PHILADELPHIA, Pennsylvania (AFP) — Governors of more than 40 cash-strapped US states were Tuesday pressing president-elect Barack Obama for a hefty helping of his planned multi-billion dollar economic kick-start plan.
Obama, in only his second trip out of his home city of Chicago since his historic election triumph last month, was set to meet the state executives battling a combined forecast budget deficit of 200 billion dollars.
The request for billions of tax payer dollars comes amid dire predictions that state governments mired in a credit crunch sparked by the financial crisis will be forced to make huge cuts in social services.
On Monday, California Governor Arnold Schwarzenegger warned his vast state, which would be the world's sixth largest economy were it a nation, was "headed for a fiscal disaster" without immediate action.
State governors say they are victims of the recession, the existence of which was officially confirmed on Monday, as they are hit by falling tax revenues while being overwhelmed with requests for help from citizens.
They warn they will either have to slash services like medical care for the poor and education or raise taxes, a move which they argue could slow the recovery, unless they get help from the federal government.
Obama met informally with the governors in Philadelphia on Monday night, after flying in from Chicago where he named a heavy-hitting national security team, including Hillary Clinton as secretary of state.
He was due to make brief remarks to the meeting, alongside vice president elect Joseph Biden, before heading back to Chicago.
Pennsylvania Governor Ed Rendell, the chairman of the National Governors Association (NGA), said the government could channel billions of dollars from a stimulus plan into quick start infrastructure projects to boost the economy.
"I would not have convened this meeting if it was just going to be begging for help," Rendell told MSNBC, arguing that many states had been more fiscally prudent than debt-laden Wall Street firms blamed for igniting the crisis.
Obama and Democrats in Congress have pledged to pass a massive stimulus bill soon after he is inaugurated on January 20, to create 2.5 million jobs which some analysts estimate could cost up to 700 billion dollars.
Rendell said in Washington on Monday that governors had around 136 billion of infrastructure projects, like road building and bridge repair, ready to go, which could immediately put people to work and boost gross domestic product.
Vermont Governor Jim Douglas said states had already made cuts to services but needed to help to save the social safety net for people plunged into economic deprivation by the recession.
"The slowing economy is resulting in growing unemployment, increased demand for state services and significant declines in state revenues," he said.
"States are not just coming to Washington with our hands out," he said.
"We're taking action at the state level to reduce our levels of spending and to live within our means."
The NGA said that 20 states had so far, just four months into fiscal 2009 cut their budgets by a combined 7.6 billion dollars.
On Monday, Schwarzenegger said in Los Angeles that his state had a current year revenue shortfall of 11.2 billion dollars and we must implement an economic stimulus package to help retain and create jobs.
On the same day, the Dow Jones Industrial Average plunged 680 points after an economic panel declared that the United States has been in recession since December 2007.
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