States Ignoring $5B in Stimulus Cash for Needy

Say they can't afford matching funds, despite benefits
By Nick McMaster,  Newser Staff
Posted Sep 8, 2009 6:05 PM CDT
Union Bank ATM   (Photo: Business Wire)

(Newser) – About half of US states are passing on a $5 billion pool of federal stimulus funds because of a requirement they put up 20% of the money, ProPublica reports. Only 27 states have applied for money under the program, which gives them wide discretion on how to distribute it—some have used it to create jobs, for instance, while others, like New York, give the cash directly to low-income recipients. 

With most states slashing budgets, officials don’t want to create new programs—analysts estimate that as much as $1 billion could be left unused when the program expires in September 2010. Many economists say their caution is shortsighted: payments to low-income families are a powerful economic stimulant because they spend quickly, and the prospect of states' receiving $4 for every $1 spent—especially when charities or corporations can contribute—should be too good to pass up.