Gov. Riley at odds with stimulus law requirement - WSFA.com Montgomery Alabama news.

Gov. Riley at odds with stimulus law requirement

Governor Riley says Alabama's acceptance of the stimulus funding would ultimately raise taxes on small businesses. Governor Riley says Alabama's acceptance of the stimulus funding would ultimately raise taxes on small businesses.

MONTGOMERY, AL (WSFA) - Governor Bob Riley says he will not recommend a change in state law that is required for Alabama to receive $66 million in federal stimulus money.

The money is aimed at expanding unemployment compensation coverage, but Governor Riley says there is a problem with the plan he's not ready to go along with.

The federal stimulus law requires states to permanently change their laws to include unemployment benefits for many who don't normally qualify, namely part-time workers and those who've quit their jobs for a "compelling family reason". Those people would be covered by federal dollars as long as the stimulus money poured into Alabama, but once that money dries up the law requires Alabama to continue paying for the extra coverage.

"This provision would result in a tax increase on all Alabama employers, and potentially their employees, when the federal stimulus dollars vanish," Governor Riley's office said.

According to the Governor's office the $66 million allotted for Alabama would run out in about 4 years. Then, Alabama would have to raise taxes by more than $17 million per year to support the benefits expansion.

"Congress has tucked this job-killing tax increase inside the stimulus and that's something Alabama should not be forced by the federal government to accept, Governor Riley said. "I'm not going to recommend to legislators that they change state law in order for Alabama to receive this portion of the federal stimulus."

Alabama's governor isn't alone in questioning some of the stimulus money.

Republican governors Bobby Jindal of Louisiana and Haley Barbour of Mississippi are raising questions in their own states over whether to accept the money or not.

"Today in a meeting with the nation's governors, President Obama acknowledged our concerns over this issue are ‘legitimate'," Riley said, "so I'm hoping his administration will work with the states to change it."'

WSFA 12 News will continue to follow this story.

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