States look for Obama to help in economic downturn

PHILADELPHIA (Reuters) - State governors preparing to meet President-elect Barack Obama will ask for $136 billion in infrastructure funds to stimulate the economy immediately, Pennsylvania's governor said on Monday.

States are also looking to the federal government to help pay for food stamps, jobless benefits and health care for the poor -- projects they cannot afford due to recession, said Ed Rendell, chairman of the National Governors Association.

Forty-five governors are expected to meet Obama in Philadelphia on Tuesday.

Unlike the federal government, states must balance their operating budgets but 43 states face deficits because of slumping tax receipts and higher welfare payments, Rendell told reporters.

He urged the incoming Obama administration and Congress to fund $136 billion in projects that are "ready to go" in the next six months. They include shoring up an estimated 73,000 structurally deficient bridges and repairing sewers.

Rendell argued such a program would strengthen a national economy whose jobless rate of 6.5 percent is the highest in 14 years. Every $1 billion spent on infrastructure generates 40,000 jobs, he said.

States face estimated budget shortfalls of $143 billion this year and next, said Joe Hackney, speaker of the North Carolina state House.

States also want federal help to temporarily increase Medicaid payments to the uninsured poor, extend unemployment benefits and temporarily increase funding for food stamps, a program that helps the poor buy food.

"The social service net that states provide is being threatened by the economic downturn," said Chuck Ardo, a Rendell spokesman who called the governor's comments a preview of the conversation governors will have with Obama.

National Governors Association vice chairman Gov. Jim Douglas of Vermont said he expects Obama to help states, largely through his promised stimulus package expected to be worth hundreds of billions of dollars.

"States are not just coming to Washington with their hands out," Douglas said. "Counter-cyclical spending by the federal government can accelerate the recovery."

(Editing by Daniel Trotta and Alan Elsner)