How will stimulus law affect us?
Published 8:02 am Friday, February 27, 2009
There has been plenty of talk about how $787 billion from the American Reinvestment and Recovery Act (ARRA) will affect the U.S. economy, but most people still are left with the question, “How will this money help me?”
We tackle those questions in several areas, including healthcare, education, economic development and government.
During his first prime-time speech as president Tuesday night, President Barack Obama laid out his hopes for an economic recovery. He also submitted his tax and spend plan on Thursday, which can be seen online at www.omb.gov.
State and Local Funding
ARRA funds will pump $144 billion into state and local relief and $111 billion into infrastructure and science.
In order for localities to receive funds coming from Virginia’s share of the stimulus, communities must submit requests via Gov. Tim Kaine’s stimulus Web site by March 6.
So far, Franklin has submitted the following requests:
n A new animal shelter: The current animal shelter facility was constructed in 1988 and has aged extensively. Previous inspections indicate the need for new flooring, new fencing and overall more space to house the animals. Expansion and renovations have caused the need to construct a new shelter. The city currently owns the property in which to house the new facility and is requesting funds for the construction project. Funds requested: $1,300,000.
n A new fire and rescue building: The Franklin Fire and Rescue building was constructed in 1979 and has evacuated twice due to flooding in downtown Franklin in the past 10 years. The location is located in the flood zone and at the very end of the run district. It is also located next to the CSX Railroad, which at times causes delays in response times, according to the city. Further, the building is not equipped to shelter all of the units used by the department, the city said. The city is requesting funds to construct a new building in a central location of Franklin along Armory Drive. This location is not in a flood zone, would not be hindered by the railroad and should enable faster response times during emergencies. Funds requested: $8,500,000.
n The Franklin Downtown Flooding Prevention Project (also known as the Main Street Project): Downtown Franklin has dealt with major flooding from the Blackwater River twice within seven years. Nearly 200 businesses and residents were affected. An engineer has developed a system of flood gates that will reduce the potential for flooding significantly, the city said. The flood gates would be installed at key entry points around the downtown area and would be incorporated into the existing storm water system. The engineer has been working the Army Corp of Engineers and the CSX & Norfolk Southern Railroads to gain the necessary permits. The approval of this project could potentially save millions of dollars in future flood cleanup, the city said. Funds requested: $1,000,000.
Mayor Jim Councill spoke about the selection of projects the city would request funding for at the last City Council meeting.
“We are trying to find projects that would be acceptable in our initial approach to the state for funding before we evaluate how many new jobs it might create,” said Councill.
“My biggest fear is that we get money to fund the projects and all the contracts come from somewhere out of town,” he said. “That would really hurt if somebody from Norfolk put in a lower bid.”
According to Erin Turner with the city manager’s office, several more project requests will be added to the Web site within the next few days.
More than 93,000 estimated jobs will be saved or created in the next two years for the State of Virginia, according to recovery.gov.
Russ Pace, director of public works, said, “I really don’t think the stimulus funds would do much in the way of creating jobs; at this point a lot of contractors are saying it would allow them to stay in business. I know we all hope to sustain a lot of them.”
ARRA has set aside $59 billion for health care.
Starting Wednesday, states were allowed to access the first two quarters of Federal Medical Assistance Percentage funding (FMAP) — the federal match for Medicaid.
Virginia will be eligible for $252,659,121 under ARRA.
FMAP funding helps pay for health care for the families hit hard by the economic crisis and some of the nation’s most vulnerable citizens. More than 49 million Americans rely on Medicaid for health care coverage and this funding could help 20 million more Americans get covered.
“This plan will also help ensure that you don’t need to make cuts to essential services Americans rely on now more than ever,” Obama told the nation’s governors in a meeting at the White House on Monday.
Southampton Memorial Hospital and East Pavilion have been facing severe cuts in Medicaid funding because of the state’s worst budget shortfall in years, David Fuller, the hospital’s CEO, wrote in a Tidewater News guest column on Feb. 15.
