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Will stimulus put us back on the gravy train?

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is that a light at the end of the tunnel? is that a light at the end of the tunnel?

Stimulus: What it will do, how it will work and how you can learn more

The feds are gonna help us... Otter’s not gonna take it... Of course he’ll take it... No, I don’t think he’s gonna do it... Doesn’t matter if he doesn’t, the legislature can take it... But JFAC has concerns... No, Otter finally said he’ll take it... But maybe not all of it.

While Montana’s Legislature is busy doling out federal stimulus dollars, Idaho’s Legislature is left waiting for reports from a specially appointed “stimulus executive committee,” plus the Joint Finance and Appropriation Committee’s legislative analyst’s review of the implications of accepting any money.

Montana’s Governor Brian Schweitzer said the Legislature can’t wait until the end to process federal stimulus money because construction projects need to start before the end of April, noting Montana’s short construction season.

“I want them to get a bill drafted and give the authority to start moving forward sooner rather than later,” Schweitzer said. “We have a short construction season, a short outdoor construction season. We don’t want to lose any days.”

Although Idaho’s construction season is just as short, and Governor Otter is so supportive of new transportation projects he has proposed increasing various taxes and fees by $174 million to fund them, he’s not so sure that accepting the almost $1 billion available is such a good thing for Idaho. He told the Idaho Statesman “I think there’s parts of the stimulus package that are going to do exactly what was intended as far as putting people back to work or saving jobs,” but added he’s “suspicious” of the entire plan and, like a few other Republican governors, is leery of any monies for ongoing items that might create a drain on Idaho’s budget when the federal funding is gone. In particular, Otter has suggested he might not accept money to provide expanded unemployment benefits.

Governor Schweitzer, whose state stands to receive a little more than $620 million in stimulus money, is less concerned. “People call this a stimulus bill. This is a jobs bill,” he said. “It’s going to put people to work.” Schweitzer estimates the money will create or save as many as 11,000 Montana jobs.

In order to ensure one-time stimulus money doesn’t fund ongoing programs, Montana’s legislature has separated the stimulus money from their regular budget into House Bill 2a. At question in Montana is who will keep track of the money, with Democrats suggesting the legislature’s finance committee is more than capable, while Republicans want to take a page out of Otter’s playbook and appoint a special committee to spend the funds. The Speaker of the House, Dan Bergen, a Democrat from Havre, suggested to reporter Dan Testa of the Flathead Beacon that setting a stimulus budget is not really rocket science; “Having federal money come to our state is not a new and novel concept,” pointing out that over half of the state’s regular budget is federal dollars. All monies, he says, should be spent by elected officials who have been “charged with a duty” to spend taxpayer dollars, not appointed officials.

Mayors have already taken steps to help state legislatures determine how best to spend that money, with a list of proposals in the 2008 U.S. Conference of Mayors report. Visit online here to see what Idaho’s mayors have proposed, and here  to see what Montana’s mayors would like to accomplish.

So what’s in the stimulus bill that will help you personally? That depends on who you are, where you live and the status of your personal financial situation.

For example, consider the unemployed.  The stimulus bill provides $7 billion for states to help their unemployed workers—currently, more than five million people are collecting unemployment. But a controversial part of the legislation provides additional benefits if states  extend unemployment benefits to part-time workers—and that’s something some state governors, like Idaho’s Otter, are disinclined to do. Their concern is in setting a precedent that will be expensive for states to pay for once federal funding runs out. Two-thirds of the unemployment dollars available to states are tied to this provision. The other third is available to states if the time period for determining eligibility includes recent earnings.

The stimulus bill gives all those collecting unemployment benefits on or before December 31 of this year a $25 a week raise, plus will protect the first $2,400 in benefits received from federal income tax. In addition, laid off employees  who meet certain income guidelines can continue their health insurance under the COBRA law by paying only 35 percent of the cost of the plan—the federal government will reimburse the remaining 65 percent for a period of nine months. Website update: Idaho's unemployed began receiving a $25 increase in their benefits beginning this week.

For those hoping to get back to work, the bill provides $4 billion for job training programs.

Buy a house by November 30 this year and get a one-time tax credit up to $8,000 (or ten percent of the purchase price). If you sell that house in three years, however, or if it ceases to be your primary residence, you’ll have to pay that money back. The credit phases out for first-time home buyers who make more than $75,000 a year, $150,000 for couples.

Make purchases to improve your home’s energy efficiency and get a tax credit of up to 30 percent of the cost, for a maximum of $1,500. A list of improvements that qualify can be found online at www.energystar.gov.

If you purchase a new vehicle between February 16 and December 31 this year, you can deduct the sales and excise taxes you pay on the first $49,500 of the vehicles value, as long as you make less than $125,000 a year. Buy a plug-in hybrid vehicle, by the way, and get a tax credit of up to $7,500.

K-12 education stands to get $53.6 billion for a State Fiscal Stabilization Fund—$40.6 billion to local school districts, which can be used for preventing cutbacks, preventing layoffs, school modernization, and other purposes; $5 billion as bonus grants for meeting key performance measures; and $8 billion for public safety and other services.

In addition, TARP includes $1.1 billion for Early Head Start, $1 billion for Head Start,  $2 billion for the Child Care Development Block Grant to provide child care services to an additional 300,000 children in low-income families while their parents go to work, $13 billion for Title I grants to help disadvantaged kids reach high academic standards and  $12.2 billion for special education grants.

Planning to go to college? The Hope Scholarship credit has been replaced with a new credit up to $2,000 in eligible expenses, such as tuition, fees and books, and then 25 percent of the next $2,000 in eligible expenses for the next two years. The credit is 40 percent refundable, which means it can be claimed even if a person has little or no tax liability.
In addition, the maximum Pell Grant for low-income students will rise by $500 to $5,350 for the 2009-10 academic year and to $5,500 the next.

Are you part of the working poor? If you make at least $3,000 a year you can now qualify for the child tax credit. The earned income tax credit will rise for the next two years, with the maximum credit for a qualifying family with three or more children going to $5,657. Food stamp benefits will increase by 13.6 percent and individuals who receive Social Security benefits; railroad retirees; disabled veterans; and government retirees who aren’t eligible for Social Security will receive a one-time payment of $250.

In 2009 and 2010, there is a tax credit of up to $400 for individuals and $800 for married couples filing their taxes jointly. You calculate your credit, subtracted from other federal taxes you owe, by taking 6.2 percent of your earned income. If you (and your employer) refigure your income tax withholding based on the new credit, you should see these dollars (approx. $40 per month for the remainder of the year) in your paycheck immediately.
The Wall Street Journal has developed a chart showing the entire stimulus bill and what it funds. Read it online here.

More on the stimulus: Business Owners, Call in the Experts and So what about those troubled mortgages? From the Horse's Mouth - the stimulus bill or here.

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Landon Otis

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Politics, funding, money, JFAC, stimulus, Governor Butch Otter, Governor Brian Schweitzer

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