Impact of federal economic recovery bill on Minnesota

On Jan. 28, the U.S. House of Representatives passed the Economic Recovery and Reinvestment Act by a vote of 244 to 188. Among Minnesota’s delegation, Representatives Keith Ellison, Betty McCollum, Jim Oberstar and Tim Walz voted for the bill. Representatives Michele Bachmann, Erik Paulsen, Collin Peterson and John Kline voted against the bill.

The Senate Finance and Appropriations committees have already begun work on the Senate version of the bill that is expected to reach the floor some time next week. The Senate debate is expected to include consideration of an extensive number of amendments to every part of the bill. Congressional leaders hope to have a final bill ready to send to President Obama by Feb. 16.

Some provisions in the House bill would bring new funding to state and local governments. These federal dollars will have some strings attached, including potential requirements that states maintain certain levels of spending or other program parameters.

Analysts are still sifting through the details, but here are some of the key provisions in the House bill that provide new funding to the state and local governments in Minnesota (the estimates come from the Center on Budget and Policy Priorities):

Health Care

  • Medicaid provides health care coverage for low-income people. $1.9 billion in temporary additional funding from FY 2009 to FY 2011

Education

Additional aid to school districts and state higher education agencies from FY 2009 to FY 2010.

  • $118 million for Title I formula grants and school improvement formula grants
  • $225 million for the Individuals with Disabilities Act (IDEA)
  • $128 million for School Modernization
  • $124 million for Higher Education Modernization

Worker Training and Employment Services. Additional funds in FY 2009 include:

  • $15 million for Youth Services
  • $11 million for Dislocated Workers
  • $6 million for Adult Activities

Emergency Shelter Grant Program

  • Provides formula grants through the Department of Housing and Urban Development to states and localities for homelessness prevention, emergency shelters and street outreach.
  • $24 million in additional funding will help an estimated 5,100 Minnesota households. These are funds for FY 2009; 25% of the funds go to the state; the rest to localities.

Key provisions that directly help struggling Minnesotans:

  • Food Stamp (Supplemental Nutrition Assistance). $175 million in increased Food Stamp benefits to 306,000 Minnesotans from FY 2009 to FY 2014.
  • Supplemental Security Income (SSI). $45 million in increased funding to SSI recipients. SSI provides basic income support to poor elderly individuals and people with disabilities. An estimated 78,400 Minnesotans receiving SSI would receive a one-time payment of about $450 for individuals and $630 for married couples.
  • Making Work Pay Tax Credit. This new tax credit is up to $500 per worker or $1,000 for a married couple filing a joint federal tax return.
  • Child Tax Credit (CTC). The Child Tax Credit provides a partially-refundable federal income tax credit of up to $1,000 per child (under age 17) to help offset the costs of raising the child. The House bill temporarily expands the CTC to make the credit available to all working tax filers with children. Approximately 164,000 Minnesota children would be helped by this provision.

We will, of course, continue to closely follow developments on this legislation as it moves through the Senate. Stay tuned for further updates.

– Steve Francisco

About Steve Francisco

Steve Francisco is the former federal policy analyst for the Minnesota Budget Project.
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