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Expert: Leaders Must Ensure Stimulus “Stimulates” MO Economy


Thursday, February 19, 2009   

St. Louis, MO – Gov. Nixon calls it a tremendous opportunity to jump-start economic growth and create new jobs. Missouri will receive $4.3 billion from the federal stimulus package President Obama signed into law this week. With the knowledge that this money will arrive to keep the state from a budget shortfall, lawmakers are now working to figure out how these funds can best stimulate Missouri's economy.

Ruth Ehresman, director of health and budget policy for the Missouri Budget Project, urges them to use it to assist lower-income residents, instead of giving tax breaks to people with higher incomes.

"Provisions that put money in the hands of low- or moderate-income Missourians are the best way to target the money, because those folks will go out and immediately spend it to meet their basic needs."

The package includes increased federal matching money for Missouri's Medicaid program and increased money for food stamps. Ehresman adds that spending money on these programs, as well as unemployment, is essential to creating economic stimulus.

"The money spent on state services generates more in economic activity than the dollar that's invested. It's important that people remember that."

Missouri also will receive stimulus money for education and construction. Some state leaders are concerned about spending stimulus dollars on programs that cannot be sustained after a couple of years.

While the stimulus money will be helpful, Ehresman warns that it won't solve the state's fundamental structural deficit.

"Certainly the economy in its downturn has had an impact on Missouri, but the economy is not the entire problem. We simply don't take in adequate revenue to fund basic services."

Ehresman advises policymakers to take this opportunity to evaluate the state's budget for the future.

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