White House on rescue: How we're doing

More than $88 billion has been made available, while $28.5 billion has been spent. Critics, however, say it's not fast enough as states suffer from revenue drops.

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By Tami Luhby, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- The Obama administration, issuing its first progress report on the $787 billion stimulus program, said Wednesday that $88 billion has been made available and that it's ahead of schedule in implementing most initiatives.

Of the $88 billion, some $28.5 billion has been actually spent with nearly $16 billion going for Medicaid payments to the states, according to the report. The administration has also enacted tax cuts under the Making Work Pay program and begun mailing $250 payments to 54 million senior citizens.

Critics, however, say the money is not being spent fast enough to help arrest the economy's slide. States are now waging yet another round of battles with their budgets after April tax revenues came in under estimates.

House Republicans, meanwhile, latched onto a report that stimulus funds will be used to repave an alternate runway at a little-used airport in an influential Democratic congressman's district.

"The Democrats' trillion-dollar stimulus spending bill was intended to create more jobs immediately, but it has quickly become the latest example of Washington's arrogance," said John Boehner, R-Ohio, in a statement.

Stimulus progress

The Obama administration's report, which will be followed by similar quarterly updates, touted the stimulus money flowing to the states to bolster education. Thirteen states have been approved to receive money under the state fiscal stabilization initiative that's designed to maintain education spending levels and prevent the loss of teachers' jobs.

The report also cited various news articles detailing the impact of stimulus spending. For instance, a Chicago window factory that made headlines last year when laid-off workers occupied the building is rehiring some people to make energy-efficient windows. Pennsylvania expects to get $4.5 million to pay for meal programs for senior citizens. And three counties in South Carolina plan to use $4.7 million to retrain the jobless and employ low-income youth.

The administration repeated its estimate that 150,000 jobs have been created or saved so far, and another 600,000 will be created or saved in the next 100 days as billions more dollars in contracts and grants are awarded.

"The act is now creating jobs in all 50 states," a senior administration official said. "People who are out of work or at risk of losing their jobs are experiencing and will continue more so to experience the benefits of this act across the country."

Trouble ahead

As the economy continues to weaken, states are contending with new yawning budget shortfalls.

Overall tax collections fell 12.6% in the first quarter, according to a new Rockefeller Institute of Government report. And the situation likely grew worse in April as personal income tax revenue plummeted. Several states are already having to tap into reserve funds to balance their budgets before their fiscal years end on June 30.

"Deeper revenue shortfalls and more budget adjustments are likely on the way for at least the next two quarters of this year," said Institute Senior Policy Analyst Lucy Dadayan.

New budget gaps of $59 billion have opened up in at least 42 states plus the District of Columbia, according to a Center on Budget and Policy Priorities report released Wednesday. This equals about 9% of state budgets. These gaps are in addition to the $48 billion cummulative shortfall states faced during the current fiscal year.

While the federal government has made billions available to the states, they have yet to claim much of it. Of the nearly $13 billion in state fiscal stabilization funds available, only $244 million has been spent, for instance.

The delay stems in part from states having to apply for the funds or receive applications and bids for projects.

Also, some cash-strapped state governments are finding they don't have the manpower needed to implement the stimulus programs. Responding to state's pleas for assistance, the White House Wednesday issued a new guidance allowing states to receive funds to cover administrative costs more quickly.

Asked about the states' worsening fiscal health, a senior administration official said the White House knew that the states would continue to struggle.

"The Recovery Act was never intended to fully offset state budget declines," the official said. "It certainly was intended and will, with expenditures of well over $100 billion going to states through the stabilization fund, offset a significant chunk of those loses. These cuts would be a lot deeper and those budget gaps would be a lot wider in the absence of the plan." To top of page

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