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South Carolina's Governor Mark Sanford and some other Governors like Louisianna's Governor Bobby Jindal opposed federal economic stimulus money early on when the bill was still being passed around the Hill. Despite the fact that, like many other states, South Caroline is facing budget shortfalls and some belt tightening, Governor Sanford recognized how accepting cash now would mean even bigger budget problems down the road.
In an attempt to thwart this spat of federalism and state sovereignty, House Majority Whip Jim Clyburn inserted an amendment to the economic stimulus plan that gives state legislators the power to override state governors.
Now, Governor Sanford has become the first governor to formally reject the stimulus funds. In a letter to Congress and the President requesting a waiver, the governor outlined how funds would be put to better use paying down debt rather than starting new programs that would always require more funds, or by temporarily propping up some part of the budget and thereby mask holes that will still be there after the funds are gone. Accepting the stimulus money would mean wreck budgetary havoc and put off the tough decisions that every state needs to make. The Governor also explained that he would not be seeking the funds stipulated to expand unemployment benefits.
Governor Sanford's official press statement can be found here.