that we are more than committed to sharing 

in the adjustment process that is brought on by a national recession. The reality is if we don’t offset some of the cuts that are going 


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to be imposed in our operating budgets, we can end up reducing 

employment, cutting our support of our counties and local communities, and our universities by enough to offset everything that we 

might be doing in an infrastructure program. So we are not saying 

that you have to fill our budget gaps, but having some help in that 

makes sense so that we can continue to not have tax increases at 

a time when we are in a recession, that we don’t see tuition hikes 

that ration out individuals from taking this time when there are 

fewer jobs to actually enhance their education, and that we continue to support as best we can some of the things that are actually 

mandated by the Federal Government, like IDEA, Leave No Child 

Behind. All of those things create budget gaps. They create them 

in regular economic circumstances. They are more severe now. 

Ms. MCCOLLUM. Governor, not to interrupt you. I understand 

that. I was a State representative. I was a State representative 

during the nineties. I understand it. I get it. But this is what is 

happening with education and I can only use my home State as an 

example. We increase Pell grants, the State decreases student aid. 

Those were before the times of the budget deficit. Where is my assurance that that is not going to continue to happen? That is my 

point. If it happened in the good times, what is going to happen 

as we face the bad times together? 

Governor DOYLE. Well, first let me say, we will take the Minnesota part of the stimulus package on the Wisconsin side of the 

river if you don’t want it. 

Ms. MCCOLLUM. I don’t think so. 

Governor DOYLE. But I do believe that, and this is what we really want to work with you on. I do believe that there are ways that 

if you want to say put strings attached, and I am only speaking for 

myself, not the NGA here, I think there are ways that you should 

seek assurance of what you are getting in this package. For example, let’s take higher education. The fact is unless you do help us 

with the budget deficits we face there will be deep cuts in higher 

education which will result in higher tuition. It is that simple and 

you understand that. 

So, and again I don’t know, I don’t mean to say this is what, I 

would have to look at the numbers, but if you were to say that in 

exchange for help to the States you want to make sure that tuition 

increases stay below rate of inflation or something like that, I 

think there are ways that we can work together to try to accomplish this. What we are saying is yes, we want, we believe the stimulus is really important and that does move directly, as you know 

in Minnesota, I know it is true in Wisconsin, that moves to private 

companies that are doing that kind of construction and it moves 

very, very directly. But in terms of education, what we are—I believe that we are all facing deep cuts in education, deep and harmful cuts unless there is help. And I think we are more, I am more 

than willing to work with you to figure out how you make sure you 

get that value for what the Federal Government may do in education, how we set metrics or how we make sure that big cuts in 

education, that you don’t give us, you don’t help the States with 

education and then find out that we made the big cuts anyway. I 

think there are ways that we want to work with you to make sure 

that you have those assurances. 


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Governor DOUGLAS. This is a time of recovery, as the terminology 

of the proposal suggests, and I really believe that unless we take 

these steps we are going to see the kinds of cutbacks that we all 

fear. We are going to have to make some decisions. We already 

made some in our States to adjust expenditure levels to live within 

our means. But unless we get the support at a time when revenues 

are declining so precipitously we are going to have to make some 

decisions that affect the people of the State in ways that we don’t 

want to do. 

So I think it is essential. And I am a former legislator as well, 

and most of them in my State are of the other party, but I trust 

them to work with me to come to some common understanding as 

to what we need to do to establish priorities that are in the best 

interest of our State. 

Ms. MCCOLLUM. Thank you, Mr. Chair. And I like your Governor. 

Mr. OBEY. I do, too. 

Mr. RYAN. Thank you, Mr. Chairman. I represent Ohio, and Governor Strickland is facing about a 25 percent budget cut, which is 

just unfathomable, and those of us who get into public service don’t 

get into it to cut mental health coverage and all the things that you 

were trying to deal with. So I just want to say thank you for all 

of your courage in this very difficult time. 

One of the things that, I represent Youngstown, Ohio, Akron, 

Ohio, and sometimes a crisis provides opportunity. And can you 

just share with us what do you think the opportunities are for us 

to restructure maybe from an economic development perspective, 

how local communities can approach economic development now in 

a different way, how can local governments—‘‘consolidation’’ is not 

always a good word—but streamline and become more efficient, I 

know you each kind of touched upon it a little earlier, but how can 

we, when President Obama says we want a government now that 

can be nimble and flexible in the 21st century reacting to the facts 

as they change on the ground instead of the industrial style government that we are all left to try to tinker with here, just try to 

share with us what do you think the opportunities may be to retool 

our government, and through this stimulus package is there anything that we could do to incentivize that kind of cooperation, that 

kind of regional economic development, if you have thought about 

that at all, because I think this is a unique opportunities for us 

where we are going to be spending a lot of money and I think you 

have articulated and the Members of Congress have articulated 

quite clearly what the critical problems are facing you and I think 

facing our constituents, but within that can we have a piece of this 

stimulus package that will help us create this new 21st century 

government based on the technology and communication capabilities that we have? 

Governor DOUGLAS. I think the answer is certainly yes. I mentioned several administrative consolidations within my administration. I know my colleagues are doing the same. And at the local 

level a number of our school districts are looking at similar consolidations. We have had some communities decide to close small 

schools over the last couple of years actually, and some are considVerDate Nov 24 2008 04:02 Jan 15, 2009 Jkt 046227 PO 00000 Frm 00105 Fmt 6633 Sfmt 6602 E:\HR\OC\A227P2.XXX A227P2

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ering that now, merging with neighboring communities to achieve 

that economy of scale. So I think this will facilitate that. 

And I want to come back to a point I made earlier. I would not 

recommend to you that you fill the entirety of a budget gap in the 

State. I think it is appropriate to force that efficiency, to insist that 

we be creative, that we use technology more to achieve some economy in our States. One example I like to use in Vermont is our tax 

department, that warm and fuzzy agency of State Government that 

has been doing a great job in terms of its responsibilities but has 

been able to reduce its staffing levels by nearly 10 percent because 

of the increase in electronic filing of returns. And so there are other 

ways that we can do that to increase efficiency, lower costs, and 

provide the quality of service to our residents. 

Governor DOYLE. I agree with Governor Douglas. The fact is we 

shouldn’t plug all these holes that the tight budgets are going to 

drive and are driving in Wisconsin greater efficiencies. But on the 

regional economic development, just an ideal place to explore, but 

in Wisconsin we have developed in the last 2 or 3 years regional 

economic development groups largely, they are primarily business 

driven and they recognize that, for example, Milwaukee shouldn’t 

be competing against Racine and I am sure you have these same 

issues but it is regional economies. And to the extent that they help 

select and drive and focus on what the infrastructure and other 

economic development needs are as this stimulus package comes 

out, it will be very helpful again to give a specific example, and 

Milwaukee has identified water technology as one of its great 

strengths. We have thousands of people that work in different—because it is on the Great Lakes and that is where they make beer. 

Water is particularly important in Milwaukee, as it is in parts of 

Ohio, and there has just been a lot of business. They actually have 

identified that now and come together and developed an agenda for 

how to grow that water technology business, and to the extent that 

we can plug that kind of regional economic development efforts into 

the stimulus package I think will be very helpful. 

Governor CORZINE. There are a number of agencies, I talked 

about this mass transit tunnel which is really a New York-New 

Jersey exercise, it would be executed through the Port Authority 

and—might very well be executed, not necessarily, by the Port Authority of New York, New Jersey, seems to be places where you can 

encourage the kind of action you are taking. There has been good 

cooperation on a regional basis, particularly with homeland security and a lot of the allocations of funds from the Federal Government where we are looking at regions and interoperability and 

some of the elements. I think a similar kind of strategy, both on 

green energy investments and certainly with regard to electronic 

medical communication, are all things that I think as the Congress 

and the administration come to setting those priorities, making 

bonus investments where people are actually operating in conjunction with that as an objective or part of the mission, I think is a 

very positive step forward. 

Chairman OBEY. Mr. Ruppersberger. 

Mr. RUPPERSBERGER. Thank you, Mr. Chairman. I represent the 

State of Maryland. And I have a letter here from our Governor 

O’Malley talking about a lot of the issues that you have talked 


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about and I don’t want to be repetitive, but I want to address the 

issue of legal authority. This stimulus package will be as Presidentelect Obama has said, the largest since we have built our interstate 

highways. We feel, a lot of us are concerned when we passed, people call it the bailout, I like to call it the recovery package also, initially, that people are concerned that when we gave money to the 

banks that the banks instead of putting money back in and lending 

the money it went to their buying other banks. So we want to make 

sure that we have the right legal authority and also the accountability to make sure if in fact we go forward with this stimulus 

package, which I feel that we should and that it will create jobs, 

because that is the key to come out of this recovery is to create 

jobs. Now, the legal authorities when we are writing the bill, we 

need to have some legal authority there, not only to make sure that 

when we give you the money that you are going to have the ability 

to go forward with these projects that are going to stimulate the 

economy right away, call them shovel ready or whatever you want 

to call them. 

Now what would you like to see in the bill to make sure that you 

have the ability to go forward with these infrastructure projects 

that will create jobs? 

Governor DOUGLAS. A couple of thoughts, a reasonable deadline 

for obligating the funds, I suggested 180 days to accommodate the 

needs of northern States; secondly, a flexibility as to what type of 

infrastructure is eligible for the support; thirdly, some provision, as 

I suggested earlier, to allow emergency procedures to be activated 

so that the bidding process can be expedited to get the project delivered as quickly as possible; fourthly, not including a maintenance of effort provision or to make sure that any ready to go 

project is eligible for stimulus funding so that other displaced funding can be used for additional projects. I think those are the key 

elements of what we need to have in place so we can move forward. 

Governor CORZINE. I would add that you probably do need a useit-or-lose-it provision in this so that this needs to be put with, you 

know, reasonable debate about how long that should be. But I 

think actually a fairly short horizon to make sure that we are getting the stimulus that we are expecting from this process, and you 

are going to have chances to talk about refunding the Transportation Trust Fund and other things, in the next Congress. So some 

of the other projects I think actually fall to that category, but I 

wouldn’t have any argument with the flexibility emergency procedure issues or maintenance of effort. I would say that I know our 

State would be more than happy to have to come review after the 

fact of how we used the money as well. 

Mr. RUPPERSBERGER. Accountability is extremely important. 

Governor CORZINE. And I think it is a perfectly reasonable thing 

to be asking since we are accelerating all this process, having an 

after-the-fact review would be useful. 

Mr. RUPPERSBERGER. You are going to have issues on your side, 

too. When you are going ahead with contracts, do you put it out 

for competitive bid or do we have these projects ready to go and 

the obligation for you to be ready because if one State doesn’t have 

the sophistication to be ready and the other does, we need to stimulate jobs. So it is extremely important, I think I mentioned to the 


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Governors and the mayors, the county executives, and commissioners, that they are ready when this goes forward. 

