Fiscal Relief Begins

Fiscal Relief on Horizon for States

Treasury Department Starts Distribution Process

The process of distributing the first $10 billion in temporary fiscal relief to U.S. states, commonwealths and territories began today, as the U.S. Department of the Treasury sent letters to governors explaining what they must do to receive their share of the money. These funds were earmarked for state relief under the Jobs and Growth Tax Relief Reconciliation Act of 2003, which President Bush signed into law on May 28.

To "qualify" for part of the $10 billion, governors need to complete a one-page form certifying that states will use funds for the purposes stated in Section 401 of the act. These purposes include "providing essential governmental services" and "covering the costs of federal intergovernmental mandates." Once the U.S. treasury has received a state's completed certification form, funds will be electronically transferred to a state within 48 hours, Treasury Department officials have said.

Information on the other half of the states' fiscal relief -- a $10 billion temporary boost in Medicaid federal matching assistance payments (FMAP) -- will follow as soon as the U.S. Department of Health and Human Services has completed its explanatory materials.

To view a Treasury Department press release about distribution of the first $10 billion, visit http://www.treas.gov/press/releases/js453.htm. This page also includes links to Treasury Secretary John Snow's letter to governors, a chart indicating each state's share of the $10 billion, and the one-page certification form.

This critical provision is designed to help alleviate the severe fiscal stress that states are experiencing. It was included in the of the Jobs and Growth Tax Relief Reconciliation Act thanks, in part, to the leadership of the National Conference of State Legislatures', said NCSL President Sen. Angela Monson and President-elect Martin Stephens in a recent letter to legislative leaders.

"NCSL was key because it marshaled the arguments and political persuasiveness of hundreds of state legislators throughout the country," Monson and Stephens wrote. " ...Victories of this magnitude are difficult to achieve. NCSL's success with state fiscal relief ranks with the Unfunded Mandate Reform Act, welfare reform, the Brown Amendment and protecting tobacco settlement money among the organization's triumphs."

For more information, contact Molly Stauffer (molly.stauffer@ncls.org), Michael Bird (michael.bird@ncsl.org) or Joy Wilson (joy.wilson@ncsl.org).