Massachusetts Budget and Policy Center releases budget report
The Massachusetts Budget and Policy Center released a budget report Wednesday assessing the impact of the American Recovery and Reinvestment Act (ARRA), colloquially known as the Stimulus Bill, on Massachusetts.
Mass Budget, as the organization is known, estimates that the Commonwealth will receive a total of $17.7 billion from the bill. Of that, $3.6 billion will go to helping the state bridge its budget shortfall, with increased federal reimbursements for Medicaid costs and grants designed to protect public education, public safety, and other state programs susceptible to harm from budget cuts.
$5.8 billion will go to tax benefits to citizens, with components included for tax relief for working class families, parents, and low-income students and a stipend to prevent the federal Alternative Minimum Tax from affecting a sizeable portion of Massachusetts families.
Another $2 billion will be put towards other direct benefits to citizens such as better unemployment compensation, Pell grants for college students, which could potentially alleviate the financial burdens of some Five College students, nutrition assistance for low-income families, and funds for health insurance coverage for recently laid-off employees.
An additional $942 million will be spent improving Massachusetts’ infrastructure. ARRA provides large blocks of funding for bettering the state’s roads, public transit, and municipal water systems.
A final large chunk will be used for workforce training, education, research, energy efficiency and other goals stipulated in ARRA. Of this $5.4 billion, some will be dispensed to the state through grants, some will go to businesses, schools and other organizations through a selective application process, and some will be awarded to eligible cities and towns.
Since ARRA’s passage in February, the Commonwealth has already received $4.3 billion in stimulus money. Of the $4.3 billion the state has already been given, $1.8 billion went directly to state government for reducing cuts and making what the budget report calls “targeted investments” in health care, education, “and other important government services.”
The additional $2.5 billion has already gone to tax reductions, Pell grants and unemployment benefits, among other uses.
According to the report, early estimates reveal that the stimulus’s impact could be quite positive for building jobs in Massachusetts.
The report cites a study conducted by the White House Council of Economic Advisors which states that the stimulus created or saved some 27,400 jobs in Massachusetts. These jobs are largely in public services such as teachers and police who would have faced cuts and in construction and infrastructural work undertaken since the bill’s passage.
The budget report estimates that Massachusetts will receive a share of stimulus money approximately proportional to the state’s percentage of national population, about two percent, meaning the state will net about $17.7 billion out of a federal total of about $865 billion.
In examining the amount the state will receive by type of funding, the report states that the Commonwealth will likely take in about $2.6 billion out of a federal total of $85.6 billion in health care funds.
The ratio for determining what a state receives in health care monies, according to the report, corresponds to the rate at which the federal government reimburses states for their Medicaid expenses.
With the stimulus money, the state’s reimbursement rate has risen from 50 to 56.2 percent, according to the report, which also reasons that without these funds, the state would have had to drop many citizens from its health care benefits, especially those who were recently included in it through the state’s new health care system.
The report also estimates that because the state’s unemployment rate continues to rise, more people will be covered by these benefits, meaning the reimbursement rate of Medicaid costs from the federal government will rise to 61.2 by the end of the current fiscal quarter.
Further funding will go to nutrition and food programs, with $2.1 million going to the Women, Infants and Children (WIC) program, $317 million budgeted for the Supplemental Nutrition Assistance Program (SNAP), previously called food stamps.
As of June, the report states that 654,000 people were on SNAP in Massachusetts, up 27 percent from last year. ARRA will expand federal SNAP funds by 13.6 percent through 2013. Through this increase, the maximum monthly allowance for a family of four would rise by $80.
Lastly, $2.1 million will go to elderly nutrition assistance programs.
Beyond health-related issues, the stimulus funds cover a wide range of public benefits.
Massachusetts has been allocated $69 million out of a federal pool of $5 billion for Temporary Assistance for Needy Families (TANF) funding. TANF provides monetary stipends, temporary shelter, and employment assistance to needy families. The amount allotted for TANF funds can go up no more than 50 percent from 2007 levels before 2011, meaning the ultimate amount the state receives could increase from the original $69 million.
The state has also received a $24.9 million Community Services Block Grant (CSBG). CSBGs are awarded to states to combat poverty at a local level. The funds will go to 24 designated Community Action Agencies, which will dispense the funds locally.
