Governors appeal to Congress for economic aid

By Richard Cowan

WASHINGTON (Reuters) - As a severe downturn spreads through the U.S. economy, a trio of state governors on Thursday pleaded to Congress for emergency funds to avert further cuts in health, education and law enforcement spending.

The governors of New Jersey, Vermont and Wisconsin detailed the severe budget constraints their states face to the House of Representatives Appropriations Committee, which next month is expected to advance a major economic stimulus bill that will include money for roads, bridges and mass transit systems.

Last week, the National Governors Association told President-elect Barack Obama the states needed about $136 billion to help fix bridges, airports and other infrastructure.

A year-long recession has reduced state revenues while at the same time governors face growing demands to provide healthcare and other aid for the poor.

Altogether, states could suffer a $180 billion shortfall in revenues over the next two years, said Vermont Gov. James Douglas, a Republican who is NGA vice chairman.

"To compensate for the decline in revenue, we've had to cut through the fat and we're now dangerously close to cutting into the bone," said New Jersey Gov. Jon Corzine, a Democrat.

Corzine said this year and next, New Jersey will have to cut its budget by 12 percent to adhere to its requirement that it not engage in deficit spending. This comes as an additional 40,000 people have enrolled over the past five months in the state's Medicaid healthcare program for the poor, he said.

To help bridge the funding gap, "Our adjustments are going to be right out of the local support for law enforcement," Corzine warned.