Obama Signs $787 Billion Stimulus Package

Government Relations Update - Economic Stimulus February 18, 2009

In what amounted to an early victory for the Obama Administration, both the House and Senate passed the conference report of the American Recovery and Reinvestment Act (ARRA) (H.R.1) on February 13. The $787.2 billion package of tax cuts and domestic spending was signed into law by President Obama yesterday.

The House was the first chamber to approve of the conference report and did so by a vote of 246-183. As was the case during the initial January 28 vote cast by the House on the legislation, not a single Republican voted in favor of the bill. Though the Republicans were joined by seven Democrats who refused to support the package, just as many Democrats who initially opposed the bill defected and voted to approve the conference report.

The Senate voted to approve the bill by a razor-thin 60-38 vote, garnering exactly the amount of votes it needed for passage. The roll call vote was extended for about five hours to accommodate Sen. Sherrod Brown (D-OH) who flew from Ohio to attend his mother’s memorial service to Washington to cast the 60^th vote in favor of the legislation. A united Democratic majority added three Republicans to their ranks—Senators Susan Collins (ME), Olympia Snowe (ME), and Arlen Specter (PA)—but needed Brown’s vote to pass the legislation as the ailing Sen. Edward Kennedy (D-MA) was not present.

Among a long list of priorities, the stimulus package includes about $300 billion for tax cuts, $120 billion for infrastructure and science, $14.2 billion for health, $105.9 billion for education and job training, and $37.5 billion for energy. Additionally, the legislation provides for a one-year patch of the Alternative Minimum Tax and a “Making Work Pay” tax credit amounting to $400 for individuals and $800 for couples.

After House passage of the legislation, Speaker Nancy Pelosi (D-CA) issued a press release stating that the Office of Management and Budget and the Treasury will quickly make funding available to agencies and briefly detailed how these funds will be distributed. Medicaid funding, the State Fiscal Stabilization fund, and the highway infrastructure investment components of the bill will be allocated by formula. Funding for the National Institutes of Health, the National Science foundation, and the broadband program will be distributed by competitive solicitations. Some programs, such as unemployment insurance, Pell grants, food stamps, and small business loans, will be allocated by individual need. The legislation includes some one time benefits, such as payments of $250 to Social Security, Veterans, and Supplemental Security Income beneficiaries. Other programs, such as national park construction, and environmental cleanup of nuclear waster sites will obtain funds through agency spending plans. The Speaker’s office also promoted the recovery.gov website that will allow the public to track funding provided by the legislation. We anticipate that, as time goes on, more detail as to how the funds will be distributed will become available.

A more comprehensive list of the details of the American Recovery and Reinvestment Act appears below:

Infrastructure Improvements

$7.2 billion for increased broadband access primarily to rural areas that are currently underserved. Priority will be given to projects that can begin immediately after enactment.
$2.75 billion for Department of Homeland Security initiatives.
- $1 billion for airport baggage and checkpoint security.
- $430 million for construction of border points of entry.
- $210 million for construction of fire stations.
- $300 million for port, transit, and rail security.
- $280 million for border security technology and communication.
- $240 million for the Coast Guard.
$4.6 billion for the Corps of Engineers for construction on projects that have already received federal funds.
$1.2 billion for VA hospital and medical facility construction and improvements.
$3.1 billion for repair, restoration, and improvement of public facilities.
$4.2 billion to modernize Department of Defense facilities.
$2.25 billion through HOME and the Low Income Housing Tax Credit program. This is an additional amount of funds provided to states according to the distribution formula to fill financing gaps in low-income housing tax credit projects. Funds received from this provision must be spent within three years of enactment.
$1 billion for the competitive Community Development Block Grant Program. This is an additional amount of funds to be allocated by formula. Priority will be given to capital projects that can award contracts within 120 days from allocation.
$1 billion for the Bureau of Reclamation

Transportation:

