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Summary of the Federal Economic Stimulus Package

Saturday, February 21, 2009

This is a partial summary of the federal economic stimulus package, known as the American Recovery and Reinvestment Act.  For more information, go to http://www.recovery.gov/.

AMERICAN RECOVERY AND REINVESTMENT ACT

$789 billion estimated cost:

• $227 billion will be sent directly to states.
• $326 billion is included in business and personal tax cuts.
• $216 billion will be divided between federal agencies and various competitive grant programs.

Recovery Act funds can be tracked at http://www.recovery.gov/ as agencies begin spending and reporting their expenditures.

EDUCATION

Fiscal Stabilization Fund for Education: $39.7 billion total

• Texas allocations: $3.1 billion
• Provides funding to local school districts to prevent budget cutbacks and layoffs, and provides for school modernization.

Title I Grants: $9.9 billion total

• Texas allocations: $950 million
• Title I grants fund academic support programs for disadvantaged children who are struggling to meet state education standards. 

Special Education- Parts B & C: $11.7 billion total

• Texas allocations: $1.2 billion
• These grants help states provide special education and related services to children with disabilities.

Pell Grants: $15.6 billion total

• Individual allocations: $500 increase for 2009-10 school year
• Combined with other recent increases in the program, the maximum per student Pell grant award is $5,350 per school year.

Central Texas allocations:

• Austin ISD: $41 million
• Round Rock ISD: $9 million
• Pflugerville ISD: $4.3 million
• Leander ISD: $3.9 million
• San Marcos ISD: $2.7 million

ENERGY AND ENVIRONMENT

Weatherization: $5 billion total

• Texas allocations: $236 million
• Grants help cover some of the costs of insulating low-income residences.

Clean Water and Drinking State Revolving Funds: $6 billion total

• Texas allocations: $342 million
• Provides two-thirds of funds to the Clean Water SRF which provides grants to states for wastewater treatment projects.  The Drinking SRF receives one-third of the funds for drinking water infrastructure projects.

Energy Tax Cuts:

• The legislation increases to 30% the tax credit for non-business energy property.
• It also removes the cap on the tax credit for residential wind, geothermal property and residential solar thermal property.

HEALTHCARE

Medicaid: $87 billion total

• Texas allocations: $5.5 billion
• Additional funds allow states to expand eligibility for Medicaid.  States with large unemployment increases get additional funds.

COBRA: $24.7 billion total

• Individual allocations: 65% of COBRA costs
• Individuals forced out of their job between 9/1/08 and 12/31/09 are eligible for a 65% federal subsidy (through their former employer) of the cost to maintain their health insurance through the program know as COBRA.

Child Care Development Block Grant: $2 billion total

• Texas allocations: $214 million
• Distributes funds to states through existing programs for child care services for low-income families

TRANSPORTATION

Highways: $27.5 billion total

• Texas allocations: $2.25 billion
• Central Texas allocations: $30 million
• Half of the state funds must be obligated within 120 days while the remainder and all locally controlled funds must be obligated within a year. The funds can be used for highway, major road, bicycle, pedestrian and trails projects, but cannot replace local or state funds already set aside for a project. 

Urban Transit: $5.9 billion total

• Texas allocations: $321 million
• Central Texas allocations: $30 million
• Contracts for half these funds must be signed within 180 days, the remainder to purchase buses and related equipment. 

TAX CUTS

Individuals and families:

• 95% of families will receive a tax cut.
• The bill includes a temporary increase in the earned income tax credit for families with three or more children.
• It includes an additional income tax credit up to $400 for individuals and $800 for spouses filing jointly for 2009 and 2010.
• It expands the refundable portion of the child tax credit eligibility through 2010.
• It extends the alternative minimum tax (AMT) patch for 2009.
• It allows a federal income tax deduction for state and local sales taxes paid on the purchase of new vehicles through 2009.
• It creates a one-time $250 payment to retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration, disabled veterans receiving benefits from the Department of Veterans Affairs, and Railroad Retirement beneficiaries.

Small businesses:

• The bill creates two new target groups for the Work Opportunity Tax Credit – unemployed veterans and “disconnected youth” who are hired in 2009 or 2010.
• It increases from 50% to 75% the exclusion from capital gains taxes for sales of small business stock.
• It extends the carry-back provision for net operating losses from two to five years.