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Economic stimulus package signed

By Legislative Affairs Staff

Agriculture and Rural Affairs |Community and Economic Development
Environment, Energy and Land Use |Finance and Intergovernmental AffairsHealth 
Human Services and Education  |Justice and Public SafetyHomeland Security  
Labor and Employment   |Public Lands|Telecommunications and Technology |Transportation

President Barack Obama signed the 1,027-page American Reinvestment and Recovery Act – the major economic stimulus package on Feb. 17.  As directed by the NACo Board of Directors, NACo supported many of the provisions in the legislation that will benefit counties across the country. 

The bill included a mix of tax reductions, and incentives and funding to reinvest in the nation’s ailing infrastructure, health care systems, the environment and many other aspects of daily life. 

Over the next few weeks, NACo will be working with the proper officials to detail the many implementation issues that will need to be addressed.  At NACo’s Legislative Conference, there will be meetings regarding implementation of the economic stimulus package.

Agriculture and Rural Affairs

Rural Development Provisions

Rural Water and Waste Disposal Program:  Provides $1.38 billion to support $3.78 billion in loans and grants for rural water and waste disposal projects.  Of this amount, $968 million is for grants and $2.82 billion is for direct loans. This funding level fulfills NACo’s request to completely fund the backlog of rural water and wastewater infrastructure projects at USDA and will assist hundreds of rural communities that have been waiting for this funding.

Rural Community Facilities Program:$130 million to support $1.23 billion in grants and loans to rural areas for critical community facilities, such as healthcare, education, fire and rescue, jails, day care, community centers and libraries. Of this amount, $63 million is for grants and $1.17 billion is for direct loans.

Rural Business Programs: $150 million to support $3.01 billion in rural business loans and grants.  The Guaranteed Business and Industry loan funding will translate into $2.99 billion in loans for rural businesses, while the Rural Business Enterprise Grant program is allotted $20 million and is available to public bodies to encourage the development of small and emerging private business enterprises.

Rural Housing:  USDA’s Rural Housing Insurance Fund will receive $200 million to support $11.47 billion in direct and guaranteed single family housing loans to help rural families and individuals buy homes during the credit crunch. Of this amount, $1 billion is for direct loans and $10.47 billion is for guaranteed loans.

Persistent Poverty Counties: The House-Senate conference agreement requires that at least 10 percent of USDA Rural Development funding (excluding the broadband program) be allocated for assistance in persistent poverty counties.  This is defined as any county that has had 20 percent or more of its population living in poverty over the past 30 years, as measured by the 1980, 1990 and 2000 decennial censuses.  NACo fought for inclusion of this provision that will benefit the nation’s 383 persistent poverty counties. 

Rural Broadband:  USDA’s Distance Learning, Telemedicine and Broadband Program will receive $2.5 billion.  The funding is for grants, loans and loan guarantees with 75 percent required to go to rural areas that lack sufficient broadband speed for economic development.  The bill also provides $4.7 billion to the Commerce Department’s National Telecommunications and Information Administration’s (NTIA) Technology Opportunities Program (TOP) for competitive grants to accelerate broadband deployment in unserved and underserved areas.

Loans for Beginning Farmers: $20.44 million for Direct Farm Operating Loans, which mostly help beginning farmers.

Rural Energy Programs: Funding for USDA’s recently authorized Rural Energy for America Program and bio-refinery assistance did not survive conference negotiations.

Watershed Infrastructure:USDA’s Natural Resource Conservation Service (NRCS) receives $290 million for the Watershed and Flood Prevention Operations Program and $50 million for the Watershed Rehabilitation Program.   Contact NRCS through your local USDA Service Center (http://offices.sc.egov.usda.gov/locator/app) to inquire about these programs.

To Access USDA Rural Development Funding,contact your USDA Rural Development state office.  To find contact information for your state office visit http://www.rurdev.usda.gov/recd_map.html.

