Since President Barack Obama’s approval of the economic stimulus package on February 17, Americans have been contemplating the numbers being thrown at them in an attempt to answer the $787 billion question: How does this affect my city and how will it affect ordinary citizens?
The details of this would-be recession-killer - officially known as the American Recovery and Reinvestment Act of 2009 - are still being fleshed out, making it difficult to predict its direct effects on the nation’s economic crisis, let alone the state’s, the county’s, or the personal ones being suffered by individual citizens. Before you consider all these, here are a few numbers to chew over: The national debt stands at $10.9 trillion; that’s approximately $36,000 per man, woman, and child in the U.S. California faces a $42 billion budget deficit. The White House anticipates a national unemployment rate of 8.1 percent. Meanwhile, California has reached an unemployment rate of 10.1 percent and here in the Santa Barbara County, the rate is 8.3 percent.
Even if this economic booster shot proves to be not as stimulating as it was promised to be, it will still deliver emergency government funds and tax relief while making short- and long-term investments across all federal and state agencies. At the top of the nation’s “to fund” list is California, explained Representative Lois Capps, whose 23rd District comprises much of Santa Barbara. “California will gain the most, I believe, out of this package,” Capps said. An estimated $26 billion will be allocated to California from the $787 billion federal government Recovery Act. The following is a breakdown of where the funding is estimated to be going and in what ways Santa Barbara may expect to see it.
Tax and Credits
The recovery package is filled with tax breaks, as long as you are willing to spend a good amount. First-time home buyers who buy a home before December 1 and those who already own one and make them more energy efficient will receive a tax credit. There is also a tax write-off for those who buy a new car. Starting April 1, tax cuts for 95 percent of working families will be given in the form of a payroll tax credit that will benefit the paychecks of more than 12 million Americans. Small business owners can expect to receive tax incentives so they can open their credit lines, hire more employees, and grow their businesses. The driving force behind these cuts and credits is not just to encourage consumer confidence among Americans but also to indirectly create jobs through this spending.
Healthcare access is one of the major areas of focus for the Recovery Act. By the time this article is posted, Uncle Sam will have already begun to cut Medicaid checks and send them out to each state. California expects to receive about $11.2 billion over two years.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) program, workers who lose their jobs can continue their health benefits temporarily by paying the full cost of the insurance, which is generally lower for a group than for an individual. Under the Recovery Act, for those who qualify, the government will pick up 65 percent of those health coverage costs for up to nine months. Former employees of businesses with 20 or more workers can use COBRA.
According to Capps, the new legislation for the State Children’s Health Insurance Program (SCHIP) will cover 15,000 Santa Barbara County children. “When the President was sworn in, he passed this Children’s Health Insurance bill which reauthorizes health access to care for all kids whose parents are working but don’t have insurance for their children. Almost everyone under 18 will have coverage,” Capps explained.
Another area that the Recovery and Reinvestment Plan aims to provide major funding is education. The stimulus sets aside $100 billion for education. Funding will go toward three general categories: Title I, special education, and state fiscal stabilization funds. “Not only do we want to make college more affordable, but [we also want to] rebuild schools using energy efficient means,” Capps said.
According to Eric Smith, deputy superintendent of the Santa Barbara School District, California will receive roughly $6 billion of an estimated $53.6 billion for state stabilization funds, which are a one-time investment for education and training, helping to prevent or restore budget cuts. Smith estimates that about 50 teachers and other certificated staff will receive pink slips. Whether or not those who are laid off will be rehired after May is unsure. “We don’t have any hard numbers on this pot of money, but the information we have received is that the dollars are to be used to prevent layoffs, upgrade, repair, and modernize schools, and restore cuts harmful to education,” Smith said. Capps said she felt confident that the state will do everything in its power to provide funding to keep teachers on payroll and prevent them from receiving pink slips this spring.
The stimulus package allots $8 billion to be used for modernization and renovation of schools and colleges. “There is a substantial amount of money in the bill to help make our government and schools more energy efficient. This will provide benefits both immediately and over the long term,” explained Emily Kryder, Capps’s spokesperson. “As a result, schools will be spending less money on their utilities and will also contract work for private sectors to help renovate these schools.”
Another $25 billion will be given to the No Child Left Behind and special education programs. Funding increases will be seen in Santa Barbara School District’s Title I program, which focuses on helping disadvantaged students meet state academic content and performance standards. “We feel fairly confident that we will receive the Title I dollars,” Smith said of the estimated $1.5 million going to California for this program. Another $4 billion will be allocated for the Head Start early education programs, which serves low-income children and their families.
The largest amount of the $39 billion in education funding will go toward K-12 and higher education. Students who want to go to college will receive an increase of $500 in Pell grants, which make such levels of education easier to get for low-income students. This translates to 7,500 California students who can stay in school. In addition, those attending university or community college may have found their student loans have dried up. These students, or their parents, are eligible for tax credits of $2,500 to help pay for tuition and related expenses. “Students are going to really notice this as they can debate if they can afford to go back to school next quarter or semester. That was our intention. We really want to plug funding into that area,” Capps said.
