In his recent letter to Congress, President Obama indicated an urgent need for $48.9 billion in an emergency spending for state and local governments in order to address widespread public layoffs, primarily of teachers, and increases in state Medicare costs. However, with the pressure on to reduce the federal deficit, the Democratic leadership seems ready to insist that such new spending be offset by cuts in funding elsewhere – namely, from the stimulus funds in the American Recovery and Reinvestment Act of 2009 (ARRA).

Despite initial resistance from the Democrats to such measures, it is now a strong possibility that any unobligated funding under ARRA could be rescinded to pay for the new emergency spending. Approximately, $43.4 billion remains unobligated by agencies across the executive branch. From the Department of Transportation, $9.4 billion has yet to be legally obligated, which means this funding could potentially face the chopping block. This money includes $1.5 billion for TIGER discretionary surface transportation grants and $7.9 billion for high-speed and intercity passenger rail.