Housing and Urban Development

The final agreement provides $1 billion for the Community Development Block Grants (CDBG) for community and economic development related projects to be distributed through existing formula from FY08.  Priority for distribution of funding will be given to projects that can award contracts based on bids within 120 days.  

The Neighborhood Stabilization Program (NSP) receives $2 billion to help states and localities ease the burden on communities due to the foreclosure crisis.  Funds will be awarded on a competitive basis to states, localities and nonprofits to help areas with the greatest number and percentage of foreclosures.  Fifty percent of funding must be obligated within two years and 100 percent within three years. The legislation also repeals program income requirements. 

HOME Investment Partnerships(HOME) is allotted $2.25 billion for state housing credit agencies to be distributed by formula from FY08.  Each state would award low-income housing tax credits based on a competitive bid process. 

Public Housing Capital Fundreceives $4 billion to enable local public housing agencies to complete building repair and construction projects in local communities.  Of this amount, $3 billion will be awarded through existing formulas and $1 billion will be released through a competitive process for projects improving energy efficiency.

Section 8 Project-Based Rental Assistancereceives $2 billion for full-year payment to owners receiving Section 8 project-based rental assistance and $250 million for grants or loans for energy retrofits and green investments.

Homeless Assistance Emergency Shelter grantsreceive $1.5 billion to prevent a surge in homelessness, provide short-term or medium-term rental assistance, housing relocation and stabilization services, and will distributed by formula.

Economic Development Assistanceprograms receive $150 million to address long-term economic distress in urban industrial cores and rural areas based on need and ability to create jobs.  EDA leverages $10 in private investments for $1 in federal funds. 

Competitive Grant Lead-Based Paint Abatement will receive $100 millionto be awarded to state and local governments and nonprofits to eliminate lead poisoning as a public health threat to children.

Regarding housing tax provisions, the bill provides up to an $8,000 tax credit to taxpayers purchasing homes after Jan. 1, 2009 with no repayment requirement.  The credit is available for home purchases up to Dec. 1, 2009.

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Energy Efficiency and Conservation Block Grant (EECBG) Programwas funded at $3.2 billion, however, only $2.8 billion is strictly dedicated to the EECBG formula created through the Energy Independence and Security Act of 2007 (42 U.S.C. 17151 et seq.).  The remaining $400 million will be awarded on a competitive grant basis, yet to be determined.  The purpose of the EECBG program is to help local governments reduce greenhouse gases and promote energy efficiency in their jurisdictions. 

The 2007 energy bill created the following formula for the EECBG program:  68 percent of the total appropriated funds will be given as grants to “eligible” units of local government; 28 percent will be allotted to the states; 2 percent to Indian tribes and 2 percent for competitive grants to non-eligible communities.  In county-speak, “eligible” units of county government are those over 200,000 in population and/or the 10 most populated counties in a state.

The EECBG program is under the auspices of the Department of Energy (DOE). While the guidelines for the EECBG program have not been published, the DOE has indicated the guidelines will be released shortly. 

Smart Grid – For electricity delivery and energy reliability, $4.5 billion was allotted to modernize the electric grid.  The funds will be used to enhance security protocols while ensuring a steady supply of energy.

Clean and Drinking Water State Revolving Funds– The Clean Water State Revolving Fund (CWSRF) was funded at $4 billion and the Drinking Water State Revolving Fund (DWSRF) was funded at $2 billion.  Notwithstanding the state’s priority list, priority for funds will be given to projects that are ready for construction within 12 months of enactment of this bill. 

The bill requires states to use at least50 percent of their allotted amount for forgiveness of principal, negative interest loans or grants.  Assuming that there are eligible projects, the bill specifies that 20 percent of funds appropriated shall be used for green infrastructure projects, water or energy efficiency improvements, or other similar environmentally friendly projects.

Army Corp of Engineers (Corps) – The Corps was funded at $4.6 billion.  Priority is given to projects that can be scheduled quickly, employ the most people and have the least risk.

