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Upper Midwest states split on federal aid

Amount of money returned to Upper Midwest states from federal government.

ST. PAUL - Wisconsin Gov. Jim Doyle appeared before the U.S. House Transportation and Infrastructure Committee, asking that his state get its share of money from a federal economic recovery package.

Minnesota House Speaker Margaret Anderson Kelliher and Majority Leader Tony Sertich met privately with the state's congressional delegation in Washington and again in St. Paul with the same goal.

Wisconsin and Minnesota economies are hurting, so their leaders feel a need to pressure Congress to return their citizens more federal money than they receive now.

To the west, in North Dakota, the story is different. Policymakers there are concerned that the economy will affect them - although they now are considering sending rebates to residents - and want to get a fair shake from the economic package awaiting Senate action.

Another Upper Midwest state, South Dakota, is somewhere between the economic extremes, with one of its U.S. senators reporting feelings are mixed about an economic stimulus package.

But beyond the current debate, a new discussion is brewing about federal money being sent back to states.

Traditionally, North Dakota receives one of the country's best returns on their federal tax dollars. South Dakota is not far behind.

The on-going discussion will feature leaders from states like Minnesota and Wisconsin lobbying for a better return on their federal taxes.

"Everyone that I spoke to is well aware that that needs to be a goal," Kelliher said after her recent Washington trip. "We continue to reinforce the message."

Ratings compiled by the national Tax Foundation show a wide range of return for tax money in the Upper Midwest.

North Dakota gets $1.68 back for every $1 it sends to Washington, the foundation reports. That is the sixth best return.

South Dakota is not far behind, with a $1.53 return. Wisconsin comes in 39th, getting 86 cents back. Minnesota ranks No. 46, receiving a 72-cent return.

New Mexico and Mississippi are the top two states, each getting more than twice as much money back as they send to the feds. New Hampshire, Connecticut, Nevada and New Jersey follow Minnesota, but not by much.

To a certain extent, that breakdown of federal aid follows through in the currently debated economic stimulus package.

Democratic U.S. Reps. Ron Kind of western Wisconsin and Tim Walz of southern Minnesota said existing funding formulas are being used to split up the $800 billion-plus in the economic package.

"This has not been a situation where individual states or members of Congress have come forward" to lobby for more, Kelliher said. "It has been discouraged for (anyone) getting larger piece of the pie."

Added U.S. Sen. Amy Klobuchar, D-Minn.: "We are in the middle of an economic crisis and everyone is working together here."

However, Klobuchar added, formulas likely will be debated when the Senate takes up its economic package in coming days. "I think we will fight that out on the floor."

Whatever happens, Americans will not be united, she said. "We are going to make some tough decisions that people won't like."

Politicians on both sides of the issue are quick to point out that several reasons give states like North Dakota more money - military bases, large numbers of elderly citizens, lots of road miles compared to population, a large number of poor residents who need government assistance and senior members of Congress with have more pull than those with less seniority.

Pam Sharp, director of North Dakota's office of management and budget, added one more reason for her state getting an equal amount for the economic stimulus package: "Everyone in North Dakota pays the same federal taxes that everyone in every other state pays."

North Dakota is one of about five states with budget surpluses this year, but Sharp said it still could face problems.

With retirement funds and other investments losing money, "they are not feeling like spending money," Sharp said. "We could see a decrease in sales tax."

Still, she admitted, "we are feeling very fortunate."

For Walz, a second-term Democrat from Mankato, there also is the fact that small states need more help than those with more residents.

In North Dakota's case, Democratic Sens. Kent Conrad and Byron Dorgan and Rep. Earl Pomeroy have been around a long time. The trio takes price in getting money for their state.

"North Dakota has a very stable representation here ... that allows them to move up in seniority," Walz said. "I am not going to be critical of it, but it is probably one of the most valid points made against earmarking."

Walz and Kind are two congressmen who oppose the long-standing system of allowing federal lawmakers - especially those in office for years - to designate more projects for their states than others can.

"We think it is a new day," Walz said. "The folks with the most seniority have the most say. It is clear that there is going to be more of a needs-based assessment in some cases and a rewarding of performance."

Minnesota House Majority Leader Tony Sertich of Chisholm said the state's congressional members are doing well for their constituents.

"We will be treated very fairly," he said.

With U.S. Reps. Jim Oberstar leading the Transportation Committee and Collin Peterson the Agriculture Committee in Washington, Sertich said, Minnesotans need not worry about getting their fair share.

"You always want to do better, but there are a lot of factors and they cannot be changed overnight," Sertich said. "It's an on-going process."

Like North Dakota, Western Wisconsin is doing fairly well economically, Kind said.

"What we are focused on is that our residents are receiving fair treatment when it comes to funding formulas in Washington," the Democratic congressman said.

His district includes Wisconsin's fastest-growing county, where residents need less government help than elsewhere. That helps explain less government spending there. And then there is the fact that some states do a better job of spending for things such as health programs, Kind added.

"Sometimes these funding formulas are set on need," Kind said. "When you have a state like Wisconsin or Minnesota, for that matter ... we sometimes get penalized because our infrastructure isn't as bad or we get penalized because our Medicaid funding is at a higher level."

In South Dakota, U.S. Sen. Tim Johnson, a Democrat, said his state's opinions on the economic stimulus package are split.

South Dakota would not be helped immediately, Johnson said. "I don't know how you can call something stimulative when it takes years to happen."

Rep. Stephanie Herseth Sandlin, D-S.D., is of a split mind on the stimulus package.

"I am voting to support the House version today based on the inclusion of many provisions important to South Dakota and the nation, and to move the process along," she said Wednesday.

"We cannot be so insulated from what's going on, and I think it's clear in South Dakota, given that unemployment numbers are on the rise, given the concerns of what's happening in Pierre with the state's budget, given other predictors that are out there, I believe some action is necessary," she told reporters.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.