MEDIA RELEASE: U.S. Senate approves vital state fiscal aid

Bill awaits House action on Tuesday

RALEIGH (AUGUST 5, 2010) – The U.S. Senate voted yesterday to extend critical fiscal aid to states and now the measure moves to the House for consideration as early as next Tuesday. 

“Senator Hagan and other supporters of this legislation should be commended for their vote to provide fiscal aid to states,” stated Edwin McLenaghan, Public Policy Analyst with the North Carolina Budget & Tax Center (a special project of the North Carolina Justice Center). “North Carolina’s economic recovery is still precarious. The first round of federal funding to states was critical for the protection of indispensable public functions—from schools and public safety to infrastructure and social supports.” 

North Carolina’s budget writers expected over $500 million in additional federal aid to cover Medicaid costs in their final budget. The US Senate voted to extend $343 million of the expected aid while also adding $300 million in funding to local school districts. The total federal aid of nearly $650 million is critical to keeping 4,500 North Carolina teachers in the classroom while helping to prevent further reductions in state services. North Carolina has already reduced its investment in state services by nearly 16 percent relative to funding levels in 2008-2009. As a result, many of the public structures—public schools, higher education, public safety, and health care--that support our economy have been hit hard.  

If passed by the US House next week, the impact of the additional federal funding will be a big boost to the state economy and save thousands of private-sector jobs. As Shannon Spillane of the Center on Budget and Policy Priorities explains, “State spending cuts are bad for the economy. When teachers and police officers get laid off, they don’t have money to spend at local shops. When states cancel contracts, those private-sector vendors have to lay off workers. It creates a ripple effect through the economy – a ripple effect that could put this fragile recovery at risk.” 

“On Tuesday, North Carolina’s delegation to the House has the opportunity to vote to support North Carolina’s recovery,” said McLenaghan. “Additional federal aid now will further strengthen the foundations of our economy and ensure North Carolinians can sustain a high quality of life.”  

For more information or to schedule interviews, contact: Edwin McLenaghan at 919-856-3192 ( or Alexandra Forter Sirota at 919-861-1468 (  

The NC Budget & Tax Center provides timely, accessible and credible analysis of state and local budget and tax issues with a special focus on the impact on low- and moderate-income North Carolinians.

The NC Justice Center is North Carolina's preeminent anti-poverty research and advoacy organization.