Other Environmentally Related Programs– The brownfields program was funded at $100 million and the Superfund program at $600 million.  The Diesel Emission Reduction Act (DERA) grants program was funded at $300 million.  DERA is instrumental in helping local governments retrofit trucks, buses and heavy equipment with pollution control equipment.  The Defense Environmental Clean-up Program was funded at a little over $5.1 billion.

Clean Renewable Energy Bond (CREB) Limits – The bill authorizes $2.4 billion for Clean Energy Bonds that are used to finance renewable energy facility projects, such as wind, biomass, landfill gas, trash combustion, etc.  This is an increase of $1.6 billion over previous limits.  One-third of this money is allotted for qualifying projects for state local and tribal governments.

Energy Conservation Bond Limits– The bill allows for $3.2 billion of tax credit bonds for green community programs.  This is an increase of $2.4 billion.  The language also allows the bonds to be used to finance loans to individual homeowners for the purpose of energy efficiency retrofits to existing homes.

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One-Year Deferral of 3 Percent Withholding Requirement: In spite of the best efforts of local government associations and the business community, the final bill adopted a one-year deferral of the 3 percent withholding requirement.  It was hoped the conferees would follow the House lead and fully repeal this unfunded mandate.  As it now stands, the withholding provision will take effect on Jan. 1, 2012.  NACo will continue to seek repeal of the provision and will be filing comments in response to the IRS-proposed regulations concerning the withholding requirement.  Comments are due Thursday, March 5. 

Help for the Municipal Bond Market: The bill contains a number of provisions geared towards increasing investment in municipal bonds: 1) interest earned on private activity bonds will be excluded from the alternative minimum tax; 2) the small issuer limitation will be increased from $10 million to $30 million, which will permit small issuers to place their debt directly with community banks and 3) banks will be able to deduct 80 percent of the cost of buying and carrying tax-exempt bonds as long as their investment does not exceed 2 percent of the bank’s total assets.  All three of these provisions will be in effect for two years. 

New Funding Option: The bill contains a new taxable bond option - the Build America Bonds program - that allows issuers the option of issuing tax-credit bonds in lieu of tax-exempt bonds for governmental purposes.  The taxable bond option allows issuers to either receive a 35 percent federal government reimbursement of interest paid to investors or to provide investors a 35 percent tax credit. 

Census Gets Additional $1 Billion: The bill provides for an additional $1 billion for Periodic Censuses and Programs to help ensure adequate resources to conduct the upcoming 2010 Decennial Census.  The data collected from the census will be used for many purposes, including the annual distribution of $300 billion in federal funds to state, local and tribal governments.

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Health

House and Senate conferees approved $86.6 billion for an increase to the Medicaid federal medical assistance percentage (FMAP) for a 27-month period from Oct. 1, 2008 through Dec. 31, 2010.  This would include an across-the-board increase to all states of 6.2 percent and additional relief in the form of a decrease in the non-federal share based on the state’s unemployment rate. 

It is estimated that the agreement would provide about 65 percent of its spending via the hold-harmless and across-the-board increases, and about 35 percent via the unemployment-related increase. States will be required to pass the FMAP increase on to counties that must contribute to the non-federal share.

The agreement also raises states’ FY09 Disproportional Share Hospital (DSH) allotment by 2.5 percent and the FY10 allotment by 2.5 percent over the FY09 amount, including the increase, for a total of $460 million.

Conferees agreed to extend moratoria on the Medicaid regulations for targeted case management, provider taxes, and school-based administration and transportation services through June 30.  They also added a new moratorium on the rule for hospital outpatient services through June 30. 

The conference report includes a Sense of Congress that the Secretary of HHS should not promulgate the rules concerning payments to public providers, graduate medical education and rehabilitative services.

The plan to kick-start the use of electronic medical records was also agreed to and would cost about $19 billion: $17 billion for incentives for Medicare and Medicaid providers to implement Health Information Technology (HIT) and $2 billion for HIT grants and loans.  The legislation codifies the Office of the National Coordinator for Health Information Technology (ONCHIT) and establishes a process to develop standards by 2010 that would allow for secure nationwide electronic exchange of health information.