Governor DOYLE. If I could just add from my point of view, useit-or-lose-it in a very tight decline is very helpful because we are 

going to have to clear away a lot of sort of regulatory measures on 

our part that slow things down. And if Congress is telling us very 

directly you have to move quickly and you are going to lose it if 

you don’t it will help me to get done in our State what needs to 

get done to get our process as streamlined as possible to get the 

money out the door. 

Mr. RUPPERSBERGER. I suggest you communicate with your attorney generals or your solicitors or whatever because you are going 

to have your own internal issues, legal issues on contract. And we 

have got to make sure that the whole purpose for a longer period 

of time was properly the issue of corruption. So we have got to really make sure that we don’t cross over that line either. 

Ms. WASSERMAN SCHULTZ. Mr. Chairman, I would like to ask 

unanimous consent to enter into the record the testimony of the 

Governor of my home State of Florida, Charlie Crist. 

Chairman OBEY. Without objection. 

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Ms. WASSERMAN SCHULTZ. Who by the way after tomorrow will 

be crossed off the list of eligible bachelors when he marries his 

bride to be. So we can congratulate him on their celebration. 

I want to return to education, and I know we covered the infrastructure needs in terms of education but my State, and my county, 

I represent the Sixth and I think the third largest school district 

in the country, Miami-Dade and Broward Counties, and just in the 

last year Miami-Dade County, for example, had to cut $89 million 

out of their budget, their school budget. 

Ms. WASSERMAN SCHULTZ. My own county, the county that I live 

in, Broward, had to cut in the last 2 years 128 million. They are 

facing hiring freezes, potential layoffs of teachers. And for me being 

a mom of three school-aged children, it is a very present day-to-day 

issue that I think is incredibly important. Children only go around 

once. Once they go through the 13 years of their education, if they 

aren’t in a well-funded, high-quality educational environment, they 

don’t get a second chance at it. 

So what I wanted to ask you is, obviously I am sure your States 

are facing a similar situation on the operations side of education. 

How are you compensating for those cuts? What are you doing? 

And how do you think we can include the operations side of educational challenges in an economic stimulus? 

Governor DOUGLAS. Well, the specific request of the National 

Governors Association is sort of two parts of the stimulus recovery 

package: one, the infrastructure support; and, secondly, some support for Medicaid, which is a State-Federal, shared responsibility, 

and one whose caseload continues to rise. And speaking from my 

perspective, without the additional support for that safety net program, support for K–12 education is more vulnerable in the budgetary process than it otherwise would be. 

Basically I look at the budget of Vermont this way. About a quarter of it is Medicaid, about a quarter is K–12 education, and everything else. And since it is such a significant part of what we do, 

it is going to be very vulnerable at a time of fiscal stress. So I think 

that is why the support for the budget and our FMAP participation 

rate is critical in order to minimize the impact on public education. 

Governor DOYLE. In Wisconsin, far more than 25 percent is K– 

12 education. We at the State level fund two-thirds of the cost of 

public education in the State. And so when you look at a 17 percent 

budget deficit, you just can’t stay away from our biggest item. We 

have provided so far—in fact, our schools have gotten a slight 2 

percent to 3 percent increase in the fiscal biennium that we are in 

right now, and we did it, frankly, by making huge cuts to other 

places, because this has just been my priority. But I believe we are 

at a point in Wisconsin that, given this deficit, without help that 

comes in some ways, that education will suffer. 

And I would suggest that this is probably our Federal-State most 

important investment that we are making right now, and that, 

again, in Wisconsin, the way you would do that is if our budgets— 

if our budget we can deal with it, then education is going to be my 

number one priority, and we are going to protect it. And that is 

really why we need help badly on the operating budget side. 

I have told our educators, look, you are going to have to be part 

of this. It is not like it is going to be wonderful times for school 


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districts. There aren’t going to be big increases and big new programs and all of these things. But what we are going to try to do 

is get through this recession that we are in and will be in in a way 

that does not do harm and long-term harm. 

And I agree with you completely on these kids; this is their 

chance, and if they are not well educated—and I made the comment earlier, and I don’t want to repeat it. But just remember, this 

country was built, the world war was won, and the country was 

built by people who got educated in the middle of the Great Depression. So our grandparents and great-grandparents were willing 

to make this investment in terrible times, and we have to make it, 

and we need Federal help in order to make that investment. 

Governor CORZINE. I think that education is the number one priority, along with public safety, that we have to address. And while 

we can’t ask you all to fill all the gaps that any individual State 

has, some basic support—some of that comes through FMAP, 

through displacement. If we help out on the Medicaid side, then 

the money that you didn’t spend there is available for education, 

and some people would argue that is where it is. 

I would rather be direct about some kind of block grant that, 

even if it was limited for education purposes, that would sustain 

these budgets through these difficult times. That is one person’s 

view, not speaking for anybody but myself. I know that there are 

a number of Governors that would prefer no attachments. 

As far as I am concerned, FMAP and then some kind of help 

within the education arena is the direction I would recommend 

with regard to the operating side, acknowledging that we are going 

to have to take up some of this problem on our own actions at our 

State levels. 

Ms. WASSERMAN SCHULTZ. Governor, count two people for that 

plan. I couldn’t agree with you more. 

And thank you, Mr. Chairman. I yield back. 

Chairman OBEY. Mr. Rodriguez. 

Mr. RODRIGUEZ. Thank you, Mr. Chairman. And thank you very 

much for allowing us this opportunity to talk to the Governors. And 

I want to thank the three Governors. And welcome back, Governor 

Corzine. Good seeing you. 

Let me just indicate, I served in the Texas House also about 11 

years, and I know that there are a lot of mandates including, the 

special education one, where we fund less than 17 or 18 percent, 

and I think we should have been funded at about 40 percent. That 

means, even if we double that amount right now just with special 

education, it won’t even cover what we supposedly should be covering. And I was glad to hear some of your recommendations about 

a lump sum that might be helpful in some of those specific areas 

where it may be necessary. 

I wanted you to respond to two issues. One, from a congressional 

perspective; where we have been working on the Middle-Class 

Working Group on a basis very similar to what Chairman Obey 

talked about. In fact, one of the major problems is the debt of 

American families. How do we reach out from a Federal and State 

perspective in terms of meeting some of the needs of those middleclass families that are having difficulties? 


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Another point you raised is the tuition for middle-class families 

that have kids in college, and the possibility of a tax cut or tax incentives for those families. But if there are any other proposals you 

care to comment on, please do, because I really believe the middle 

class is the anchor of the economy, and that is where we need to 

make an economic thrust. 

Secondly, another important issue is in Texas that a tornado hit 

my community and killed seven people. There have also been floods 

and droughts. Yet, from the Federal perspective, we are not responding appropriately from the State perspective. And so I just 

wanted to get your feedback on those two areas in terms of natural 

disasters as well as meeting the needs of middle-class Americans. 

Governor CORZINE. Thank you, Congressman. 

I think that we have at different points in the hearing talked 

about ways that you can help the middle class. Section 8. Maybe 

some people would say that is more moderate, but affordable housing is actually a very serious issue across the country. Certainly if 

we were moving as President-elect Obama has talked about with 

regard to tax cuts focused on the middle class in conjunction with 

some of the things that we have been talking about today with regard to stimulus and recovery, I think it is very sensible; some tax 

relief, different proposals out there that I think would be very important. Aid in higher education obviously is one of those places. 

I think that it has to be comprehensive. Whatever is going to be 

put together has to try to do as much as you can within the context 

of however the total amount that you in the Congress and the new 

President decide is going to have a meaningful impact on GDP. If 

we have, instead of 3 or 4 percent growth in GDP we have a 3 or 

4 percent decline in it, we are losing $800 billion. It is not like 

doing nothing is without cost. One is an explicit cost in the budget, 

and the other is a real cost to the public. 

And so I think you are asking a question that I want to be supportive of, and the middle class, is how you drive the economy. If 

you want to stimulate it, you need to actually be working very 

strongly with the demand side that occurs there. And so I hope you 

have a very forceful, significant program that includes tax relief for 

the middle class, but also in some of these basic educational issues, 

some of the basic housing issues. 

Governor DOYLE. I agree with all of that. One other area that we 

really struggle with as a State is the programs that are designed 

to get people to the middle class. Obviously, the stimulus package, 

to me, is the most important part. There has never been a social 

program created better than a decent-paying job. So we want to cooperate in every way to get people to work. 

An area of Federal-State responsibility has been TANF and subsidized child care. The TANF grants that come to our State have 

not increased since 1996. The result is that a large segment of cost 

that used to be picked up by TANF dollars now are picked up by 

State governments. We have a State earned income tax credit. We 

have work training programs and others that were originally funded out of Federal TANF funds, but since that money has never 

been expanded, more and more of it is now picked up by the State 

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The same is true with child care grants, which are directed to 

help people get to the middle class by being able to go to work and 

have subsidized child care. Those grants, as I understand it, have 

not been expanded since 2001. So Wisconsin now puts hundreds of 

millions of dollars of our State tax money into subsidized child care 

that was originally funded primarily through the Federal child care 

subsidy programs. 

These are big areas that are directed not at welfare, but actually 

directed at trying to have people get into the workforce. So somebody working at a moderate—low-, moderate-wage job in Wisconsin—across the country, Wisconsin may be a little higher than 

other States—we subsidize that child care as we were directed to 

do under the Federal subsidized child care provisions. But as that 

money has just been flat-lined over many, many years, we now pick 

this cost up. 

It is an example of something that started as a major FederalState initiative that the States have taken up more and more and 

more of the burden on that does really affect working people. These 

are programs that are the people who are going out into the workplace and who are getting jobs and are doing what they want to 

do and everybody wants them to do, but the cost of that is falling 

heavier and heavier on Wisconsin taxpayers. 

Chairman OBEY. On that note, I know that a number of Members have statements that they wish to enter into the record. Without objection, they will be entered. 

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Chairman OBEY. Let me simply thank our three witnesses. I 

think this has been an excellent hearing. You have really been very 

helpful, and I wish you luck with the problems ahead. Thanks 

again. 

Chairman OBEY. If I could now ask the second panel to come forward. 

Mr. LEWIS. And I thank the Governors very much for being here. 

Chairman OBEY. You bet. And let me explain, the first panel consisted of Governors because we wanted to hear from government officials about the impact of this recession on their jobs. And now we 

want to hear from a number of private individuals who can explain 

what the human impact of this recession is on a wide variety of 

people. 

We have with us today Dr. Sandy Baum, who is one of the Nation’s premier experts on issues relating to college access, college 

pricing, and student aid policy; Julie Murray, Chief Executive Officer of Three Square, Inc., Las Vegas, Food Bank. I must say, I have 

never seen a more spectacular effort in the food bank area than 

that. And Marsha Kreucher, Executive Director of Community Action Agency of Jackson, Lenawee, and Hillsdale, Michigan. 

