Senate passes state aid bill

Reporting from Washington —  The Senate on Thursday approved a $26.1-billion state aid bill to save teachers’ jobs and extend healthcare for low-income people, but liberal House Democrats may have to swallow hard before accepting some of the offsetting cuts in social programs dear to their hearts.

And some more-conservative Democrats are expressing concern about such federal spending, even though the bill is fully paid for with offsets, because Republicans are making the rising federal deficit a major issue in the fall congressional elections.

Given the potential popular appeal of avoiding teacher layoffs on the eve of a new school year — and the anguished pleas for help from recession-battered states — House Speaker Nancy Pelosi (D- San Francisco) says she is confident the bill will be approved in her chamber when members return Tuesday from their August recess.

One main offset approved by the Senate to avoid adding to the deficit is an earlier-than-expected phaseout of an enhanced food stamp program that poorer households have been receiving under the 2009 stimulus program. The extra $80 in monthly aid would end in 2014.

About 40 million Americans receive food stamps.

In addition to the food stamps change, Pelosi had her own concerns about the Senate decision to cut $1.5 billion in renewable energy loan funds to help cover the costs of the package.

But Senate Majority Leader Harry Reid (D-Nev.) said Thursday that the Energy Department would be able to find money for the program elsewhere in its budget.

“This is a huge victory for American families,” Sen. Patty Murray (D-Wash.) said after Thursday’s vote. “We’re putting people back to work and making sure our kids are being taken care of.”

Several education and Parent Teacher Assn. representatives met with senators after the 61-39 vote to approve the bill. All Democrats and two Republicans, Sens. Susan Collins and Olympia J. Snowe of Maine, voted in favor.

“Thank you, senator!” said one of the education representatives as Reid welcomed them to an afternoon news conference.

The package would provide $16 billion to the states to extend funding for Medicaid, the state-federal healthcare program for low-income residents. Demand and costs for Medicaid services have risen sharply as a result of the recession and slow recovery.

The extra aid would be extended through June 2011.

Many states had already counted on the funding in their annual budgets, and governors, including California’s Arnold Schwarzenegger, pressed Congress to act, arguing that they would be exposed to even tougher budget cuts without help from Washington.

The Senate package also extends $10 billion to avoid 138,000 teacher layoffs nationwide. In California, the office of Assembly Speaker John Perez (D- Los Angeles) estimates that the state will receive about $1.2 billion, saving an estimated 13,110 jobs.

Tens of thousands of other public-sector employees, including firefighters and police officers, are also expected to remain on the job as extra funds flow to the states.

The bill is paid for by the food stamp cuts, closing foreign tax loopholes, eliminating advance filing of a low-income tax credit that President Obama had sought to end, and trims in various other government programs.

The hard-fought bill was met with stiff resistance from most Republicans even as it was poised to pass. Rep. John A. Boehner (R- Ohio), the House minority leader, said Democrats were “scampering back to Washington to push through more special-interest bailouts and job-killing tax hikes.”

lisa.mascaro@latimes.com