Two-billion would go immediately for funding HIT infrastructure, training, dissemination of best practices, telemedicine, inclusion of HIT in clinical education, and state grants to promote HIT. 

The Prevention and Wellness Fund would receive $1 billion under the agreement, including $650 million for prevention and wellness programs like the CDC’s Healthy Communities Program.  Health Resources and Services Administration (HRSA) is allotted $2 billion for community health centers and $500 million for health workforce development.  $1.1 billion is allotted for comparative effectiveness research.

Conferees agreed to provide a 60 percent premium subsidy for unemployed workers to maintain COBRA Continuation Coverage for nine months. The program will be administered by the Department of the Treasury and allow employers (or health plans if they administer COBRA benefits) to receive a credit against payroll taxes.  People with annual incomes above $125,000 (single) or $250,000 (couples) would not be eligible.

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The biggest change in human services funding is that the Temporary Assistance for Needy Families (TANF) block grant’s emergency fund is now $5 billion.  Originally, it was funded at $2 billon in the House and $3 billion in the Senate.  The funds are available for FY09-FY10.  The total amount that a state may receive is 50 percent of its annual TANF grant.  Originally the cap was 25 percent. 

The agreement also includes extending TANF supplemental grants that go to states with high population growth and low benefits through FY10.  Two other important TANF provisions include clarification that carryover funds can be used for any allowable TANF benefit or service and a temporary modification of the caseload reduction credit.

Child support, foster care, and the Supplemental Nutrition Assistance Program(SNAP, formerly food stamps) also fared very well.   The agreement extends states’ ability to use child support enforcement incentive funds to draw down federal funds through Sept. 30, 2010.  The FMAP increase, with the exception of the targeted increase, will also apply to foster care Title IV-E payments.  There is a temporary increase of 13.6 percent in SNAP benefits as well as $145 million in FY09 and $150 million in FY10 for increased state administrative costs.  The agreement also eases the SNAP work requirements for single adults through 2010.

The only proposed human service program increases that were not included in the final agreement were those for the Low Income Home Energy Assistance Program and the Social Services Block Grant. 

The Child Care Development Block Grant received $2 billion, Head Start $1 billion, Early Head Start $1.1 billion, and the Community Services Block Grant $1 billion.  Nutrition programs for the elderly also received a boost: $65 million for Older Americans Act congregate meals and $32 million for home-delivered meals.

One of the biggest changes in the education funding is there will be no line item for school construction.  That funding will not be under $53.6 billion.

State Fiscal Stabilization Fund:  Most of the state allocation, 81.8 percent, is dedicated to elementary, secondary and postsecondary education, and can also be used for early childhood education and services.  Governors may use up to 18.2 percent of their allocation for school construction, modernization and renovation.  Other education increases include $10 billion for Elementary and Secondary Education Title grants to local education agencies, and $11.7 billion for the Individuals with Disabilities Education Act state grants.

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The Byrne JAG formula grant program received $2 billion; Byrne Competitive Grants  is funded at $225 million. The COPS program received $1 billion for the hiring and rehiring of additional career law enforcement officers.  The bill waves the 25 percent local match and the $75,000 per officer cap.

Law enforcement in rural areasgot a $125 million boost to combat the persistent problems of drug-related crime in rural America. Funds will be available on a competitive basis and includes funding for the hiring of police officers and for community drug prevention and treatment programs

In other justice and public safety programs of interest to counties: Violence Against Women Programs  received $225 million; $50 million was allotted for Internet Crimes against Children initiatives; $40 million more for law enforcement along the Southwest border and in high intensity,  drug trafficking areas.

The Department of Justice will be required to submit a spending plan to Congress within 60 days of passage.