Dr. Baum, why don’t we begin with you. 

Dr. BAUM. Thank you, Chairman Obey, Ranking Member Lewis, 

members of the committee, I am very pleased to have an opportunity to be here and talk with you today, and I commend you for 

your efforts in crafting a stimulus package that is focused on revitalizing our infrastructure. 

I am an economist. I do work, as you said, on college access and 

affordability, student aid, and college prices. I am a professor of economics at Skidmore College. I also do a lot of consulting work for 

the College Board and publish reports for them. I am here today 

as an individual, as an economist speaking about my own views on 

what I think the Federal Government’s role in financing higher 

education in this economic emergency is. 

As we have been talking about infrastructure, there has been a 

lot of reference to higher education. I am pleased to hear that. I 

want to reiterate the importance of this. We are talking about 

physical capital and revitalizing physical capital, but we know that 

a major driver in the economic growth in the United States has 

been the increase in human capital, in the education, the skills, the 

training of our workforce. And we have already been concerned 

even before this crisis about the United States falling behind in 

educational attainment. We can’t allow this crisis to exacerbate 

that problem. 

Historically we know that, in economic downturns, more people 

turn to higher education. They seek additional training to improve 

their opportunities in the labor force that they find particularly 

limited. At the same time that the demand for higher education increases, as we have just heard from the Governors, State budgets 

are, of course, severely constrained, and it becomes more and more 

difficult for States to fund their higher-education institutions appropriately. So we have this collision, where we have more people 

who need higher education, people have less and less money with 

which to pay for it, and the States aren’t able to provide for it adequately. 


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So what I believe the Federal Government really needs to do now 

is to increase funding for Pell grants so that students have more 

money to permit them to pay for higher education; and it also 

needs to assist the States in maintaining and increasing the capacity to educate these students. We have heard from the State of 

California, as well as from other States, that they may be forced 

to diminish the number of students that they can educate because 

they simply don’t have the funds to do this. So I would like to address both of these sides of the question briefly. 

First is the increased need for Pell grant funding, which is urgent. We already know that there is a shortfall in the Pell grant 

program. The Pell grant is the best way for the Federal Government to assure that students will have the funds that they need 

to enroll and persist in college in these difficult times. Two-thirds 

of the student aid on which students depend comes from the Federal Government, and that includes about $18 billion in Federal 

grants, about 80 percent of which are in the Pell grant program. 

About 5.5 million students depend on Pell grants to help them 

finance college, and these funds are incredibly well targeted on students who really need help. Among the dependent students who receive Pell grants, about two-thirds of them come from families with 

incomes of $30,000 or less. About 60 percent of the Pell grant recipients are independent students. And almost 60 percent of these 

students had incomes in the previous year of under $15,000. There 

will, of course, be more and more students who fall into these income categories as the economy continues to sour. 

The Pell grant has created a lot of wonderful educational opportunities for people, but it has lost much of its power. Recent increases in the Pell grant maximum have been most welcome, but 

the current maximum of $4,731 is lower in 2007 dollars than the 

maximum was 30 years earlier. 

So what we have is a situation where, Congress has continued 

to pour more money into Pell grants, although we now spend about 

$14.5 billion a year—the reality is that this has only allowed us to 

cover more and more students. The number of Pell grant recipients 

tracks closely the increased funding on Pell grants. So what that 

means is that the maximum Pell grant and the average Pell grant 

per student have not been able to increase in inflation-adjusted dollars. 

In fact, while we talk about the maximum Pell grant all the 

time, what really is important to individual students is, on average, 

how much they get. And in 2007–2008, that was $2,649, just about 

$100 more in constant dollars than was the case 30 years earlier. 

So, on average, students are not getting nearly enough money from 

this program. That is even without taking into consideration the 

increase in college prices. That is just taking into consideration increase in the Consumer Price Index. 

In 1987–1988, the maximum Pell grant covered 50 percent of the 

published tuition fees, room, and board at the average 4-year college. That 50 percent has now declined to just under a third. At 

private colleges there has been a decline from about 20 percent in 

1987–1988 to about 13 percent of total published tuition fees, room, 

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The Pell grant helps many independent students and many dependent students. There will be many more adults who are looking 

for assistance, looking to go back to school as their labor market 

opportunities are diminished. We have to make sure that we give 

them adequate funding. 

I had a conversation recently with a 31-year-old single woman who makes $16,000 a year working full time. She wants to go to 

her community college to increase her skills; and the Pell grant for 

which she is eligible is under $700. So she wanted to know how she 

is supposed to go back to school. That is her full income, if she can 

keep her job, $16,000. The child of a single parent making $40,000 

a year would be eligible for a Pell grant of less than $1,500. 

So we have to think about the number of dollars we are giving 

to students, in addition to the aggregate amount of money, the 

maximum Pell grant, and the number of students we can serve. 

Raising the Pell grant is the most important thing that the Federal 

Government can do for students now in the short run to help them 

pay for college. 

Many students are going to continue to borrow, and Congress 

has done a good job of making sure that Federal loans remain 

available, but we have to do a better job of protecting those students who, through no fault of their own, get into trouble when it 

comes time to repay their loans. Of course, many more students 

will find themselves in that circumstance now because of the high 

rate of unemployment. 

In addition, if we want the Federal aid system to be more effective, and we want our taxpayer dollars to be used more efficiently, 

we have to simplify the system and make sure that students can 

access it with a simple application process and that we don’t keep 

adding more programs. 

It would be wonderful if we can increase the Pell grant and make 

sure there is enough money in every student’s hands, every potential student’s hands, to make sure they have the opportunity to pay 

for college. But even if they have the money, but States are unable 

to fund institutions to have the capacity to educate those students, 

we won’t accomplish our goals. 

There is an urgent need on the part of the States for help from 

the Federal government to provide these educational opportunities. 

In particular, community colleges and broad-access, public 4-year 

colleges are going to find many more people knocking on their 

doors looking for improvement in their skills, looking to be more 

successful in the labor market. Obviously, we want to get these 

people off of the unemployment roles and into environments where 

they can constructively be improving themselves for the jobs that 

we hope will be awaiting them when they finish. 

Assuring access to higher education is important from an equity 

perspective, but it is also important in terms of the efficiency of our 

economy. It is good economic policy. It will help us to reduce the 

excess supply of labor. It will help us to increase over the long term 

our human capital. And our economy will reap the benefits far into 

the future. If we don’t do this, if we don’t strengthen the Federal 

aid system, the Federal Pell grant program, if we don’t assist educational institutions to provide opportunities, make sure they have 

capacity to educate our students, we will feel that pain far beyond 


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the time that the economy begins to recover. So I urge you to make 

higher education a clear focus in your stimulus package designed 

to revitalize the infrastructure. Thank you. 

Chairman OBEY. Thank you very much. 

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Chairman OBEY. Ms. Murray. 

Ms. MURRAY. Good afternoon, Mr. Chairman and members of the 

House Appropriations Committee. As Chairman Obey mentioned, 

my name is Julie Murray, and I am the chief executive officer of 

the Three Square Food Bank in Las Vegas, and I am honored to 

have been invited to come and speak before you today. I always 

like to speak during the noon hour before the meal has been 

served, because then all of us can feel hunger and just have a really great understanding of how challenging it is. If I would have estimated my speaking time better, I would have brought food boxes 

for you from Las Vegas. But let me tell you first thank you for 

being here and for staying for our testimony. I appreciate it. 

So the Three Square Food Bank started over a year ago at the 

inspiration of Eric Hilton—he is the youngest son of Conrad N. Hilton—along with numerous other think-outside-the-box kind of community leaders in Las Vegas who declared that it was not acceptable in our community for people to go hungry. 

I am proud to say that we are the newest member of Feeding 

America, and are proud to be distributing food in southern Nevada. 

We are the 206th member in this network of food banks. 

If I would have testified a year ago, I would have said that thousands of families in my home State are living paycheck to paycheck 

and are just one disaster away from being in total ruin. However, 

I am sad to tell you that, as I testify before you today, those families have had that one crisis occur, and that crisis is the recession. 

And due to the recession, they are now living their biggest fear, 

which is living without a paycheck. 

Nevada’s unemployment rate is no different than any of the others who have testified before me today. We have risen to 7.6 percent, which is a full point higher than the national average, when 

traditionally we are about 1 percent or more lower than the national average. One out of every 91 homes in Nevada is in foreclosure, and nearly half of our State homeowners owe more on 

their mortgages than their homes are worth. New construction has 

screeched to a halt, causing job losses not only in construction, but 

in related industries. At our Three Square Food Bank, we see the 

people affected by these statistics every day, and I have four points 

that I want to share with you in my 5 minutes of testimony. 

Number one, the children who are facing hunger. In Clark County School District, nearly half of our children, which is 132,000, 

qualify for free or reduced lunch. Picture that: 5 out of 10 children 

who are crossing the crosswalk on our way to school are struggling 

with hunger. When half of our children are struggling, we are living in a crisis mode. 

At the beginning of this school year, my Three Square Food Bank 

launched a weekend feeding program called the BackPack for Kids 

program that provides bags of nutritious, kid-friendly food to approximately 3,000 children weekly. I recently visited one of our 

BackPack partner schools where every one of the 733 students 

qualifies for a free or reduced lunch. I asked one second-grade student, Isabel, what she thought about the bag and the food. She had 

a huge smile on her face and said how proud she was to be able 

to take food home for her family. Her mother had just been laid 

off, and this 8-year-old girl carried the 5-pound bag of food home 


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on her back in the backpack every Friday and shared the food with 

her mother, her younger brother, and her dog. 

The next example: middle-class families who are living in crisis. 

So for every child in need, there are family members struggling to 

make ends meet. The ongoing layoffs in our normally recessionproof gaming industry are bringing more people to our food pantries. Representative Serrano asked if tourism and the arts are 

being impacted. Our gaming industry and other related industries 

are being impacted in ways we never could have imagined. There 

are people who have never before sought food assistance that are 

doing so. And let me illustrate a story of what Congressman Obey 

mentioned in his opening remarks when he said that it is so amazing what the loss of a job does to someone’s dignity when they go 

through that experience. 

So while filling my gas tank recently on a Sunday afternoon, a 

white car pulled in next to me with a middle-aged man and two 

little girls in the back seat. The man approached me with a very 

ashamed look on his face and said he had never been out of work 

before, was recently laid off, and could not afford gas or food for 

his family. My heart broke for him, but my heart broke for the little girls who were in the back seat having to watch their dejected 

father beg for money. I gave him cash, and told him how to find 

a local food bank agency where he could receive some free groceries. 

As Nevada’s unemployment rate grows, such stories will only become more common. Indeed, as the unemployment rate grows nationwide, you will hear such stories in every congressional district 

across the Nation. 

