States Ponder: What Happens When The Money Stops?

LOS ANGELES (AP) — As gridlocked Washington edges toward default, states staggering out of the last recession are preparing for the worst: The federal piggy-bank that helps them pay for health care, jobless benefits, road building and schools could run out of cash.

In Kansas, Gov. Sam Brownback is warning that his state might not be able to fully cover potential shortfalls. Massachusetts is preparing to replace $850 million in U.S. payments that could be derailed in August, while Oregon plans to free up a cache of money if Washington stops sending checks.

No one seems to know what funding could be cut, by how much or for how long. That would be determined in Washington if Congress fails to raise the government’s borrowing limit by Tuesday.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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