$27.5 billion for highway investments. These funds will be distributed by the formula established in the FY 2008 Consolidated Appropriations Act. Apportionment of funds must occur within 21 days of enactment. Priority will be given to projects that can be completed within three years and are located within “economically-distressed areas.” Fifty percent of the funds must be spent within 120 days of enactment and the remaining funds must be spent within a year of enactment. If funds are not spent within the given timeframe they will be subject to redistribution.
$1.5 billion for competitive grants to state and local governments for transportation improvements. This funding is intended for all surface transportation modes that will have a significant national, metropolitan, or regional impact. The Secretary of Transportation will grant competition criteria within 90 days of enactment of the Act. Priority will be given to projects that can be completed with 3 years of enactment. The federal share for this provision is 100 percent.
$1.3 billion for investment in air transportation. This funding includes $1.1 billion in discretionary grants to airports and $200 million in supplemental FAA funding. The Secretary of Transportation is required to award 50 percent of the grant funding with 120 days of enactment and the remaining 50 percent within one year.
$1.3 billion for Amtrak. $850 million is provided in discretionary capital grants and $450 million for capital security grants. Not more than 60 percent of the discretionary grants may go towards Northeast Corridor projects. No expenditure of these funds may subsidize the operating losses of Amtrak, and priority will go to projects that repair, rehabilitate, or upgrade railroad assets.
$8 billion for high speed rail. The American Recovery and Reinvestment Act provides $8 billion in discretionary grants to the states for high-speed rail corridor, intercity passenger rail service, and congestion mitigation projects. Most of this funding was added by White House Chief of Staff Rahm Emmanuel during closed door meetings. Interim guidance on grant terms, conditions, and procedures due from Secretary within 120 days of enactment until final regulations are issued. Federal share is up to 100 percent of the total cost.
$6.9 billion for transit capital assistance. This funding includes $5.5 billion for the Urbanized Area Formula Grants program, $690 million using the Other Than Urbanized Areas program (with a 2.5% set-aside for Indian reservations), and $690 million using the Growing States and High Density formula. The federal share for eligible projects will be up to 100 percent. The deadline for grantees to obligate funds is 180 days after apportionment for a minimum of 50 percent of their funds.
$750 million for fixed guideway infrastructure investment to be distributed by formula. Recipients must obligate at least 50% of the funds 180 days after enactment. The federal share is 100 percent and is subject to the use it or lose it provision.
$750 million for New Starts and Small Starts projects that are already in construction or in final design stages and could award contracts within 150 days.

Education:

$53.6 billion for the State Fiscal Stabilization Fund. Funds may be used in state fiscal years 2009, 2010, and 2011. A governor may obtain funds by submitting an application to the Secretary of Education.
- $39.5 billion to local school districts using existing formulas.
- $5 billion to states as bonus grants for meeting key performance measures.
- $8.8 billion to states for high priority needs such as public safety and other services.
$13 billion for Title I grants to local education entities.
$12.2 billion for special education.
$15.6 billion to increase the maximum Pell Grant by $500.
$3.95 billion for job training. This includes:
- Dislocated Worker Program: $1.25 billion for training and reemployment services for dislocated workers.
- Adult Program: $500 million to serve eligible low income adults.
- Youth Program: $1.2 billion for youth activities including summer jobs for youth. The eligibility age for youth recovery funds is extended to age 24.

Environmental Clean-Up/Clean Water:

$6 billion for cleanup of former weapons production and energy research sites.
$6 billion for drinking water infrastructure programs.
$1.2 billion for environmental cleanup programs.
$1.28 billion for loans and grants for water and waste disposal facilities in rural areas.

Science:

$1 billion for NASA.
$3 billion for the National Science Foundation.
$2 billion for the Office of Science at the Department of Energy.
$830 million for the National Oceanic and Atmospheric Administration. Of this, $600 million is allocated for satellite development and acquisitions. $170 million will address gaps in climate modeling and establish climate data.

Health:

$19 billion to promote the adoption of health information technology.
$1 billion for fighting preventable diseases.
$10 billion for biomedical research.
$1.1 billion for research on the relative effectiveness of health care services.

