The stimulus package is expected to include US$80 billion to US$100 billion in additional funding to localities and states for Medicaid, the federal health care funding programme for the poor, the elderly and the disabled, Mr Schumer said in a statement released on Monday.

The package will also include money for infrastructure projects, according to the statement.

'New York's (Medicaid) matching rate could be temporarily increased by approximately 10 per cent - resulting in at least US$5 billion a year,' said Mr Schumer, a Democrat. 'This money would be injected directly into the state coffers and could help defray budget cuts and future tax hikes.'

New York is facing a record US$15.4 billion deficit over the next 15 months.

Congress is mulling two different approaches to the Medicaid issue, an across-the-board increase for all states or a tiered approach. In either scenario, New York stands to benefit, said Mr Schumer.

The senator is working with Mr Obama's transition team to work out the details of the stimulus package.

'There is an overwhelming consensus that we should give aid to states and localities,' Mr Schumer later told a news conference. 'The reason for it is very simple. For the federal government to be pumping money into the economy to reduce the severity of the recession, while the states are taking money out of the economy by either laying people off or raising taxes, simply makes no sense. This would be like robbing Peter to pay Paul.'

The New York Metropolitan Transportation Authority, which is also grappling with a record deficit of about US$1.2 billion, is expected to benefit from hundreds of millions of dollars in emergency funding for maintenance and upgrades, Mr Schumer said.

The senator and US Representative Jerrold Nadler, a New York City Democrat, are pushing for at least US$20 billion in new funding to be devoted to national mass transit systems.

That would allow the MTA to revive bus and subway projects that have been delayed or cancelled as the authority has cut back on its US$28 billion capital programme.

The MTA board earlier this month approved a 'doomsday' budget that would impose sharply higher fares and severe service cuts on New Yorkers unless the state or federal government intervenes.

At least 43 states are facing budget deficits for fiscal 2009 and 2010 that together total US$140 billion, according to Families USA, a consumer healthcare advocacy group. -- REUTERS