What does the stimulus mean for households and businesses?
Written by Patty Silverstein, chief economist for the Metro Denver EDC, this section identifies major issues affecting the economy and answers frequently asked questions.
"Stimulus" has been the economic buzzword of recent months, but what does it really mean for households and businesses?
Transparency is one of the administration’s stated goals for the American Recovery and Reinvestment Act (ARRA), so the federal government and many state governments are taking steps to help taxpayers understand how, where, and when their dollars are being used. According to the Colorado Economic Recovery and Accountability Board, Colorado should receive roughly $3 billion in direct commitments from the ARRA that will be used to meet a variety of needs. The three largest funding amounts are $653 million for healthcare and Medicaid, $487 million for K-12 education, and $404 million for transportation. The remaining funds will be distributed for renewable energy and weatherization improvements, housing and food assistance, and other projects.
The speed with which these funds are distributed and used will influence how effective they are against the recession, so government agencies are working quickly to allocate funding and award contracts. That could denote changes in Metro Denver in the coming months.
Upgraded Roads, Transit, and Pedestrian Facilities
The Colorado Department of Transportation (CDOT) will receive $329 million for road improvements across its six service areas. The Metro Denver service area will receive the largest amount ($97.1 million) for projects including road repair and resurfacing, median replacements, ramp metering facilities, and improvements to the C-470 bike trail.
In addition to the CDOT funds, $74.8 million in ARRA money will go to three regional entities – the Denver Regional Council of Governments (DRCOG), the Pikes Peak Area Council of Governments, and the North Front Range Metropolitan Planning Organization. Estimates of the DRCOG portion of funding range between $55 and $60 million, and the organization has selected 13 projects designed to enhance Metro Denver’s multimodal transportation network. The projects include renovations to Union Station in downtown Denver; various interchange developments along I-225, I-70, and US-36; and new pedestrian facilities in cities throughout the region.
While some of these improvements are transit-related, Colorado will receive a separate distribution of funds specifically for transit projects. The Regional Transportation District (RTD) will receive the largest portion ($72.1 million) of the state’s total $100 million distribution, and Colorado Governor Bill Ritter has approved some of that funding for several FasTracks projects.
Because transportation agencies must meet certain timelines for distributing funds, the contracting process for transportation projects around Metro Denver is moving quickly. Some contractors have already made plans to re-employ laid-off workers, and project work could begin soon. Transportation officials have also noted that a general lack of work for contractors has made for more competitive pricing on project bids. While this could ultimately stretch ARRA dollars to allow for even more construction, officials say they will not schedule additional projects until they are sure the low pricing will continue. Construction zones ahead!
Additional Dollars for Community Healthcare Providers
Stimulus funds have been approved for Colorado’s 15 Community Health Centers, which are primary care facilities serving low-income residents. The Denver Health and Hospital Authority will receive the largest portion of the funds, and the Metro Community Provider Network will also receive a large distribution. Additional stimulus funds for healthcare will be used to manage the state’s Medicaid caseload, provide childcare vouchers for working families, and help healthcare providers use information technology to improve patient care.
New School Funding
Part of the funding allocated for Colorado school districts is intended to help the districts avoid budget cuts. Because the funding will not be distributed until the end of the 2008/2009 school year, however, some school officials say they will use the money for next year’s budget. Districts will also receive funds to increase the use of technology and support low-income and special education students.
New Investment in Renewable Energy
According to the Colorado Governor’s Energy Office, some of the state’s allocation for clean energy will be distributed to the Energy $aving Partners Program beginning in May. The program provides weatherization services for low-income households, and many contractors have already begun adding staff to handle more projects.
Another portion of Colorado’s energy allocation will go to the State Energy Program. Funds for the multi-initiative program will be directed to workforce training in renewable energy occupations, an informational clearinghouse of energy efficiency incentives, and a Residential and Small Business Finance program designed to help consumers and companies purchase energy-efficient equipment.
Many Colorado communities will also receive their own funding through the Energy Efficiency and Conservation Block Grants (EECBG). Colorado received the grants – valued at more than $40 million – in addition to the energy funding initially allocated under the ARRA. Twenty Colorado cities, 10 Colorado counties, two Colorado Indian tribes, and the Governor’s Energy Office will all receive direct allocations under the EECBG. Additional EECBG funds will be distributed to local areas around the state that do not receive direct allocations. In addition to local incentive programs, the funds can also be used for energy efficiency retrofits, efficient street lights and traffic signals, and energy audits.
Tax relief and Competitive Grants
In addition to the $3 billion allocated to Colorado through the ARRA, the state may be eligible for further funding. Numerous federal entities – from the National Endowment for the Arts to the U.S. Environmental Protection Agency – have additional stimulus funds available as competitive grants. Colorado will also benefit from tax relief not included in official ARRA spending estimates. Under the Making Work Pay Tax Credit, for example, Colorado families are expected to receive $900 million in payroll tax breaks. Tax credits may also be available for consumer and business investments in renewable energy. Combining dedicated ARRA funds, tax relief, and grant funding, Colorado officials expect the state will receive more than $7 billion in total economic stimulus.
A Better Denver
In addition to federal actions under ARRA, some local governments have implemented their own stimulus programs. Officials with the City and County of Denver, for example, will advance the completion timeline for projects approved in 2007 by voters under the Better Denver Bond program. Sixty projects will begin construction in 2009, and officials expect most of the program’s 215 projects to be completed by 2011. The program focuses on parks, libraries and cultural facilities, transportation, and public health and safety.
The many investments planned under ARRA and various local initiatives have a twofold purpose. They will help improve the roads, public buildings, and other facilities that Metro Denver businesses and residents use every day, and they will help counteract job losses tied to the nationwide recession. As Metro Denver’s economy recovers, stimulus investments will in many ways create a stronger foundation for regional economic growth.
Sources:
City and County of Denver.
Colorado Economic Recovery Accountability Board.
Council of State Governments.
Denver Regional Council of Governments.
Recovery Accountability and Transparency Board.