Energy:

$4.5 billion for repair of federal buildings.
$3.4 billion for fossil energy research and development. This includes $1 billion for fossil energy research and development programs; $800 million for Clean Coal Power Initiative Round III Funding Opportunity Announcement; $1.5 for a competitive grant program for industrial carbon capture and energy efficiency projects; $50 million for a competitive grant on site characterization activities in geologic formations; $20 million for geologic sequestration training and research and $10 million for program direction funding.
$11 billion for electric grid updates and modernization. Included in the $11 billion is $4.5 billion to implement programs authorized under title XIII of the Energy Independence and Security Act of 2007 and for other investments that modernize the electricity grid. The bill also makes several modifications to ESEA title XIII including: changing the Federal Smart Grid Investment Matching Grant Program from a 20% federal reimbursement to a 50% federal grant for qualifying investments and requiring recipients of grant funds to provide such information as the Secretary determines is necessary to create a clearinghouse of smart grid data.
$6.3 billion for energy efficiency and conservation grants. $3.2 billion is provided through Local Government Energy Efficiency Block Grants (EEBG) to help state and local governments make investments that make them more energy efficient and reduce carbon emissions. Of the $3.2 billion, $2.8 billion shall be distributed according to formula. The remaining $400 million shall be awarded on a competitive basis. In addition to the state share of the EEBG, $3.1 billion will be distributed through the State Energy Program through existing formulas.
$5 billion for the weatherization assistance program. These funds are to be distributed by state energy offices to local energy programs top low income family households.
$2.5 billion for renewable energy research.
$2 billion for grants to fund the manufacturing of advanced batteries including advanced lithium ion batteries, hybrid electrical systems, component manufacturers and software designers.
$6 billion for loan guarantees for renewable energy projects. This provision can fund next generation nuclear, clean coal, and renewable energy projects. No more than $500 million can be spent on biofuel projects.
$1 billion for energy efficiency programs. This includes $300 million to provide consumers with rebates to replace old appliances with energy efficient Energy Star products.

Public Housing:

$4 billion to the public housing capital fund. Of this, $3 billion is allocated to public housing authorities (PHAs) by formula for capital projects, and $1 billion to PHAs through competitive grants for priority investment projects. Priority will be given to capital projects that can award contracts based on bids within 120 days from when funds are made available to the PHAs. All funds must be spent within three years.
$2 billion for full-year payments to owners receiving Section 8 project-based rental assistance.
$2 billion for the redevelopment of abandoned and foreclosed homes.
$1.5 billion for homeless prevention activities, which will be sent out to states, cities and local governments through the emergency shelter grants formula.
$250 million is included for energy retrofitting and green investments in HUD-assisted housing projects.

Family and Worker Assistance:

$21 billion in COBRA premium assistance, providing a 65 percent subsidy for up to nine months for workers to retain health care coverage.
$19.9 billion for additional Supplemental Nutrition Assistance Program (SNAP).
$2 billion in Child Care Development Block Grants. These funds will provide child care services and will supplement, not supplant state general revenue funds for child care assistance.
$2.1 billion for Head Start & Early Head Start.
$4 billion for State and Local Law Enforcement which includes:
- Byrne Justice Assistance Grants: $2 billion in formula grants to help prevent, fight, and prosecute crime.
- Community Oriented Policing Services (COPS) grants – $1 billion in grants to support the hiring of additional law enforcement officers. The Act waives the 25 percent local match requirement and the $75,000 salary cap per officer.
- Byrne competitive grants: $225 million in competitive grants to support crime prevention, improve the administration of justice, provide services to victims of crime, and other activities.
- Violence Against Women grants: $225 million, of which $175 million is for formula grants and $50 million is to be used for transitional housing assistance.
- Victims Compensation: $100 million for grants to support state compensation and assistance programs for victims and survivors of crime.
- Rural Law Enforcement grants: $125 million in grants to combat drug-related crime in rural areas.
- Southwest border/Project Gunrunner: $40 million in competitive grants to provide assistance and equipment to local law enforcement along the Southern border or in High-Intensity Drug Trafficking Areas to combat narcotic activity. $10 million of these funds are to be transferred to the Bureau of Alcohol, Tobacco, Firearms, and Explosives for Project Gunrunner.
- Tribal Law Enforcement Assistance: $225 million to be distributed to American Indian and Alaska Native tribes.
- Internet Crimes Against Children: $50 million in grants to enhance investigative responses to predators using the Internet or other technology to sexually exploit children.
$555 million to expand the Department of Defense Homeowners Assistance Program (HAP).

Oversight Provisions:

Additional funding to the Government Accountability Office and the Inspectors General to audit and investigate ARRA spending.
Creation of a Recovery Act Accountability and Transparency Board to coordinate and conduct oversight of ARRA spending.
Creation of www.recovery.gov to post information regarding recovery spending, including grants, contracts, and all oversight activities.
Protections for state and local whistleblowers.

Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.