Arizona is poised to get approximately $4 billion from the federal economic recovery package passed by Congress this month, and much of the money will be controlled by the governor, not the Legislature, according to an analysis by legislative budget staff.

That money, mostly available for two years, could go a long way to help state lawmakers bridge what is expected to be a $3 billion budget deficit next year.

There is some flexibility in how to use the money, but there are many caveats. For one, the money not designed as permanent assistance and it comes with strings attached.

The money cannot be used to replace state funding in many cases. Some assistance requires matching money from the state. The use of some money is conditioned on "maintenance of efforts." That is, the state must maintain certain funding levels or thresholds in order to qualify to get the money.

Budget staff cautioned lawmakers that their estimate could be revised on clarification from the federal government. Many questions remain unanswered, including when and in what increments the money would become available.

But what is clear is that Gov. Jan Brewer will have to play a bigger role in crafting the fiscal 2010 budget than she did in fixing the fiscal 2009 deficit, where her input amounted to the restoration of about $18 million to certain health and welfare programs.

The assistance from the federal government is coursed through her office and not the Legislature, a source of frustration for some Republican lawmakers.

"Shame on Congress for continuing to ignore states' constitutions and the appropriations responsibility of legislatures," said Sen. Russell Pearce, the chairman of the Senate Appropriations Committee.

The debate at the Capitol in the next few weeks is likely to center on which money to accept.

"It is one-time money, and if you are just going to fill the hole with one-time money, then you just push the problem out," Pearce said. 

Pearce said he also refuses to "grow government."

But House Assistant Minority Leader Kyrsten Sinema said the federal package is good news and particularly critical for education. Staff said the money will be available for the fiscal 2009 budget.  

Because the federal assistance depends largely on gubernatorial discretion, Sinema called on Brewer to take an "active role" in crafting the budget. She also urged the governor to listen to agency officials in how to direct the money.

"I would say in the areas where she gets to make determinations about the funding allocations, first you look for opportunities to fill back in some holes that need to be filled so that we qualify for the fund," Sinema said. "No. 2, look for opportunities to maximize potential matches."

A potential flashpoint is already emerging.

The Department of Economic Security, whose current budget was recently reduced by $90 million, has decided to cut its child care funding by $24 million.

Under the stimulus package, $50 million is available to Arizona for child care. But there is a "maintenance of efforts" requirement, meaning the state would only get the money if that $24 million is somehow restored.

DES could rearrange its cuts so child care doesn't take a hit, but that means they would have to take the money from other areas.

"I'm not sure there are enough places to get that $24 million so that we can get all of the funding that we need," Sinema said, adding she doesn't think that the Legislature is inclined to give or restore $24 million to DES.

Two primary initiatives will provide the state with direct fiscal relief – Medicaid money and fiscal stabilization funding.

Here are the broad strokes of what Arizona will get from economic recovery plan:

* $1.6 billion in Medicaid money tied to a specific unemployment rate.

* $1 billion under the stabilization fund.

* $1.5 billion for the next two years in "secondary" assistance.

Under the package, the federal share of the Medicaid cost is increased to 75 percent from 66 percent for health care programs serving low-income families. This expectedly comes with requirements, such as the state cannot lower eligibility limits. Also, the level of federal aid is tied to the state's unemployment rate. That is, the higher the unemployment rate, the bigger the money that the state gets.

With a 6.9 unemployment rate, the state would get a total of about $1.6 billion in Medicaid money through fiscal year 2012.

There are also conditions to qualify for the stabilization fund, where the bulk of the $1 billion is expectedly dedicated to education.

The money can be used to backfill education reductions with the goal of reaching fiscal 2008 or fiscal 2009 levels. But state funding for education cannot fall below the 2006 levels. 

According to budget staff analysis, the current funding for universities and community colleges is only about $70 million above the 2006 levels. The universities' budget was reduced by $141.5 million in the fiscal year 2009 fix.

The appropriations chairmen's options include about $314 million in university reductions for fiscal 2010.