Infrastructural improvements will also be a primary focus of the stimulus money.
Massachusetts will net $319.7 million in public transportation improvement funds, the sixth largest stipend for any state based on the Commonwealth’s heavy concentration of urban areas.
The state will garner $437.9 million for highway and bridge infrastructural improvements, which must be completed in three years and promote projects in economically distressed areas as well as maximizing job creation, according to ARRA’s specifications.
Massachusetts will take in $29.1 million in Community Development Block Grants (CDBGs), used to provide housing and economic opportunities for low to moderate income families.
Another large portion will go to the Public Housing Capital Fund. $81.9 million will go to grants to public housing agencies to update and modernize federal public housing developments. The fund provides direct monies to more than 60 public housing agencies in the Commonwealth, with nothing going to agencies designated by the Department of Housing and Urban Development (HUD) as troubled.
$59.6 million will go to low-income tax credits through the federal Low-Income Tax Credit program. The funds will be put towards building and maintaining affordable housing.
Another $119 million will be used for Project Based Rental Assistance. These monies fall under HUD’s Section 8 program, which provides rental vouchers to low-income families, elders, and people with disabilities to help them afford and keep housing.
$44.8 million of the ARRA funds will go to homelessness prevention, while the report estimates that $56.1 million will be used for workforce development programs, which help give employment training to at-risk youth and other people likely to be unemployed.
Another $162.7 million will be used for unemployment insurance modernization.
ARRA also emphasizes environmental improvements.
Massachusetts will receive $42.2 million in energy efficiency block grants, which provide money to cities to improve energy efficiency and reduce carbon fuel dependency.
$186.6 million will be used for clean and safe drinking water improvements, while $54.9 million will go to overall state energy initiatives. Lastly, $122.1 million will go to weatherization improvements.
$40.8 million will go to Justice Assistance Grants (JAGs), used to train and provide better equipment to public safety personnel. $29 million will go to the Community Oriented Policing Services (COPS) program for hiring and rehiring police officers.
The Commonwealth will net $813 million in education block grants to better fund public school districts and state higher universities.
$162.8 million of this block will go to the state’s higher education budget to ensure that each campus will receive the same level of funding it did last fiscal year, although the stimulus monies will expire at the end of this year, meaning they will have to find a way to bridge an anticipated gap next year.
The state will net $181 million in flexible block grants, which can be spent on almost any form of public service, from education to law enforcement.
$299.3 million will go to special education funding, while $163.4 million will be spent on Title I, which aims to benefit educational outcomes for low-income students.
$23.9 million will go to Child Care Development Block Grants (CCDBG), the primary federal grant for child care services.
Lastly, $10.1 million will go to the head start and early head start programs, which provide a comprehensive array of services to low-income preschoolers in nutrition and education.
Finally, the state will receive various tax breaks.
$2.6 billion go to “Making Work Pay” tax credits, which will go to an estimated 2.45 million workers in the state. The credit will be up to $400 for individuals and up to $800 for married couples filing joint tax returns.
$66 million will go to the Earned Income Tax Credit, which provides relief to low to moderate-income workers.
The state will take in $177.6 million for the Child Tax Credit which gives greater tax benefits to families with more children. Taxpayers with qualifying children under 17 years old will be able to claim $1,000 per child with an estimated 155,000 citizens benefiting.
Another $193.5 million will be put to the American Opportunity Tax Credit, a modification of the preexisting Hope Credit, which helps taxpayers offset the first two years of post-secondary education.
This would directly benefit financially independent university students, who would be eligible to receive a $2,500 tax credit, benefiting up to 71,000 students in Massachusetts.
The state will also receive an additional $2.5 billion to offset the effects of the Alternative Minimum Tax, which has inadvertently pulled middle-income families into paying a tax originally designed only to make high earners pay a minimum share.
Families earning more than $70,950 must pay the tax, and the $2.5 billion will go to helping to reimburse some financially vulnerable families who will still have to pay the ATM tax.
The state will net $306.5 million in one-time economic recovery payments, for retirees and social security recipients.
Sam Butterfield can be reached at email@example.com.