“Cuts of this magnitude could cripple health care access in communities for all of us,” he wrote.
Some of the ARRA money may stave off those cuts.
“We are very pleased that we have been able to avoid catastrophic reductions in this vital safety net health program,” Fuller said Thursday. “Instead of the possibility of a 50 percent of cost in reimbursements in Medicaid, we will experience a change from 75 percent of cost to 72 percent of cost when inflation is factored into the process.”
Fuller said the solution is short-term and should carry SMH into 2011.
“Rest assured that, at that time, we will be returning to this subject matter once again for a permanent solution,” he said.
First-time homebuyers who purchase a new home before Dec. 31 will be eligible for an $8,000 tax credit through ARRA.
Mortgage banker Drew Edwards of Southern Trust Mortgage Co. in Franklin said, “I think it’s definitely an incentive to buy, but I believe it would have been a better idea to give those first-time buyers the $8,000 for their down payment instead of having to wait and get it back at the end of the year.”
ARRA includes allocations for infrastructure and economic development, including $46 billion for transportation projects, $6.4 billion for clean and drinking water projects and $7 billion to bring broadband Internet service to underserved areas.
“I am not sure this federal funding should be called an ‘economic stimulus package,’” said John Smolak, president and CEO of Franklin Southampton Economic Development. “In my humble opinion, it is more of an ‘economic stabilization plan,’ trying to keep economic conditions from getting worse.”
Smolak said completing the broadband development through Franklin and Southampton County is vital to the area.
“I hope we get some of that money,” he said.
Smolak said it’s too early to tell exactly how the area will benefit, but if the funds do flow down from the governor and General Assembly, job creation may result.
“Development of new business parks, water and wastewater systems, road improvements and broadband fiber are the infrastructure we need to have in place right now so the private sector can create jobs as the economic climate improves in the future,” he said.
Smolak added there are two projects that could use immediate funding — a new wastewater treatment plant with connecting lines outside of Courtland and into the Turner site, a new industrial facility off General Thomas Highway.
“Those projects are shovel ready,” he said.
Fifty-three billion in education and training funds are expected to be spread over 50 states through ARRA. The bill includes $14 billion for elementary and secondary school construction and modernization.
This week, Southampton County Public Schools presented the first draft of its 2009-10 operating budget, after making more than $1.8 million in cuts.
How many those cuts will be restored with money from ARRA remains to be seen, but it appears the General Assembly is planning to devote around $357 million to K-12 education.
Del. Phillip Hamilton (R-93rd), one of the House of Delegates’ six budget conferees, told the Associated Press that there was a tentative agreement to apply $357 million to K-12. Southampton County Administrator Michael Johnson said he heard the same figure.
The school board said it faces a $1,863,315 decrease in state revenue, based on numbers presented by Gov. Tim Kaine on Dec. 17.
At a recent school board meeting, Franklin’s acting Superintendent Bev Rabil discussed the Virginia Department of Education’s response to the stimulus package.
Rabil said that the funding would only come once.
“The funds may not be enough to save all the support positions we are faced with cutting,” she said. Also she told the board that no new buildings would be authorized through these funds. Some on the board had expressed interest in using the funds help build a new high school.
Rabil told the board that the DOE had instructed schools to keep other contingency plans in mind.
“The letter said we should be very cautious if we plan on using these funds,” she said.
For citizens who decide to do a little home remodeling, there is a 30-percent tax credit of up to $1,500 for purchasing energy efficient windows, doors, furnaces and air conditioning. There also will be a rebate off the purchase of any new, energy-efficient appliances.
Sales tax is waived through Dec 31 for people who purchase a new car.
Blake Blythe, owner of Blake Ford in Franklin, said the initiative is something that has been tried before, and he was unsure about how it would impact local car dealers.
“It’s nothing new,” he said. “It’s just a version of an old deduction we used to have that had been taken away for some reason. I hope it does something, but I can’t say I’m for sure that it will.”