Number three, I would like to address the growing demand at 

charitable agencies. At our 1-year anniversary next week, which 

you are all invited to come to our food bank for, our food bank will 

announce that we have distributed 10 million tons of food, which 

represents 8.5 million meals that we have distributed. That food 

reaches hungry people—— 

Chairman OBEY. Did you say 8.5 million? 

Ms. MURRAY. Yes, 8.5 million meals per year—this year, in our 

first year of operation. That food reaches hungry people through 

our 211 agency partners. These community partners include food 

pantries, homeless shelters, rehabilitation homes, and programs for 

at-risk youth and seniors. Forty agencies who joined us this year 

never had been engaged in food relief before, but are doing so in 

response to the economic crisis. And our existing food pantries are 

hit particularly hard, many of them seeing a doubling of clients— 

a doubling of clients—over the course of this year. 

And, number four, my recommendations. My food bank will continue to work diligently, as will food banks across the country, to 

assist the people in their States. However, there is only so much 

that we can do to meet the overwhelming need; but there is so 

much that Congress can do to address hunger in America with the 

upcoming economic recovery package. Specifically, three points. 

Number one, an increase in the SNAP/food stamp benefits along 

with administrative funds for cash-strapped States. 


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Number two, a boost to TEFAP and CSFP, the two commodity 

programs that provide nutritious food through food banks and 

other charitable organizations. 

Ms. MURRAY. Number three, increase funds to meet the growing 

demand in the WIC program. 

These crucial measures to strengthen our Nation’s Federal nutrition programs will go a long way towards meeting the needs of millions of Americans devastated by the recession. Moreover, the inclusion of additional funding for SNAP food stamps and emergency 

food assistance will support economic recovery and help stimulate 

local economies. I can tell you, with food prices having risen so 

much, when cash-strapped families receive the higher food stamp 

benefit they will immediately spend it in their grocery stores. 

So in conclusion, I wanted to share with you that when my three 

children, who are all in college, come home for the holidays and are 

gathered around my kitchen table, we talk about you as if we know 

you. They have worked for you as congressional pages and as interns. We look at the decisions that you are making and the things 

you are doing. Please know that to my family and to millions of 

Americans, you are heroes; you are the ones who can and will pull 

this country out of the crisis we are in. We have faith in you and 

we are cheering for you. 

I would be happy to respond to any questions at the end of our 

time allotment. Thank you. 

Chairman OBEY Thank you very much. 

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Chairman OBEY. And now Ms. Kreucher. 

Ms. KREUCHER. Thank you. My name is Marsha Kreucher, and 

I am the CEO of a community action agency in the southern central part of Michigan. And I am honored to be here today. I was 

asked by our new Congressman-elect Mark Schauer to talk a little 

bit about the face of poverty in Michigan and some community development-type projects that community action agencies get involved in that he thinks have potential for good economic development policy. 

I know that you have all heard that Michigan is facing some 

huge challenges. We may be leading the way of the downward momentum that has been discussed today. Our unemployment rate is 

well above the national average, over 9 percent; and median income, which in Michigan has always been high, has plummeted 

12.5 percent last year to put us below the national average for possibly the first time. We have record numbers of homes in foreclosure, housing values are falling, and we have one of the highest 

child poverty rates in our county right now at 40 percent. It is just 

a stunningly dismal picture. In the 20 years that I have been a 

community action director, I have never really seen things quite so 

bad. 

In the counties that our agency serves, we are mostly rural, we 

have three cities. The largest city has a population of 37,000; 13.5 

percent of those residents are now unemployed, and 15 percent fall 

below the poverty level. We are heavily reliant on the automobile 

industry, mainly in our area of the State on the smaller parts suppliers and light manufacturing. We have lost thousands of jobs in 

the last 5 years and almost 2,000 jobs just in this year alone. And 

these are working-class jobs. We have talked about the middle 

class and working-class jobs, and this has been a middle-class community. The erosion in income and the quality of life has just been 

stunning. People are frightened, I think, and that is one thing that 

we all feel. 

One of the things that I think can really help, and I would ask 

for your support, is the request to increase the eligibility for CSBG, 

which is the base funding for community action agencies, to help 

people that are at 200 percent of poverty as opposed to 125 percent. 

And that is because when you are looking at, like we are, legions 

of Michigan people who are unemployed and living on unemployment insurance, or who are working at low-wage jobs that are kind 

of piecemealed together, 200 percent of poverty is barely enough to 

make ends meet. And it would, I think, really help to be able to 

reach a lot of these people. 

When people are laid off, they come to us for any variety of reasons. They may come to us because they have missed a house payment or they have had a utility shut off. It is generally not a population that is used to coming in to ask for help. They are people 

who, more often than not, now are looking at foreclosure. In our 

small city, we have about 400 homes that are owned by banks, that 

are vacant and are for sale. 

The banking industry is worried, the housing industry is worried. 

It drops—housing values. Crime is on the rise. There is an uptick 

in homelessness. And we have many, many families who, although 

we are a HUD-certified counseling agency, we are getting maybe 


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30 calls a week to help renegotiate loans with banks, and we have 

really no resources to help people who have gotten caught in the 

subprime loan mess. Sometimes we see grandparents losing homes 

that maybe it would be $3,500 or $5,000 to fix, and there really 

isn’t very much help available to help these people. I think that we 

would all think that stabilizing neighborhoods is probably one of 

the key things that we can do. 

One of the projects we have been involved in, which I think is 

probably a good example of a community action agency in general, 

is that we got involved in a community revitalization project in the 

city of Jackson, which targeted 23 blocks immediately adjacent to 

the downtown; and we have mobilized about $12 million in investment in that area through private investors, Federal dollars, State 

dollars, local community dollars. We have been working with five 

churches and have built new homes, demolished blighted property, 

rehabbed many homes, both homeowner and rental property 

homes. 

And because we are a community action agency we also work 

with the Neighborhood Association, which has now become incorporated and has received some funding of their own, is hiring staff, 

running an after-school program for kids. And because we run the 

IDA program, we are helping people to increase home ownership in 

that area. 

We are working with Youth Build to add job skills and construction, and Habitat for Humanity to provide more housing there too. 

So what we have seen, just in that little project over 5 years, is 

it has created a lot of jobs, and I think has probably shown one of 

the things community action is good at, which is, we are good 

multi-taskers and we are able to leverage funds from the private 

sector as well as the public sector and bring together the community to make things work. 

I won’t talk too much about energy and home weatherization. I 

mean, that has been discussed today. I know it is on the radar 

screen of everybody. Clearly, there is great potential. We have been 

weatherizing homes since the 1980s. There are a lot of creative 

projects going on across the country with renewable energy and 

community action agencies with private investors. 

I will tell you that we have waiting lists for every one of our programs. Unprecedented. I would estimate that we have probably increased our waiting lists and people coming in for help 35 or 40 

percent just over the last year alone. Children don’t have food; they 

are on waiting lists to get—adults are on waiting lists to be able 

to get money or be able to afford to go to college. Children don’t 

have winter coats; they are coming to school with sweaters on. It 

is just a terrible picture. 

So we encourage you. Congress has been very supportive of community action agencies over the years, and we appreciate that. We 

have always been on the front lines. This year it seems very dramatic; the front lines are much more complex; our problems are 

more complicated. And we appreciate your support and are enthusiastic about all that you are doing with the economic stimulus. 

Thank you. 

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Chairman OBEY. Well, thank you all. Let me just ask one question of all of you, a little differently to each of you, but it is the 

same basic question. 

Dr. Baum, some Members of Congress might say to me, ‘‘You 

know, Obey, student aid is fine and Pell grants are fine, but you 

guys are just using the recession in order to bump up spending for 

these student aid programs.’’ I would ask you, Why should we be 

looking at student aid in a recession? Is there really a significant 

impact on American families with respect to their ability to send 

their kids to college during the recession? 

Ms. Murray, with you I would simply ask, Why should we add 

more money to food and nutrition programs? If this is a serious 

problem, why can’t we expect the private sector and charities to 

pick up the slack in your area? 

And Ms. Kreucher, with you, the same question I asked Dr. 

Baum. Some people will say, ‘‘Well, you just like this Community 

Service Block Grant and so you are using this recession as an excuse to pump money in.’’ Why is there a qualitative or quantitative 

difference in terms of the job that you have to do in your locality? 

What kinds of things are you having to do today that county 

boards, city councils, are sloughing off on you because they just 

don’t have the money in these times? Why don’t we begin with you, 

Dr. Baum? 

Dr. BAUM. It is certainly a reasonable question because everyone 

has been saying all along that we need more money for student aid. 

That said, there are several aspects to this. One is that if we do 

nothing, then the demand for Pell grants is going to increase because as more people are in these serious economic circumstances 

that have been described, they will simply qualify for Pell grants. 

So even without changing any of the provisions, clearly more 

money will have to be appropriated, or the amount of money that 

we provide to individual students will have to be diminished. 

But more than that, it is the issues that I touched on which involve the repercussions of an economic downturn. There will be 

more and more people who will not find labor market opportunities. And we can either have them be unemployed, we can try to 

provide unemployment compensation for them, or we can help 

them to go to school. And it is obviously in both the short-term and 

the long-term interests of the economy to make sure that we can 

have these people using their time constructively and developing 

their human capital. And that is true for higher education institutions as well. There have been struggles all along, problems of 

State funding pressures. But the reality is that right now there is 

much increased demand, as there always is in economic downturns. 

And to turn these students away would be a serious mistake. This 

is the result of the recession, that there is this kind of increased 

demand and this increased need. 

Chairman OBEY. Thank you. 

Ms. MURRAY. Thank you, Mr. Chairman. Your question is, Why 

should you add to the food and nutrition programs currently in 

place? 

Chairman OBEY. My question is simply, If this is an economic 

stimulus package, why should programs for nutrition be included? 


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Why can’t we simply rely more on private sector churches, charity, 

et cetera? 

Ms. MURRAY. Thank you for the clarification. I will give one example. I mentioned the children in the schools. In order for us to 

go communitywide with our BacPack program and be in every one 

of our schools, we had to collaborate with a lot of people. We had 

to collaborate and find a donor to fund the food; we had to collaborate and find someone to deliver it; we had to find community 

groups who would come out and load thousands of bags of food 

every week. And as food bank, we are doing everything we can to 

leverage what we have in the communities to provide as much food 

as possible. And you saw our food bank. We are very creative. We 

think outside the box, and we collaborate with lots of people. 

We are doing just as much as we possibly can to keep up with 

the demand. And just when we think we have met it, then we will 

go through a round of thousands and thousands of more layoffs. 

And our agency partners report that they are seeing increases of 

66 percent in the numbers of families that they are feeding. 