The City of Santa Barbara hopes to receive funding to fix old bridges, roads, and sidewalks, as well as improving the Santa Barbara Airport. The stimulus package allocates $27 billion toward rebuilding America’s infrastructure. California will receive approximately $2.6 billion to repair highways and roads across the state. Within the last few days, Vice President Joe Biden and U.S. Transportation Secretary Ray LaHood announced $8.4 billion to go toward public transit. Of this funding, $1.1 billion will be available to California for repairing and building public transportation infrastructure.
The most recent figures show that Santa Barbara will receive an estimated $1.4 million toward “shovel-ready” projects that could begin within 180 days of receiving funding. Around $1,347,262 will be given for rebuilding a new terminal in Santa Barbara Airport. These figures however are still in the preliminary stages, according to Nina Johnson, assistant to the city administrator. Johnson said that the city is still currently exploring how to apply for stimulus funding and how much of it the city could receive for infrastructure projects. One thing is certain: More jobs will be created because of it. “Construction projects had to be stopped because the state ran out of money. Now, construction workers can go back to work and the highway will be fixed sooner,” Capps said. “This bill is going to help - goods and services can now travel [on the highway] and people will get more jobs.”
Although Obama has described the total number of job losses in this country as “astounding,” he stressed that the bill will help create jobs and decrease the unemployment rate. An estimated 396,000 jobs will be saved in California over the next two years, according to the White House. In Santa Barbara County alone, approximately 18,300 people are currently unemployed. In the congressional 23rd and 24th districts, both of which comprise chunks of Santa Barbara County, an estimated 14,400 jobs will be saved.
The package allocates $3 billion nationwide for emergency funds to provide immediate temporary assistance for needy families. There will also be an increase in food stamps. For the unemployed, the bill extends benefits through December, increasing the payments by $25 a week. Additionally, the first $2,400 of unemployment benefits will not be subject to federal taxes. The seven million poor Americans who are elderly, blind, or disabled and receiving supplemental security income would get a one-time extra payment of $250.
One of the first exact figures released by the White House was for Housing and Urban Development. The homelessness prevention fund, on both the state and local government levels, will benefit from $1.5 billion. Santa Barbara is being given $829,013 of the $244 million granted to California to put toward this effort. Homeless shelters across the county will be able to provide more amenities as well as food for those who need it.
According to Frank Mannix, deputy chief of the Santa Barbara Police Department, nearly 35 percent of the general fund revenue of Santa Barbara is set aside for the Police Department. “The economic crisis has affected the general fund. This affects us as far as our budget goes. We are forced to look at our budget, consider the reallocation of services, and make up for the shortfalls we come across,” Mannix said. The SBPD, like many other city agencies, is unsure how much it will receive from the Recovery Act. However, there are two programs where major funding may come from.
The bill sets aside $3.7 billion for police programs, much of it aimed at creating and saving officers’ jobs. The Byrne Justice Assistance Grant (JAG), which is awarded directly to state and local governments, will be allocated $2 billion in funding projects to prevent and control crime and to improve the criminal justice system. According to the JAG Web site, the Santa Barbara County Sheriff’s Department is expected to receive $86,215, Santa Barbara City Police Department will receive $231,862, and the Goleta Police Department will receive $121,554.
The second source of funding will be under the Community Oriented Policing Services program (COPS) program. The COPS Hiring Recovery Program, a competitive grant program aimed at creating and preserving jobs in the police force will receive $1 billion. Although the COPS grant estimates for each state has yet to be released, Mannix believes it will help offset layoffs. Mannix said figures from both JAG and COPS grants are still in the early stages; however, he is optimistic they will receive substantial financial funding.
The National Institute of Standards and Technology (NIST), will receive $610 million. This act will provide $220 million in NIST laboratory research, competitive grants, research fellowships, and advanced research and measurement equipment. UCSB, being the major research institution it is, will most likely reap the benefits of this money. NIST will also provide $20 million for standards-related work on electronic medical records to assist in modernizing the healthcare system. Michelle Mickiewicz, Santa Barbara County Public Health Department’s deputy director, confirms that the city’s health department will focus the funding they receive for these electronic health records. Capps also said funding will go toward new energy grids for the county. This, among all else, will create more jobs for Santa Barbarans.
Economists and government officials agree: The economy will not be turning around anytime in the near future. This crisis did not occur overnight, nor will it fix itself in the same period of time. However, it seems as though the nation is looking in the right direction with this economic stimulus package. “We will recover,” Capps said. “This isn’t the first time we’ve faced big problems. Maybe this is the first time in our lifetimes, but not for our country.”
The truth of the matter is that the Recovery Act is definitively a spending bill, but one with the intention of providing the most efficient results for the country’s economy and citizens. “What would happen if we did nothing? I was reluctant to put so much added debt onto my grandkids. But I wanted to make sure it was a good vote on the behalf of my constituents,” Capps said. “Every single economist that we listen to, many of which were brought to Capitol Hill so we could understand, said that if we didn’t do something major, and we didn’t do it quickly, it wasn’t going to work.”
The numbers for funding of federal and state agencies are still being calculated and will continue to be throughout the next couple of months. Santa Barbarans should remain optimistic and can rest assured that they will see the stimulus package’s effects both around the corner and down the road.