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GAO-04-736R 1 (2004-05-07)

handle is hein.gao/gaocrptaqgv0001 and id is 1 raw text is: SGAO Accountability * Integrity Reliability United States General Accounting Office Washington, DC 20548 May 7, 2004 The Honorable Don Nickles Chairman Committee on the Budget United States Senate Subject: Federal Assistance: Temporary State Fiscal Relief Dear Mr. Chairman: As part of the Jobs and Growth Tax Relief Reconciliation Act of 2003,' the federal government provided $10 billion in temporary fiscal relief payments to states, the District of Columbia, and the U.S. commonwealths and territories (herein referred to as states). Generally, use of these funds is unrestricted in nature; the act authorizes funds to be used to provide essential government services and to cover the costs ... of complying with any federal intergovernmental mandate. These funds were intended to provide antirecession fiscal stimulus to the national economy and to help close state budget shortfalls due to the recession that began in March 2001.2 According to the National Conference of State Legislatures (NCSL), in February 36 states reported facing budget shortfalls with a cumulative budget gap of about $25.7 billion. This report responds to your February 13, 2004, request and subsequent agreement with your office to provide information to help Congress assess the use of the temporary state fiscal relief payments. Specifically, we are reporting (1) what is known about the potential impacts of unrestricted fiscal relief on the fiscal behavior of states, (2) how the temporary fiscal relief payments were distributed among the states relative to their fiscal circumstances, and (3) how state budget officials report these funds were used. The temporary fiscal relief payments reviewed in this report were designed to provide assistance to help state and local governments address cyclical deficits prompted by the recent economic downturn. These payments were 'Pub. L. No. 108-27, Title VI, May 28, 2003. 'A recession begins just after the U.S. economy reaches a peak of activity and ends as the economy reaches its trough. The National Bureau of Economic Research identified the period of the recession from the peak to the trough month (March 2001-November 2001). 3 National Conference of State Legislatures, State Budget Update: February 2003. GAO-04-736R Temporary State Fiscal Relief

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