South Carolina Governor Sanford Blinks On Stimulus Funds

By James Rosen

WASHINGTON — "We are pleased with reports that Governor Sanford will join the other 49 governors – Democrats and Republicans – in filing a certification to accept Recovery Act money," said Kenneth Baer, a spokesman for White House budget director Peter Orszag.     

"The Recovery Act will create or save 3.5 million jobs [nationwide], and we do not want to see the citizens of any state denied the help that it can provide,"

Sen. Hugh Leatherman, a Florence Republican and chairman of the S.C. Senate Finance Committee, reiterated Thursday that the state lacks the money to offset stimulus funding with debt payments from other parts of the budget."There should be no confusion," Leatherman said. "Given the current condition of our revenue collections, programs will be slashed, reductions in forces will occur and services that our citizens have previously enjoyed will no longer be offered."

Gov. Mark Sanford today will comply with a crucial stimulus deadline and become the last governor in the nation to seek millions of dollars in federal economic recovery funds for his state, aides said late Thursday.

Sanford will continue contesting $700 million in education and law enforcement money for South Carolina, but his 11th-hour move to meet today’s midnight deadline buys time for schools that are fearing mass teacher layoffs and SLED director Reggie Lloyd’s warnings of draconian cuts.

Sanford’s monthlong fight over stimulus money placed South Carolina in the national spotlight and put him at loggerheads with President Obama.

"Tomorrow the governor is going to send the [Section] 1607 certification for everything except the stabilization funds," Sanford’s spokesman, Joel Sawyer, said Thursday evening. "The governor will apply for that [additional] money if the General Assembly is willing to compromise and pay down some debt with it."

Obama has twice rejected Sanford’s written requests to use $700 million in State Fiscal Stabilization Fund money to pay off state government debt instead of its stated use to help school districts retain teachers and modernize old schools or build new ones.

White House officials confirmed for the first time Thursday that a 45-day deadline in the $787 billion stimulus bill, which Obama signed into law Feb. 17, applies only to governors’ initial requests for the money – and not to states’ formal application for it.

S.C. political leaders in Columbia and Washington had thought that midnight tonight was the deadline for actually claiming the $700 million in disputed funds.

Obama aides cheered Sanford’s decision to protect most of $8 billion in stimulus funds slated for South Carolina.

"We are pleased with reports that Governor Sanford will join the other 49 governors – Democrats and Republicans – in filing a certification to accept Recovery Act money," said Kenneth Baer, a spokesman for White House budget director Peter Orszag.

"The Recovery Act will create or save 3.5 million jobs [nationwide], and we do not want to see the citizens of any state denied the help that it can provide," Baer said.

Obama has claimed that the stimulus package will create or preserve 50,000 jobs in South Carolina, whose 11.4 percent unemployment rate is the nation’s second highest.

Sanford will likely continue to tussle with General Assembly leaders from his own Republican Party over his insistence that at least some of the disputed $700 million pay off debt, despite $1.1 billion in state budget cuts already imposed this year because of revenue shortfalls.

Sen. Hugh Leatherman, a Florence Republican and chairman of the S.C. Senate Finance Committee, reiterated Thursday that the state lacks the money to offset stimulus funding with debt payments from other parts of the budget.

"There should be no confusion," Leatherman said. "Given the current condition of our revenue collections, programs will be slashed, reductions in forces will occur and services that our citizens have previously enjoyed will no longer be offered."

Sanford, though, and state Senate allies accused Leatherman and other legislators of deliberately distorting state budget figures to build their case for accepting the $700 million in stimulus money.

Sanford said Senate budget writers left out $578 million in other stimulus-related funding that the House included in its spending plan.

"We can build a responsible budget," Sanford said. "It is important as we go through this budget-setting process that we not go out and scare people as a way of strengthening one’s hand."

Leatherman denied the charge.

Sanford’s expected certification today is an implicit acknowledgement that he had erroneously claimed for weeks control over only the $700 million in education funds, not over the entire $8 billion package.

In fact, Sanford’s failure to certify – request – the stimulus funds by midnight tonight would have imperiled all $8 billion reserved for his state.

The stimulus package, an ambitious bid by Obama to jolt the economy, provides $8 billion to South Carolina for Medicaid payments, road and bridge repairs and construction, unemployment benefits, police, tax cuts and a host of other needs.

"Does Governor Sanford intend to meet the minimal prerequisite certification requirement in order to reserve the right for the state to seek funds in the future?" a statement from House Majority Whip Jim Clyburn asked. "Or will he put all economic stimulus funding in jeopardy?"

Sanford’s application would prime the stimulus spigot, but even if Sanford and the legislative leaders can reach a compromise, it’s uncertain how any of the $700 million could be used to pay down state debt