If States Fail to Use Stimulus Funds as Intended, Efforts to Strengthen Economy Could Be Undercut

Source: Iris J. Lav and Nicholas Johnson, Center on Budget and Policy Priorities, February 24, 2009

A few governors and legislative leaders have suggested that their states might not accept the full amount of fiscal relief in the new recovery legislation or might use the funds to finance tax cuts or build up reserves, rather than spend them as Congress intended. Such actions could weaken the new law’s impact, and possibly even prolong the recession, by reducing the amount of stimulus injected into the economy.

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