So even though we are calling on our corporate leaders and our 

community and individuals and foundations, they can only give so 

much. And they are reeling from the tough economic times and giving as much as they possibly can. 

So just know that in States like all over the country and like 

mine, my food bank is doing everything we can to collaborate and 

think outside the box, but we just can’t keep up with the demand 

because the numbers are so huge. So we do need help with what 

you have offered. Thank you. 

Chairman OBEY. Ms. Kreucher. 

Ms. KREUCHER. I would say that community action with Community Service’s Block Grant just has a long history of mobilizing resources and working in collaboration with many, many sectors. 

There is no sector that has the ability to handle all of these problems alone. City dollars aren’t going to do it, county commissions 

can’t do it. Revenue sharing has been lost. Private sector, in places 

like Michigan, is a problem for investment. We have to be able to 

work with people who have had a history of working with us before 

and are willing to kind of step forward and help out during difficult 

times. I think we have a track record. 

One thing that I think is really important is the psychological 

and kind of morale-boosting piece. As we go in and start working 

in neighborhoods within the city of Jackson and in our communities, we are finding people who are saying that they are afraid. 

They feel like they have been forgotten. They don’t know what is 

going to happen next. What are the next jobs that are going to happen? 

And there is something to be said about moving forward and creating jobs and working to renovate neighborhoods to show that 

they are still safe, to show that people are still involved; that there 

is going to be an infrastructure that makes people think that it is 

going to be okay in the end; that things still are happening as normal, and we will be continuing. And I think that is really an important piece. 

Chairman OBEY. Thank you. Mr. Lewis. 


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Mr. LEWIS. Thank you very much, Mr. Chairman. And thank you 

all for not only being here but for the work that you are about. I 

was going to approach this a little differently when I began this 

meeting, but please forgive me. 

Dr. Baum, I will begin with you because I think you should know 

that two of my twin sons are both college professors, and so I am 

very empathetic to the challenges of a college professor, a professor 

at Skidmore. But in the meantime, I am curious to know what exactly the College Board is. You indicated that you were testifying 

as an individual not representing Skidmore or the College Board, 

but I would like to know exactly what the College Board is and 

what role you play there; is it a paid position or is it just additional 

compensation beyond being professor, et cetera. 

Dr. BAUM. The College Board is a nonprofit membership organization with members being colleges, universities, high schools, and 

other kinds of educational organizations. And the College Board 

works on issues relating to college access, college success, the transition from high school to college. Everyone knows they have the 

SAT and the AP. They run some high schools in New York City. 

They have a lot of college preparation and curricular programs, a 

lot of college counseling programs and so on. 

I am not employed by the College Board; I am a consultant to 

the College Board. I do their publications on trends in student aid 

and trends in college pricing, and I spend a lot of time consulting 

for them. I also consult for other organizations, and I am employed 

by Skidmore College. 

Mr. LEWIS. I appreciate that. That helps clarify some of the questions I had relative to that, because I noted when you testified before the Senate and also, in the presentation you gave on NPR in 

2007, the testimony was very similar to that which you have presented today which would be very much a reflection of what you 

just described as the College Board’s work, the work that you do 

for them. 

Dr. BAUM. I would say that one of the wonderful things about my 

relationship to the College Board is that they subsidize me to do 

my research and to express my views, and not to be just a voice 

for the views of others. And so that is one of the contributions that 

they make. 

Mr. LEWIS. One of the areas of concern I have that leads to just 

a very brief line of questioning, is the fact that we operate here 

under our rules in the House with a truth-in-testimony process. 

And sometimes when people describe themselves as speaking as an 

individual, that causes them not to feel like they need to respond 

to some very specific requirements. 

So let me ask this. Can you provide for the record a list of all 

grants, sub-grants, contracts, subcontracts received by the College 

Board in fiscal years 2008–2009, prospectively 2009? 

Dr. BAUM. The College Board obviously has such a list. I am here 

presenting my own views. No one told me what to say. I am 

not—— 

Mr. LEWIS. Can you provide such a report? 

Dr. BAUM. I am just here expressing my own views, and I have 

no—I am sure that the College Board as an organization could do 

that, but they have not—I am not testifying—— 


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Mr. LEWIS. Let me say this. In our records you are listed as—— 

Dr. BAUM. I am a consultant to the College Board and I am employed by Skidmore College. 

Mr. LEWIS. So the second question is we would appreciate a list 

also, if you could consult with the College Board and provide a list 

of all grants, sub-grants received by the College Board in fiscal 

years 2007 and 2008. 

CHAIRMAN OBEY. Let the Chair simply interject at this point to 

say that I am certainly interested in obtaining all of the legitimate 

information that we can obtain. But I think it is an open question 

as to whether someone who is a consultant to an organization has 

the authority or the ability, in fact, to provide the kind of information that has just been requested of the organization. I would think 

the organization itself would have to make that decision, and I 

would think they would make it at a time when someone was testifying on their behalf. 

Mr. LEWIS. I appreciate the Chairman making that clarification 

for me. The listing we have for Dr. Baum is as a senior policy advisor for the College Board, and it seems to me that she might be 

able to provide that. 

But in the meantime, moving on, if I could. I wanted to mention 

to Ms. Murray that beautiful downtown Las Vegas is important to 

us, because in North Las Vegas there lives one of our daughters 

and two of our grandchildren and a very, very attractive donkey as 

well as a pig, two cats, and two dogs as well. It is a very prolific 

family. 

But in the meantime, just a few minutes away from here, is an 

organization in Mr. Moran’s district, the Arlington Food Assistance 

Center just about 3 miles away. And it just occurred to me that— 

I am sure you experience this but all of us should think about— 

the work that you are about, which I think is fabulous work, can 

be accomplished and needs to be expanded by a lot more than just 

some stimulus package on the part of the Federal Government. 

Citizens being involved, volunteering, helping with the programs 

that you are about are a fundamental force as well. Some of my 

own staff participates in this Arlington organization, and they too 

are involved in providing and delivering food to thousands and 

thousands of people. And that work is not just commendable, it is 

very stimulating and exciting work. So thank you. 

I am interested in having at least the Chairman bear with me 

a moment. He doesn’t really know this, but from about the time I 

went to college I thought I might want to be in public affairs one 

day, and I knew absolutely that if I was going to be, I would run 

as a Democrat. And between my junior and senior year in college, 

I had the privilege to participate in one of the early People to People programs that preceded the Peace Corps, known as Project 

India. And 12 of us, together with advisers, went to India and 

spent 31⁄2 months. I will never forget walking down a mud pathway 

and turning, just as we were going to a village, and watching a 

mother with her baby lying in the mud brushing the flies away, 

and literally we watched that child starve to death. It was that and 

many another experience in the world’s newest and largest democracy at the time that caused me to know I would be involved in 

public affairs one day. 


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And indeed when I came back to school, knowing that, I knew 

I would be a Republican and not a Democrat. And I will let my 

Chairman guesstimate what that is all about. But in the meantime, we very much appreciate your work and thank you all. 

CHAIRMAN OBEY. I would simply say that when I was growing 

up, I was a Republican and I converted to a Democrat. I guess 

what that demonstrates is the old rule of physics: To every action, 

there is an equal and opposite reaction. I am sorry the gentleman 

moved in the wrong direction, however. Mr. Dicks. 

Mr. DICKS. That was very interesting. First of all, I want to congratulate each of you for your testimony, but also for your careers, 

what you are doing to help other people. I can remember in the 

State of Washington in 1969, 1970, 1971, we had a huge downturn. 

We lost the SST. And I was at the time working for Senator Magnuson and we had 161⁄2 percent unemployment in King County, 

and people who had been engineers, who had always had a job 

were unemployed. So we went through this. And it was interesting; 

kind of the way we worked through this was we did a number of 

congressional—I worked for Senator Magnuson in the State of 

Washington, and we had emergency extensions of unemployment 

compensation. I think you got three of them. But this was only for 

States with high rates of unemployment. 

Now, I am not sure you could do that in this era, Mr. Chairman. 

We also then, we had direct funding for the food banks. And I 

was interested in your emergency food assistance program. Does 

that program allow for direct funding of the food banks right from 

the Health and Human Services? 

Ms. MURRAY. Thank you, Congressman Dicks. Yes, there are food 

banks throughout the country. And not 100 percent of them have 

that direct, but most of them do. That is correct. 

Mr. DICKS. So they get some money from the Federal Government to operate the food banks. 

Ms. MURRAY. Correct. 

Mr. DICKS. Then you add surplus commodities and food stamps. 

Now, most States, you only could have one or the other program, 

you couldn’t have both. Is that still the rule? 

Ms. MURRAY. Do you know, Congressman Obey knows this because he has visited our food bank. Our food bank is 11 months 

old, so we do not currently have any of those items that you just 

outlined. So the 10 million pounds of food that we have achieved 

this year just have been through sheer donations; and so we are 

looking forward to our strategic plan in 2009 to be able to add 

those items that you just mentioned. 

Mr. DICKS. But can a State now have both a food stamp program—I think in those days, this is a long time ago, you either had 

a food stamp program or you had a surplus commodity program, 

and, in other words, to deal with the problem. But now I think you 

can have both? 

Ms. MURRAY. Yes. That is correct. Yes, you can. 

Mr. DICKS. So what else? Now, the WIC program—and I know 

these are all programs that the Chairman’s committee is responsible for—does a fantastic job of making sure they are adequately 

funded in terms of what we can do with the reality of the situation. 


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Ms. MURRAY. Let me just tell you that we are grateful for the 

funds that we have through programs like WIC and TEFAF and 

CSFP. But what has happened, though, even though the funding 

is good, with the huge growing numbers of people who need help, 

we just can’t keep up. So when you look at food stamp—and I was 

sorry that Congressman Ryan isn’t here because I know he did the 

Food Stamp Challenge—is that with the new Farm Bill people now 

on food stamps will get $1.33 per meal. And so even though we are 

grateful for that, it just needs to be more, because the suffering 

that is going on is just so great. 

Mr. DICKS. Let me ask you this. You talked about the school 

lunch program and it is at 50 percent. I have many schools in my 

district—and you mentioned one that was 100 percent—that are 70 

percent. So I am very sensitive to what you are talking about. But, 

again, there is some limit to the funding for these school lunch programs. 

And you talk about the weekends, and I love your pack program 

where you can take these packs home and they can help their family help themselves. What would you recommend there? I mean, 

what should we do in terms of the meals that are provided at the 

school, through the school system; and what do you do about the 

summers? That is another part of the situation. 

Ms. MURRAY. Thank you so much for asking. As food banks, what 

we do is we work to understand where the children are who are 

food insecure, and then we look at tackling it in a very strategic 

way. So with the weekend program, we know how to get BackPacks 

in their hands so that they can have the bags of food for the weekend. Those same children often struggle with food in the summertime, and there is a program, the Summer Food Service Program, 

(for which we as food banks do get reimbursement from the Federal Government, which comes to the State which comes to us. 

