American Recovery & Reinvestment Act

The President fired a shot across the bow of Congress last night with his $450 billion proposal to address the jobs crisis.  In a reprise of the Recovery Act of 2009 (the “stimulus”), the majority of new spending in the proposal would flow through state and local government with over $110 billion devoted to infrastructure and education alone.  However, state budget planners need not revise their mid-year predictions just yet as the bill will face a hurricane-force headwind as soon as it hits the House of Representatives next week. 

According to the Congressional Budget Office, the $825 billion stimulus law (ARRA) enacted in February 2009 has had a significant impact on the economy, including levels of employment. The CBO estimates that  ARRA’s policies had a number of effects in the second quarter of calendar year 2011, when compared with what would have occurred had the stimulus not passed, including an increase in GDP, a lower unemployment rate, an increase in the number of people employed and an increase in the number of jobs. 

All states but North Dakota experienced an increase in participation in the SNAP program between May 2010 and May 2011; 21 states had a double digit annual growth in the number of people depending on SNAP benefits. SNAP program costs are projected by CBO to decline as the economic recovery takes hold more fully. Every $1 spent on SNAP benefits generates $1.79 in total economic activity, according to the USDA. 

Medicaid, the largest health insurance program in the nation, is jointly financed by state and federal governments. The federal government establishes matching rates for each state each year, setting the percentage of overall costs paid by the federal government—between 50 and 83 percent—based on a state’s per capita income compared to the nation’s per capita income. The American Recovery and Reinvestment Act of 2009 provided all states with enhanced matching rates for their Medicaid programs in recognition of the fiscal issues states faced in the Great Recession.

According to a new report out by UBS Investment Research, as many as 450,000 state and local government employees could be laid off in the upcoming fiscal year.   This is a significant increase compared to last fiscal year’s layoffs, which totaled about 300,000 positions.

The report goes on to say that the increase is largely due to the ending of ARRA funds, including enhanced Medicaid matching rates and the education jobs...

Unemployment rates remain high and many people have been without work for extremely long periods of time, exhausting state unemployment trust funds quickly. More states are borrowing from the federal government to cover costs, which could have an impact on future fiscal stability.

It’s no April Fool’s joke for states desperately trying to balance their budgets. A new analysis of enhanced Medicaid match rates under the 2009 American Recovery and Reinvestment Act found the average state will lose 21 cents in federal funding for every dollar the state puts toward paying Medicaid bills beginning April 1. This decrease follows on the heels of a 37-cent loss states suffered Jan. 1, according to The Council of State Governments’ report.

During the current fiscal crisis, most states in the Midwest have chosen not to enact broad-based tax increases — a trend likely to continue as new annual and biennial budgets are finalized. 

According to a new CSG report, stimulus-funded green jobs topped 51,700 in the sixth and final quarter of the Recovery Act. The report updates past CSG green job reports, the first, released in December 2009, which found that roughly 13,000 green jobs were created or saved in the first quarter of the Recovery Act.

Medicaid matching rates to states before, during and after Recovery Act funding are analyzed. For every dollar a state spends for Medicaid, the average state gained $1.07 additional match for each state dollar spent under the Recovery Act enhanced rates.