Congress Passes Economic Stimulus Legislation

This past week, Congress passed a comprehensive economic stimulus package, the American Recovery and Reinvestment Act (H.R. 1), with a variety of proposals which affect the fiscal operations of both state and county governments. The President is expected to sign the bill, a $787 billion package of emergency spending and tax cuts, this week. The legislation includes funding provisions for infrastructure, wastewater treatment, clean water development and flood control management, as well as aid for community development, healthcare and local law enforcement, among several other county priorities. Generally, much of the authorized funding simply augments existing programs.

TAC will post further details regarding the stimulus package, its implementation and impact to Texas on our website. For additional information, please contact Laura Garcia at (800) 456-5974.

ECONOMIC STIMULUS HIGHLIGHTS (Based on information available at this time; compiled, in part, from information received from the National Association of Counties.)

Highways and Bridges: $27.5 billion. According to the National Association of Counties, fifty percent of the money will be distributed to the states based on states’ 2008 share of highway and bridge dollars and 50 percent using the Surface Transportation Program (STP) formula. The funds can be used on any STP-eligible project with no state or local match required. Under the legislation, 30 percent of the funds apportioned to each state (approximately $8 billion) must be suballocated within a state using the existing STP formula, which distributes funds to areas over 200,000 in population, under 200,000 and under 5000. Roughly $17.9 billion will be expended at the discretion of the states. Generally, 50 percent of the highway funds must be obligated within 120 days, with the remaining 50 percent obligated within one year. The $8 billion in suballocated funds must be obligated within one year. The bill also includes $1.5 billion for competitive grants to state and local governments for certain transportation projects; grants would range from about $20 million to $300 million.

Mass Transit: $8.4 billion. The transit formula program will receive $6.9 billion. The fixed guideway modernization program will receive $750 million for formula grants, and the new starts program will receive $750 million, with priority given to projects which are currently under construction or can be obligated within 150 days.

Aviation: $1.1 billion for airport improvement projects; all grants will be discretionary.

Clean Water State Revolving Fund: $4 billion to help communities upgrade wastewater treatment systems;

Drinking Water State Revolving Fund: $2 billion for drinking water infrastructure.

Projects that are construction-ready within one year of the bill’s enactment will receive priority funding consideration. States must use at least 50 percent of their allocation for forgiveness of principal, negative interest loans or grants.

Rural Water and Waste Disposal: $1.38 billion to support $3.8 billion in grants and loans to help communities fund drinking water and wastewater treatment systems; $968 million is allocated for grants and $2.82 billion is allocated for loans.

Corps of Engineers: $4.6 billion for environmental restoration, flood protection, hydropower, and navigation infrastructure.

Medicaid Aid to the States (Federal Medical Assistance Percentage): Approximately $87 billion to the states, increasing through the end of 2010 the share of Medicaid costs the federal government reimburses states, with additional relief tied to rates of unemployment. The increase in federal Medicaid dollars for Texas will help provide more comprehensive primary and preventive care for the indigent. The cost of treating the indigent eventually filters down to the local level through uncompensated care cost at safety net hospitals and other local facilities.

Health Information Technology: $19 billion, including $2 billion in discretionary grants and loans and $17 billion for investments and incentives through Medicare and Medicaid to promote widespread adoption and use of interoperable health information technology.

Child Support/Foster Care/Supplemental Nutrition Assistance Program (SNAP/Food Stamps): Extends states’ ability to use child support enforcement incentive funds to draw down federal funds through September 2010. The increase in the Federal Medical Assistance Percentage will also apply to foster care IV-E payments. $19.9 billion for SNAP; benefits are increased by 13.6 percent.

Community Development Block Grants (CDBG): $1 billion for community and economic development projects distributed through the existing formula from FY 2008. Priority for funding distribution will be given to projects that can award contracts based on bids within 120 days.

Community Services Block Grants: $1 billion for grants to local communities to support employment, food, housing, and healthcare efforts.

Neighborhood Stabilization Program: $2 billion to help communities purchase and rehabilitate foreclosed, vacant properties.

Rural Community Facilities: $130 million to support $1.2 billion in grants and loans to rural areas for critical community facilities, such as those for healthcare, education, fire and rescue, community centers, and libraries.

Homeless Assistance Emergency Shelter Grants: $1.5 billion for homeless prevention activities, which will be distributed to states and local governments via the emergency shelter grant formula.