However, with most of my colleagues in the food banking world, it 

is not nearly enough. The money that we get reimbursed isn’t 

enough to cover it. So what we do is we raise money from donors 

so that it is a partnership; that if the Federal Government is helping to give some funds to the State, of which we get some at the 

food bank and it is not enough, we believe that we just all need 

to do it together. And if we are raising funds and you are helping 

and the States are helping, that is the only way we are going to 

get through these tough economic times is if we are all in it together, which I believe we are. 

Mr. DICKS. So it isn’t just infrastructure alone. You have got to 

deal with the human element of this crisis, besides—and we all 

want to do infrastructure. I don’t like the idea of just sending 

checks back to people and saying, You go spend the money. To me, 

I would rather see us do infrastructure, but have a response to 

these very legitimate social needs of the people that are going hungry. 

I mean, I think we made a pledge to ourselves during the Johnson era that we were not going to let people be hungry in this country. And yet what you are telling us is that that in fact is happening today. So I just congratulate you on your work. 

Andre Agassi, by the way, is a friend of mine, and he has come 

here to Washington to help us with the Washington Tennis and 


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Education Foundation. You couldn’t have a better person to work 

with. 

Ms. MURRAY. We are so happy to have him in our State. Thank 

you, Congressman. 

Chairman OBEY. Does he give you free lessons? 

Mr. DICKS. It is beyond me. I am beyond hope. 

Chairman OBEY. Ms. Kaptur. 

Ms. KAPTUR. Thank you, Mr. Chairman, for bringing this excellent panel of really outstanding American women to testify and become a part of our record. 

I have two sets of questions, one for Dr. Baum, if you could just 

think about this while the other witnesses are testifying. I understand that the dropout rate across our country in colleges is at 

least half, and in many community colleges where the economy is 

not good, upwards of 75 percent. And my question is really, as we 

look at increasing Pell Grants and doing what we must in this 

arena, are there private companies that are targeting these dollars 

at the expense of students who then drop out? And what can we 

do about it? 

I have heard figures as high as 75 percent dropout rates, where 

companies benefit and churn the Pell Grants, and with open enrollment, then students go to another school perhaps. So I have a 

question about the efficiency, the quality, and what happens to the 

student, as well as the existence of the program itself. 

But in the food arena, I serve on the Agriculture Committee. I 

am passionate about agriculture. I know several things about our 

government. Number one, Federal programs do not integrate well 

at the community level. That is number one. 

Number two, we do not often use Federal subsidy dollars to spur 

opportunity, certainly in the food area. 

And thirdly, we do not use Federal dollars to create sustainable 

food systems and improve nutrition. It is not just food, it is nutrition that is so important, with just unbelievable rates of diabetes 

now and obesity among our population. 

And I also believe that there is no neighborhood in America that 

is poor. I know that there is income poverty many times and personal poverty, but it is a question of how we use those subsidy dollars. Are those dollars going in a given neighborhood for income— 

whether it is a veteran’s check, a Social Security check, are they 

going to a payday loan company, or are they going into a community development credit union that could augment what you are 

doing? 

So these are views that I hold. And in the food arena, we are particularly bad at turning food subsidy dollars into opportunity. Several members of our subcommittee, including Congressman Jackson of Illinois, Congressman Farr of California, I, Congresswoman 

DeLauro, are very interested in how to use Federal dollars, to use 

food subsidy to spur opportunity. And let me just mention this and 

see how you react. 

First of all, how can we use Federal dollars in this program to 

deploy food technologies that are advanced? For example, 12- 

month-out-of-the-year Hoop Houses to engage some of the residents 

in producing their own food, including in inner-city areas. 


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Number two, the expanded use of community gardens in communities across this country which can be picked to the ground for 

free. How do we work with our botanical gardens and others to do 

that, including in urban areas, where technology with drip irrigation and with aquaculture can now produce protein and excellent 

vegetables at a very reasonable price. 

How do we use gleaning across this country in Michigan, in Ohio 

at a much expanded rate with processing in order to provide 

canned goods and year-round food that we are now plowing under? 

A third of the production in this country is plowed under. How do 

we use these Federal dollars more creatively? 

And finally, how do we use the EBT transfer mechanism for our 

food stamps, the electronic benefits transfer machines, to empower 

local people setting up farmers markets and food production sites 

even in the heart of our cities where we have food deserts now. 

I am interested in the dollars. With rising prices in the food 

stores, my greatest fear is that, yeah, we can increase the amount 

of money in food stamps, but that does not mean you create empowerment or you use dollars going into communities wisely so 

that people are not perpetually poor, but we, rather, use food production as an economic opportunity in some of the poorest communities in our country that are absent supermarkets, that are absent 

community development credit unions, that are absent ways of 

helping themselves improve their lives. 

And let me just say in one neighborhood in my community of Toledo, Ohio, very close to Michigan, just one building of 146 people 

that are mentally ill, elderly, fragile people, in one year $1.4 million comes into that building in the form of income from Federal 

subsidy alone. Where do those dollars go? They go up the street to 

a beer distributing place because there is no place for them to cash 

that check. That particular site could have a Hoop House, it could 

have an electronic benefits transfer machine working with other 

high-rise buildings in the area. We could produce food in the heart 

of the inner city and employ local people raising their own food. 

I would like you to react to that as you think about how we can 

make the food system help create opportunity and not just be a 

permanent subsidy trying to beg product from others. I know there 

is a transition that has to occur. But that is the part of the food 

system that excites members like myself. 

I will let Dr. Baum comment and then the two representatives 

of community action. 

Chairman OBEY. I would ask them to be very brief, because the 

gentlewoman has almost reached the end of her time. 

Dr. BAUM. Thank you. I am glad that you raised the question of 

graduation rates, because we as a society have done much better 

at providing access to higher education, despite all the gaps in access, than we have in helping, supporting students through to 

graduation. 

There are a variety of explanations, and the data are, first of all, 

quite poor, because it is very difficult; some people go to college and 

take a class, and that is all they wanted to do, and then they are 

counted as dropouts. But part of this has to do with people’s academic preparation, part of it has to do with not having enough 

money. 


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You are asking questions about certain types of institutions. And 

we know that in all sectors of higher education there are some institutions that do a great job, and then there are, unfortunately, a 

few institutions that do not. And certainly there have been institutions in the for-profit sector that have been found to be abusing 

Federal funds, but many of them also provide very high-quality 

educational opportunities to students. 

In terms of a solution, my proposed solution for that, which actually was articulated by a study group that I recently headed with 

foundation funding as well as help from The College Board, a group 

of scholars and public policy experts, we proposed that institutions 

should actually get a subsidy, a campus-based subsidy based upon 

the number of low- and moderate-income students that they not 

just enrolled, but that they helped to progress and graduate so that 

they would have funds that would help them to provide mentoring 

services, emergency funding, and so on. And they need to be 

pushed to see students through, not just to enroll those students. 

Ms. MURRAY. Thank you. 

The first thing that came to my mind is, I would love to be able 

to have much longer to talk to you because these ideas are brilliant. But just to answer in a very brief period of time, I will share 

with you the idea of wrap-around services, what you described of 

having the EBT and other services, food produced all in one hub. 

I love it. 

What we are doing in Las Vegas, our university is the University 

of Nevada-Las Vegas, UNLV. They are studying our ZIP codes to 

understand where are the hungry people and where are there pockets where they have no grocery store, no nonprofit agency, and no 

church. And what we are working to do then is strategically put 

hubs into those neighborhoods to get our fresh produce there. 

So, as an example, we have 55 grocery stores in our valley that 

have food that in 48 hours will expire. We have trucks on the road 

Monday through Friday picking that food up, and the grocery 

stores get the tax write-off, and we get fresh food and we deliver 

it. We are going to be delivering that fresh, perishable food, which 

is meats and cheeses and produce, for free to these hubs because 

of a donor who has said, I want to do this. 

So I love your idea about the wraparound services, about the 

EBT, about having all of those things in different pockets to effect 

change, and I would love to be able to have more than this time 

limit to further discuss it with you, Congresswoman. 

Ms. KAPTUR. I would welcome that opportunity, and a number of 

my colleagues would as well. 

Ms. MURRAY. Thank you. 

Ms. KREUCHER. I think those are great ideas as well. And sometimes I wonder if part of the issue is not what is being reported, 

because we may be reporting kind of in a siloed way for funding 

that we get from the Federal Government about a project. 

For example, in the revitalization project we are working in, we 

are looking at putting a supermarket in a neighborhood that does 

not have one. And we would probably use a small amount of CDBG 

or CSBG money as we are working to pull that together. But much 

of it would be private investors, and so we might not be reporting 

up in a way so that you are gathering the full impact. 


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Ms. KAPTUR. I hope you become a partial owner in that, and then 

you can fund your organization. You will not need Federal subsidy 

anymore over the years, really, when you look at the amount of 

food dollars that go into these neighborhoods. 

Ms. KREUCHER. Actually, that is true. We run the WIC program 

in one of our counties. And so we have instituted a farmers market 

as a piece of it, just as a little kind of economic development project 

for them. I mean, we have it in our parking lot and open it to the 

community, as well as the WIC participants, to be able to get vegetables and food. 

We have community gardens at a neighborhood resource center, 

but I am not sure how they are all being reported up, because 

there may be a very small percentage of Federal dollars that are 

involved, even though it may be a Federal project to start with. 

So we may need to take a better look at that to make sure that 

you are very well informed of what we are all doing. 

Ms. KAPTUR. Thank you. 

Chairman OBEY. Thank you. 

Mr. Olver. 

Mr. OLVER. Thank you, Mr. Chairman. And I want to thank the 

panel for your truly fine testimony today. And as one of my fellow 

colleagues previously, I think, has suggested, it would be wonderful 

if this kind of testimony would be available to every person, this 

kind of interaction that we have been able to have would be available and used by every Member of the Congress. 

Each of us, as Members, has a multiplicity of community action 

agencies and food banks. And, for instance, I myself have five community action agencies covering the territory of my district, and 

two food banks that cover central and western Massachusetts, a 

small State in area, and dozens of farmers markets. And the work 

you do in those areas is really and truly very important. 

You have reminded me that the programs that you are describing grew out of the war on poverty, basically, which may be forgotten by younger members. I am at an age where it is possible to remember quite back into that range. 

And we are in danger of a really severe and long recession here, 

and that will inevitably produce, if it comes to pass in its full form, 

a great increase in poverty, a huge increase in poverty, in the number of poverty families in this country. And it is heartbreaking to 

see that happen—after such real progress was made in the last 

third of the 20th century at reduction of poverty, to see that happen before our eyes. So what you are doing is very important indeed. 