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The final version of the Economic Stimulus Package would provide roughly $610 million dollars in competitive grants to local governments.   Notably, the legislation proposes $150 million for public transportation and railroad security assistance, $150 million for Port Security Grants, and $100 million for FEMA’s Emergency Food and Shelter Program.  

The legislation also provides $210 million for FEMA’s Firefighter Assistance Grant Program for modifying, upgrading or constructing local fire stations.   Finally, the legislation removes the $5 million cap on FEMA’s Community Disaster Loan Program for eligible applicants who applied in 2008, and authorizes funding for redeveloping foreclosed and abandoned homes damaged or destroyed as a result of the 2005 hurricanes, severe flooding in the Midwest in 2008, and other natural disasters.

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The American Recovery and Reinvestment Act (H.R. 1) contains considerable boosts for job training programs. Under H.R.1, an additional $5.1 billion will be provided for existing workforce development and related programs administered by the Department of Labor. 

The new stimulus package would provide funding for a number of existing workforce development programs, including three state formula grant programs that provide funding for youth, adults, and dislocated workers— Title I-B of the WIA. Other programs authorized by the WIA would also receive funding.

WIA Title I Programs

• $2.9 billion for state job training grants:  to provide funding for state formula grants for adult, youth, and dislocated worker training and employment activities. Funds will be allocated through existing state grant formulas.
• $500 million for Adult Employment and Training:to be provided for adult employment and training activities. Funds will be allocated through existing state grant formulas.
• $1.2 billion for Youth Activities:to be for grants for youth activities, including summer employment. The age limit for eligible youth under this program is changed from 21 to 24.
• $1.25 billion for Dislocated Workers
• $750 million for high-growth and emerging industry sector grants:to provide worker training and placement in high-growth and emerging industries. Of the total proposed allotment, $500 million will be reserved for research, labor exchange and job training projects that prepare workers for energy efficiency and renewable energy industries. 
• $200 million for national emergency grants:to be used for grants to eligible entities to serve workers affected by major economic dislocations (i.e. plant closures or mass layoffs).
• $ 50 million for Youthbuild:to be used for funding Youthbuild activities.

Additional workforce development funding

• $120 million for the Community Service Employment for Older Americans program
• $250 million for JobCorps
• $400 million for State Employment Service Grants for state unemployment insurance and employment services operations, of which, $250 million will be allocated for reemployment services for UI claimants.
• $80 million for the enforcement of worker protection laws for the enforcement of worker protection laws, oversight and coordination activities.

Unemployment Insurance Benefits

• $36 billion for Unemployment Insurance Benefits: More than $36 billion will be allocated to provide unemployment insurance benefits, with $27 billion allotted to continue the current extended unemployment benefits program, and $9 billion to increase the current average unemployment insurance benefit.

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Public Lands

The American Recovery and Reinvestment Act includes funding for key public lands management agencies. Bureau of Land Management construction, land management and wildland fire was funded at $320 million. Fish and Wildlife Service resource management and construction was funded at $280 million. National Park Service operations and construction was funded at $750 million.

USGS surveys, investigations and research was funded at $140 million. USDA Forest Service capital improvement and maintenance received $650 million. USDA Forest Service wildland fire management programs were funded at $500 million. Bureau of Reclamation water project funding was listed at $1 billion. 

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Telecommunications and Technology

Broadband

The bill splits broadband grant funding between the National Telecommunications and Information Administration (NTIA —$4.7 billion) and Rural Utility Service (RUS—$2.5 billion).   After deductions for various funding requirements that won’t go to broadband grants and for administrative costs, the NTIA grant amount will probably be around $3.8 billion.

The NTIA grant program has very flexible criteria, giving the NTIA considerable leeway in determining grant award winners. It doesn’t define “unserved” and “underserved,” nor does it set minimum data transfer speed requirements. The former should help municipalities in suburban and perhaps even urbanized areas, while both the former and the latter may help incumbents. (Both public and private providers will be eligible.) All grants are to be awarded by Sept. 30, 2010. Net neutrality is required, as defined by NTIA in consultation with the FCC. 

