America Recovery and Investment Act
March 5, 2009
First, the good news: The American Recovery and Investment Act (ARRA), also known as the “Federal Stimulus Package,” was signed into law in February. It is estimated that the ARRA will bring in approximately $925-950 million in resources over the next two years. It is a highly complex package coming in roughly 300 different funding streams, each with its own terms and conditions. Some of the funds will require state or local funding matches while others have tight time constraints. Most have very specific project parameters.
On February 26, Stephen Klein from the Joint Fiscal Office presented preliminary estimates as to the dispersal of these funds. He cautioned us that these were truly preliminary. They are still reviewing the implications and strings attached to these funds. A percentage of matching dollars will likely be required to capture $240 million of these funds. He estimated the following:
1. $275-300 million will go to the Vermont General Fund
2. $290 million will go to project funding such as transportation, energy, broadband, upgrading.
3. $210 million to state, local and communities for schools, organizations, higher ed., research and businesses
4. $25 million to individuals in the form of Pell grants, food stamps, SSI etc.
Representatives from the Legislature and Administration have been meeting continuously in order to better understand contingencies, plan and coordinate best use of these monies once they are available.
More good news: Vermonters can also expect approximately $500 million in tax cuts for individuals and businesses. Some of these tax cuts include credits for first time homebuyers, credit for education expenses, and child tax credits. We can also expect energy-related provisions for people who improve the energy efficiency of homes, purchase plug-in vehicles or invest in renewable energy such as biomass or wind among others.
Now, the not-so-good news. By 2011, current projections indicate that we will face a deficit of more than $200 million if we stay on the same course. Projected revenues are simply outpaced by spending. Finance 101 reminds us that we must increase revenue, decrease spending, or both. But these times call for more than that. They also call for a clarification of principles and values that will guide us in restructuring and redesigning our state through hard times and into the future. Number shifting alone cannot do this.
When the Legislature returns, we will be addressing a 68-page bill that 1) establishes a state-wide guide to economic development, 2) promotes near-term economic development by getting the most out of ARRA and 3) promotes long-term economic development. This bill will be guided by principles developed after 2 ½ years of testimony and public hearings from businesses and people throughout the state. It is extensive.
Please join Joan Lenes and me at Bruegger’s Tuesday mornings at 7:30 or at Village Wine and Coffee most Monday afternoons at 4:30 or by appointment. I will be away the week of March 9th. KLWebb22@mac.com. I enjoy hearing from you.