And I just want to say that I, who follow the trajectory much 

more like the chairman of the committee, as he described it earlier—I would just like to say that I am a very strong supporter of 

all of the programs that you have been talking about this morning, 

this afternoon. 

I did want to just make an observation and a brief question. I 

am not really going to go through—I am having a good time listening to what your answers are to other people here and learning 

more and more by it. But I do want to just mention for Dr. Baum 

that Pell Grants, just a little bit of the statistics which—I bothered 


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my staff here; I have gotten up a couple of times, you may have 

noticed. 

We will have—in this 2009 fiscal year, we will have issued something like 17 billion of Pell Grants. And, yes, we do need more and 

we should do more. No question. You stressed the Pell Grants, but 

the student loan capacities that are out there, the student loan values, the sum total of student loans that are extant now are something like $500 billion worth of student loans outstanding. And the 

yearly volume of student loans is roughly four, or a little bit more 

than four times, four to five times what the Pell Grant value is. 

And I just want to ask you, are we now yet seeing any statistics 

at all about what the student loan market is or is not? Just really 

for the fall loans, we were pretty much before the crash in credit, 

but when there are renewals of student loans for a second semester 

or subsequent semesters, there must be quite a problem with the 

credit crunch. 

Do you have any insights as to what is happening there and 

what we should be watching for? 

Dr. BAUM. Well, all of the evidence is that the efforts that Congress and the administration have made to assure the availability 

of Federal student loans have been successful. A few lenders have 

gone out of business, it is true, but there are other lenders making 

these student loans. Many schools have joined the direct lending 

program because of concerns about the availability of student loans 

from banks. 

The credit crunch is having a significant impact on the private 

student loan market. These are loans that maybe about 10 percent 

of undergraduate students take. Those who borrow do borrow a lot 

of money from these programs, and many of them are finding that 

those funds are not available. 

But this is a very separate issue, and my personal belief is that 

we would be much better off if students had all the funding they 

needed through their own income, savings, and assistance from 

Federal and State governments and they borrowed through the 

Federal Government and not through private loans, because these 

loans can get people into significant trouble. They do not have as 

favorable terms, they do not have good protection. 

So the Federal loans appear to be—I mean, I am sure we will 

find some individual students who run into some problem, but Federal loans are available. And I think that Congress has done a good 

job of making sure that is the case. 

Mr. OLVER. Thank you very much. 

Chairman OBEY. Mr. Hinchey. 

Mr. HINCHEY. Thank you very much, Mr. Chairman. And thank 

you very much for this hearing. I think it has been very, very interesting. 

And all three statements that you delivered to us were fascinating and very, very important; and I am deeply grateful to you 

for taking the time to be here. What you are focusing on, among 

other things, of course, is the need to improve human capital, and 

through three essential elements: education, nutrition, and income. 

These are the most fundamental things that we have to deal with. 

And we have been dealing with some very adverse circumstances 

here over the course of the last number of years. What we have to 


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do here in this Congress now with this upcoming new administration is, stop the damage that has been done and reverse it, go back, 

start making progress, start moving this country in the right direction. 

Oddly enough, there are such a number of people who for some 

mysterious reason are opposed to internal investment in our own 

country. They are in favor of spending money in a lot of reckless 

ways, but they do not want to spend it here to improve the circumstances in our own Nation—a real mystery to me, but nevertheless it seems to be the case. 

I would just ask you, if you could, all three of you, just tell us 

individually what you think should be the main focus of our attention and what you think we should do in the context of these next 

2 years. 

Ms. MURRAY. Congressman, lives are being impacted and people 

are hurting; and I do not know any other way to describe it other 

than through what I see with the children and with the seniors 

and the families. And people who have never been unemployed before have been laid off and are suffering. 

And so when you go to meet in January and you look at what 

to pass with the economic stimulus package, we just really humbly 

ask you to be swift, to be aggressive, and to provide all the help 

you can. We realize that we have a responsibility on our end; if we 

as food banks and we in our State are not doing everything we can 

do to trim and to be creative and to fund programs, then we are 

not doing our job. 

But we are. We are being creative. And we ask you to be as generous as you can be. Because it is human beings, it is children and 

seniors who are suffering. And we will only do this if we all do this 

together. 

Dr. BAUM. I think it is very important that we provide shortterm relief and also that we think about our recovery in terms of 

the long-term implications of it. 

So, clearly, people have to be healthy and nourished in order to 

survive and to get through and to be productive citizens; and that 

is of primary importance. But, fortunately, if we give money for 

short-term relief to people who really need it, that from an economic perspective is money that people will spend immediately, 

and that has the biggest impact. It has to be given to people who 

will spend it. 

But we also have to be thinking about—I think the infrastructure direction is terrifically important. It will provide jobs. It will 

have an impact in the long run. And again, I would reiterate that 

that includes both physical and human infrastructure, and making 

sure that people have the opportunity both for quality elementary, 

secondary education, and for access to higher education; and training is a critical part of this effort. 

Ms. KREUCHER. It is really hard to choose in times like this, but, 

you know, we talk about being investors in people and being investors in our neighborhoods. Clearly, that is what Congress is doing, 

making those investments. 

When I look at poverty, I do not think there is any question that 

education is the number one pathway out of poverty. We are a 

Head Start grantee, we are very deeply engaged in and believe in 


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early childhood education as the way to start. And I think the quality of our school systems is tremendous. I think every child should 

be able to go to college. I think that is going to solve many of our 

long-term problems. 

But at the point where we are at right now in this country, I also 

think there has to be a hardy investment in economic development. 

I am looking at it through the lens of Michigan. We have many 

people who have been working people their entire lives, but there 

needs to be the creation of work for them as we move forward, providing education and some other long-term supports so that we can 

choose our new technologies and our new path for the future. That 

is going to be very, very important for us. 

Mr. HINCHEY. I just thank all three of you for the insight you 

provided and the help you are giving us. Thank you very much. 

Chairman OBEY. Mr. Honda. 

Mr. HONDA. Thank you, Mr. Chair. 

And to the three of you, thank you very much for your work. I 

guess I was listening to the kind of work that you do and how you 

respond to our questions, and it just struck me that you are partly 

exemplifying the kinds of teachings that are found in the Book of 

Ruth, where you go out and you use your talents gleaning the 

fields. But what you are gleaning are the different kinds of philanthropic programs that are out there, government programs, and 

bringing them together for the purpose of helping those who need 

the help. 

And when times get bad, it seems like there is even less help out 

there. And so I was wondering whether, over these years that you 

have been doing this work, have you ever thought of the question, 

are there other ways that we can sustain this kind of effort, the 

kind of efforts that you are involved in on a daily basis when times 

do get tough? 

Because when times get tough, resources become more scarce, as 

you have described. But it is at that time when resources have to 

at least maintain themselves or increase a little bit. In the past, 

I guess we used to pool our wealth for the common good of others 

so that they could make it through. 

But as a government, as a society, what are some of your 

thoughts that if I only—if we only could persuade people to change 

the way we do things, this is what I would like to see so that we 

could sustain this kind of effort? Because a recent study just indicated that—a study that we had led—that among developed countries, the United States is the one that leads in poverty and in the 

gap between the wealthy and the poor. And you are the ones that 

are helping people make it. 

But I am just wondering about my question, whether you have 

any thoughts about that or some vision of how it can be done better. 

Ms. KREUCHER. I would like to say that there are many community action agencies that are really leaders throughout the country 

that have done much work in developing for profit subsidiary corporations that have subsidized the work. I think it is important. 

Things have been changing dramatically in our universe in the last 

5 years. I think there is much more fee-for-service-type work. There 

is much more entrepreneurial kinds of activity. 


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I will give you an example. One of the programs we run is home 

weatherization and energy. There is a lot of time and energy being 

spent right now in talking about how we can move forward with 

renewable energies, how we can make low- and moderate-income 

neighborhoods more sustainable with renewable energies. There is 

an amazing amount of entrepreneurial activity out there right now 

in working with families that are upper-income families that may 

be able to pay for some of these services that will help subsidize 

the work that we do for the lower-income families, which I think 

makes a lot of sense. 

There are also private investors out there, and I know California 

has a great project that is getting ready to start with Morgan Stanley, with solar roof panels, that is a wonderful example of really 

entrepreneurial work that is going to boost the property value of 

homes, make energy sustainable for low-income families and be 

doing it with private investment dollars that are recouping their 

investment basically from carbon tax credits and incentives from 

State and Federal Governments. 

So I think there are plenty of examples out there, and I think 

it is the wave of the future. 

Mr. HONDA. Taking it perhaps another step, if there are ways 

that moneys can be saved, perhaps through the technology, some 

of that money can be an income stream for public access funds for 

groups like yourself, so that when this technology works 24–7, is 

part of creating revenue 24–7, a portion of that should probably go 

into a particular fund. 

I was just wondering if that is something else that might work. 

Ms. MURRAY. Congressman, that is an excellent question. Two 

things to your point and your question is that an endowment 

fund—we are working so hard right now to raise the operational 

funds to keep our food bank going and to raise funds for our new 

kitchen, but the best process is to have an endowment fund so that 

when times get tough the endowment fund is producing revenue. 

Additionally, for non-profits, it is just so smart for any of us to 

try to find something that can provide recurring revenue. Paul 

Newman was one of the greatest examples I can think of, in that, 

for his foundation, he sold salad dressing. And there is something— 

I know in my arena of food banks there is something we can do 

to have recurring revenue coming in. 

So with the combination of endowments, a secure set of funds 

that produce revenue whether times are good or bad, and recurring 

revenue projects is what we are looking at doing. Thank you. 

Mr. HONDA. Thank you. 

Chairman OBEY. Thank you. 

Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Mr. Chair. Mr. Chair, I think there 

has been a lot of statistical information that was given in the introductory remarks by our three panelists, but quite often we refer to 

percent of poverty. Percentage of poverty, even to most Members 

of Congress, they could not translate that into what is an actual 

salary, income level for a family of one, two, three, or four. 

So, Mr. Chair, I think especially with the advantage that we 

have at times of having America view and listen in on these important conversations that we are having, I would ask the Chair if we 


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could maybe look at using numbers and dollars rather than percentages in the future to make the hearing more relevant in the 

information that is presented to people who might be listening. 

Just a suggestion. 

I have kind of three things, and I am going to be really brief: 

Pell Grants. Pell Grants, wonderful, fully support them. What we 

found in doing some research, though, quite often the Federal Government would increase Pell Grants and States would turn around 

and decrease their support of financial aid by the exact amount, because then it was a win-win for them. So if we were to increase 

Pell Grants, I would ask you if you think that there need to be 

strings attached; or if the States decrease their amount of financial 

aid by that amount, should they not be eligible for a Pell Grant increase in the future? Because if that is really to be an investment 

and increase from the Federal Government, an investment, then in 

my opinion it needs to truly be that, an investment. 

