Apr 01 2009

Graham Receives Response from OMB Director

WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) today made this statement after the Director of the Office of Management and Budget (OMB) Peter Orszag provided clarification on how the federal government will provide funding to states from the State Fiscal Stabilization Fund.

Graham had written to OMB on March 18 seeking clarification on whether the state legislature could request the $700 million in education funding if the governor refused to do so.  He also raised 10th Amendment constitutional concerns regarding the legal authority to bypass the governor of a state.

In their response, OMB made clear the governor – not the state legislature -- has the sole authority to submit an application for State Fiscal Stabilization funding:

“…for a State to access its allocation of the State Fiscal Stabilization Fund, the Governor must submit an application to the Secretary of Education, and there currently is no provision in the Recovery Act for a State legislature to make such an application in lieu of the Governor for a State’s allocation of the State Fiscal Stabilization Fund.”

Graham said:

“OMB’s opinion is in line with what I believe to be the correct interpretation of the law.  I appreciate their response as it will provide clarity and guidance to the state legislature and governor as they continue working on the state budget. 

“I voted against the stimulus package because it was too large, unfocused, created too much debt and too few jobs.  However, the choice for South Carolina now is whether to accept the stabilization funding or see the money go to another state. 

“We can refuse to accept it, but we cannot refuse to pay it back.  Based on that dilemma, I believe it is in South Carolina’s best interests to apply for these funds.  They will do some good. 

“The letter did not address my constitutional concerns which I think are real and will not be fixed by a mere change in the statute.  Regardless of one’s opinion about the provision’s constitutionality, the Congress will not be able to fix this problem by Friday and allow the state legislature to apply for the funding.  Also, it is unlikely other states would want to pass a legislative fix that would assist South Carolina.  By doing nothing, other states increase the chances they will receive a portion of the funding originally directed to our state. 

“The Governor has legitimate concerns about our state’s long-term debt and the burden we are passing along to future generations.  The legislature has equally legitimate concerns about the impact the deep recession is having on our state, which is second in the nation in unemployment, and how further budget cuts will affect education. 

“Time is of the essence and I am hopeful the governor and legislature can find a compromise which addresses the needs of both current and future generations of South Carolinians.  It is my hope a win-win solution which addresses our state’s needs today while building a solid foundation for future generations can be achieved.”


Click here for a copy of OMB Director Peter Orszag's letter.