The RUS program will focus on rural areas, and 75 percent of the funds must go to such areas that also lack sufficient access to broadband.  The program will also give priority to deployment of competitive broadband systems, which should help municipalities, but possibly hurt incumbent providers. There is some language about preference for "open" networks, but it is apparently much softer than the NTIA program net neutrality requirement.

Preference would be given to current and former RUS telephone loan recipients. On the other hand, no area receiving RUS funding under the program would be eligible for the NTIA fund program.

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Transportation

The stimulus bill provides $48.1 billion for transportation programs.  In most cases the legislation includes 100 percent funding with no match requirements, however there are “use it or lose it” provisions or time limits for spending the funds in most categories, and a number of oversight and transparency reporting requirements. 

Highways and Bridges

The bill provides $27.5 billion for highways and bridges. 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 for any STP-eligible project with no state or local match required. 

In a victory for NACo, the legislation requires that 30 percent of the funds apportioned to each state be sub-allocated within a state using the existing STP formula, which distributes funds to areas over 200,000 in population, under 200,000 and under 5,000.  This totals to about $8 billion.  These are the funds that, generally, county governments will have access to and in large metropolitan areas are programmed by the Metropolitan Planning Organization (MPO).  The House bill did not include this provision.  Additionally, 3 percent of each state’s share will be available to the Enhancement Program, which counties have often been able to use for their local projects.   This totals to about $800 million. 

There are several other set-asides, including $310 million for Indian reservation roads and $170 million national park roads, $60 million for the Forest Highway Program, $10 million for Refuge Roads, and $20 million for highway surface transportation and technology training.  The remaining $17.9 million will be spent at the discretion of the states. 

Generally, 50 percent of the highway funds must be obligated within 120 days and 50 percent within one year.  The $8 billion in funds sub-allocated have a year to be obligated.   

Competitive Grants for Surface Transportation

The bill includes $1.5 billion for new competitive/discretionary grants to state and local governments for transportation projects. Highways, bridges, transit, rail and ports are eligible.  Grants would be made in the $20 million to $300 million range and generally need to be completed in three years.  Funds must reflect an equitable geographic distribution and balance between addressing urban and rural needs.

Mass Transit

The bill provides $8.4 billion for mass transit, almost of which goes to local governments and all with a 100 percent federal share.  The transit formula program will receive $6.9 billion with 80 percent going to urbanized areas, 10 percent to rural areas and 10 percent to high growth and high density regions. 

Within this formula there is a setaside for tribal transit needs and $100 million for grants to transit agencies to reduce energy consumption and greenhouse gases.  The fixed guideway modernization program will distribute $750 million in formula grants. 

For both these formula programs, recipients will have 180 days after grant awards to obligate 50 percent of the money and two years after the award for the remaining 50 percent. The new-starts program will receive $750 million, and priority will be given to projects that are currently under construction or can be obligated within 150 days. 

Aviation

The bill provides $1.1 billion for the Airport Improvement Program (AIP), which provides grants to locally owned airports, with a 100 percent federal share.  Unlike the existing AIP program, the spending will be all discretionary rather than formula and must be applied for.  Fifty percent of the grants must be awarded within 120 days and the remaining 50 percent within one year.

Rail

The rail section of the bill provides for $9.3 billion in spending.  Amtrak would receive $850 million for capital projects with priority given to repair, rehabilitation and upgrading of rail infrastructure.  An additional $450 million is provided for security grants.  The largest rail funding is $8 billion for high-speed rail.  The secretary of transportation is given flexibility in allocating these funds with the goal of advancing the deployment of intercity high-speed rail service in the United States.  It is not clear how these funds are to be spent on upgrading existing rail service versus the development of new high speed rail routes. 

This is only a snapshot of all the provisions in the legislation, and it is too early to know how the funding will flow to county governments and when they can expect it.  NACo will continue to monitor circumstances and will keep members informed as new information is available.

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