And then I would ask the other two panelists—and thank you so 

much for your testimony—when a child comes to school hungry, 

goes home hungry, is worried about the next meal, whether there 

is going to be a roof over their head, or whether they are going to 

see a doctor, or a sibling sees a doctor if someone at home is really, 

really sick, how successful should we expect that child to be at 

school? How accountable should we hold that school? How accountable should we hold ourselves as a community? 

I have heard, you know, the testimony about all the wonderful 

volunteers and needing to have more volunteers. But maybe if the 

two of you—and Doctor, you might have some personal stories to 

even share with us, because I am going to wrap up here so I can 

listen. 

I have been out visiting some food shelves and food banks, seen 

a lot of empty shelves, talked with a lot of staff, staff that has 

looked at maybe having to be laid off because of shortage of dollars 

coming in, volunteers who for years either helped with Christmas 

funds for the Toys for Tots-type of examples, drove for Meals for 

Wheels, stocked food shelves; they are now on the receiving end. 

Could you share with me a little more about what you are hearing and seeing out there—and without asking you to, personally, 

maybe have someone feel uncomfortable if they are listening to this 

testimony—some personal anecdotes you could share with the committee? 

Ms. MURRAY. Thank you, Congresswoman. First to your first 

item, I agree with using the dollar figures instead of the percentages. So to start with the BackPack program, the children that 

were in that school, their families have an income level of $20,000 

or less for a family of four. And that school has 100 percent of the 

children. But I agree that it is a better descriptive term. 

In terms of children and test scores and ability to learn, let me 

share with you one chickenpox story. So one of the children also 

that was at this school that I visited, the teacher said that when 

the child had chickenpox for 2 days and had to stay home from 

school there was no food at the home, and so the child reached out 

to the teacher and said, ‘‘Can I come back? I have no food. I need 

to come to school to get the meals.’’ 


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And so how accountable should we be holding people? It is tough. 

When parents are laid off, it is not a reason for it, but for some 

reason children get the brunt of what is going on in the economy. 

When a parent is suffering, the child is the innocent one that does 

not have the ability to get the food. 

So I think it is inherent on all of us, whether it is us representing our organizations or you in Congress or folks in our 

States to work on this together. It is that important. 

And what we have are some tests that are being done now by 

our university partner to show the results of what is happening 

when children have a consistent supply of food. And what we think 

will happen is, we think that it will show that test scores will go 

up, that attendance will be better, that there will be less violence 

in the schools, and that all the bad factors will go down. 

Just one quick example to keep my story short is, we recently 

had a volunteer session with some executives from MGM Mirage, 

and we always invite some of our clients to come in and just join 

in together because we are all in this together. Two of the clients 

that came in were from homeless teen shelters, and they spoke 

about what they are seeing. So one beautiful 17-year-old girl said, 

‘‘Well, my mother was laid off. There were five kids, I was the oldest, so she asked me to leave.’’ 

The other girl that was with her to provide testimony, just because I like to have our volunteers and our community leaders understand who is getting the food we provide; the other young 

woman said—I asked her what her biggest challenge was, and she 

said it is the anger. She said, ‘‘My father also just left me and 

abandoned me. We are angry, and we go to school or we go into 

our lives and we have so much anger that we have to control.’’ 

So what I am looking at is just a single focus of food. If I can 

make sure that we are providing that one basic element of food and 

we can eliminate that from what people are worrying about, then 

social services and education will be so much better if kids have 

food. 

So it is a huge challenge. And, again, the only way I know that 

we are going to come through this is if all of us are in it together 

at a local level, at a State level and a Federal level. The problem 

is so severe that if all three entities are not in it together, I worry 

what will happen to the kids if we do not get this under control. 

Thank you. 

Dr. BAUM. I will address that Pell Grant question. 

First of all, there are 50 States with 50 different State grant policies. And in most of them, certainly getting a higher Pell Grant 

does not diminish the State grant that you will get. 

We have seen State grant funds for students rising very rapidly 

over time. There is a problem that an increasing portion of those 

dollars are going to students who do not have financial need. And 

I think that is a very big issue, because right now there are—you 

know, everybody is struggling, but there are some people who really cannot afford to pay and others who use that money, extra 

money, for other purposes and would go to college anyway. 

In States that have need-based State grant aid, the focus is the 

people who cannot afford to pay. 


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I do think that the Federal Government has a role in providing 

incentives for States. I would not attach strings to Pell Grants; that 

would complicate the program and make it problematic. The Pell 

Grants have to be for students. 

However, there is a small, federally funded LEAP program that 

provides matching funds to States for need-based grants. That has 

over time deteriorated because there is hardly any funding. I think 

it is totally appropriate for the Federal Government to provide 

matching funds to States for need-based aid where they provide the 

incentive for the States to give the money to students who really 

need it, and there is, of course, considerable overlap between the 

Pell Grant recipients and recipients of other need-based grants. 

Many States do provide aid farther-up-the-income-scale than Pell 

Grants. And we all know that there are families with incomes 

above $45- or $50,000 a year who do need some assistance. So I 

think it is not clear that the State grants have to match the Pell 

Grants, but certainly it is appropriate for the Federal Government 

to provide incentives for States to both maintain and increase their 

State grant funds to students and to make sure that there is an 

incentive for those funds to be appropriately targeted to the students who need them. 

Ms. MCCOLLUM. Thank you. 

Ms. KREUCHER. I will also mention numbers. When we look at 

a family of three, when we look at the Federal poverty level, that 

is $17,600. So, frequently, when we are enrolling children in our 

Head Start program, which would often be a single mom with two 

children, that is their income cap, $17,600. 

We talked earlier about encouraging changing eligibility requirements for many of the programs to what we call 200 percent of poverty level, in the business, that is really $35,200. And a family 

making $35,000 a year is generally still making some compromises 

in just getting through paying their basic needs. So what we call 

poverty really does not have a lot to do anymore with what it really 

takes to live in the community. 

I wanted to mention, kind of starting at your last question, which 

was about layoffs of people that were working in organizations; and 

I think when I mentioned that education is the primary pathway 

out of poverty, that certainly counts with the staff that we have as 

well. There was a time in the early days of Community Action and 

Head Start that probably 60 percent of our employees were former 

Head Start parents. The idea was, you brought people in from the 

neighborhood, taught them how to teach children, and then they 

were hired and became child educators. 

Well, now things are really different. Now the majority of our 

Head Start teachers have college degrees, many of them have ZA 

endorsements for teaching certificates. And sadly, but true, the 

first people when we have to cut back that get laid off, just as with 

any other organization, I think, are those who are the least skilled 

and have the least education, because requirements are changing 

everywhere. And I think that is a problem. 

We, as an organization, do a lot with providing tuition reimbursement and everything we can to support families in doing that, 

but it is a changing world with education as well. 


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As far as children—we run the Head Start program—it is devastating. We see so many families in tremendous need. 

We have been involved in research projects with the University 

of Michigan and Michigan State University about nutrition, weight 

gain, obesity, all kinds of things using Head Start children. And it 

has been very interesting that those are all very positive. And the 

structure of a Head Start classroom and the meal structure does 

seem to decrease, demonstrate a decrease in weight gain and obesity problems. A full-day classroom seems to have even more gains 

than a part-day classroom, because we know children for a longer 

period of time in the day are getting better nutrition. 

I am an advocate. I think, when I look at schools, I know that 

teachers and others are struggling with trying to reach academic 

requirements and dealing with tremendous needs in the family. I 

am a supporter of school-based health clinics, because I do think 

that that does help. 

When I was a kid, we had nurses and we had social workers, and 

the schools really had a lot of support. 

And I am not quite sure how we can help children. I do not want 

to tag the, you know, responsibility onto the school district. But at 

the same token, we do know that if children are not healthy and 

are not eating well and do not have appropriate brain development 

when they are really little, their odds of success are going to be 

much slimmer. 

Chairman OBEY. Thank you. 

Mr. Lewis, you wanted to comment? 

Mr. LEWIS. Thank you, Mr. Chairman. We are about to wrap this 

up, but I want all of you to know that we are very appreciative of 

the work that you are about. 

Ms. Kreucher, fabulous responsibility and job. 

Dr. Baum, we appreciate very much your efforts as well. 

And, Julie Murray, you will hear more from me somewhere out 

there. 

In the meantime, Mr. Chairman, I want them to know that we 

may have some questions for the record. And if the witness could 

try to be responsive and come forward in a timely fashion We 

would appreciate it. 

Mr. LEWIS. And further, just by way of our work here, because 

we are going to be receiving some kind of a stimulus package at 

some point, it may be that we will need additional witnesses and 

testimony. 

And so, Mr. Chairman, pursuant to section 5 of the committee 

rules and clause 2 of Rule XI of the Rules of the House, I am invoking the minority’s right to call witnesses selected by the minority 

with respect to the matter being discussed at this hearing. I have 

a letter signed by 25 of our 29 members invoking that right. 

[The information follows:] 


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Chairman OBEY. I thank the gentleman. 

Let me simply thank all three of you. You have provided spectacular testimony today as far as I am concerned, and I think you 

made quite clear that when we consider the kind of actions that 

should be taken to deal with the economic downturn that we are 

experiencing that it is not enough just to try to pump dollars into 

the economy for the purpose of raising consumer purchasing power; 

it is also necessary to deal with some of the human fallout that occurs. And I think you painted a very clear picture today of what 

some of that is. 

So thank you all very much. I appreciate it. 

The meeting is adjourned. 


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I N D E X 

Page 

Chairman Obey’s written statement ...................................................................... 3 

Dr. Baum’s written statement ................................................................................ 137 

Government Finance Officers Association’s statement ......................................... 51 

Governor Crist’s statement ..................................................................................... 109 

Governor Corzine’s written statement ................................................................... 26 

Governor Douglas’ written statement .................................................................... 15 

Governor Doyle’s written statement ...................................................................... 10 

Governor Patrick’s statement ................................................................................. 122 

Governor Perry’s statement .................................................................................... 37 

Governor Rell’s statement ....................................................................................... 118 

Governor Sanford’s statement ................................................................................ 128 

Governor-elect Perdue’s statement ......................................................................... 65 

Letter from Minority ............................................................................................... 118 

Mayor Nutter’s statement ....................................................................................... 78 

Mr. Farr’s statement ............................................................................................... 116 

Ms. Murray’s written statement ............................................................................. 151 

Ms. Kreucher’s written statement .......................................................................... 160 

Op-ed by Governors Perry and Sanford ................................................................. 35 

Questions for the Record submitted by Mr. Lewis ................................................ 194 

Questions for the Record submitted by Mr. Moran .............................................. 185 

Regional Bond Dealers Association’s statement ................................................... 52 

State of California delegation statement ............................................................... 95 

Town Manager of Cary, NC’s statement ................................................................ 69 

U.S. Conference of Mayors’ statement ................................................................... 85 

Æ 


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