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The American Recovery and Reinvestment Act of 2009

    Client Alerts
  • February 20, 2009

On Tuesday, February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (the "Act"). This $787 billion economic stimulus package includes numerous tax provisions and billions of dollars in spending. It is the largest single piece of stimulus spending legislation since President Dwight Eisenhower created the Interstate Highway System in 1956.

As he signed the legislation into law, President Obama stated that the package marked "the beginning of what we need to do to create jobs for Americans, the beginning of what we need to do to provide relief for families, the beginning of the first steps to set our economy on a firmer foundation, paving the way to long-term growth and prosperity." Congressional Republicans have denounced the Act and asserted that it will not turn the economy around.

Despite the political rhetoric on both sides of the aisle, the fact remains that there are programs, loans, tax credits and direct grants that your company may be able to utilize immediately. The purpose of this alert is to provide an outline of the major aspects of the Act and to focus on some of the major industry sectors that will be impacted by the Act.

Overall, the federal stimulus package is expected to bring $6.1 billion to North Carolina over three years. The biggest chunk, about $2.3 billion, is expected to go to Medicaid. Approximately $750 million will be available to address a budget shortfall in the current fiscal year expected to exceed $2 billion. The Perdue administration had earlier anticipated about $900 million in federal aid to address the budget shortfall in the current fiscal year. The difference means that Perdue budget officials will have to find another $150 million in cuts or tap additional revenue pools before June 30.

South Carolina expects to receive almost $8 billion total from the package, $463 million of which is designated for highway projects. Earlier, South Carolina Governor Mark Sanford said that he would reject any federal stimulus funds, though MSNBC reported that his staff is now equivocating on that. This is important because the Act states that state governors must within 45 days of the bill being enacted certify that the state will request and use the funds, and that "the funds will be used to create jobs and promote economic growth." So it is the governor's call. But if the governor does not accept the money, then the state legislature can accept the cash "by means of the adoption of a concurrent resolution." The South Carolina legislature could make sure the Palmetto State gets its share of the money even if the Governor does not want it.

A large portion of the stimulus funds will flow to states as grants. The Act includes appropriations for highway and bridge projects, mass transit, drinking water treatment, wastewater treatment, renewable energy projects and incentives to spur the health care industry's move to electronic transfer of patient information. Most provisions require the state itself to be the grant recipient and to be responsible for appropriating the funds. In other instances, a business can apply directly to the federal agency or department responsible for administering the grant or tax credit.

In North Carolina, Governor Perdue has named Dempsey Benton, former Secretary of the Department of Health and Human Services, to lead the temporary Office of Economic Recovery & Investment. The office will: track all federal dollars flowing into state and local governments as well as to private businesses and non-profit organizations; identify the most rapid ways to move the stimulus money into the economy and remove regulatory and other impediments; develop a communications network, using a variety of tools including the Internet, to keep the public informed about the status and progress of the recovery effort, along with funding opportunities; and report to the General Assembly and the citizens on a regular basis about the status of the use of the stimulus funds, including federal, state and other non-federal money.

Please click on any of the links below to see a summary of specific areas of the stimulus package.

Members of Parker Poe's Government & Public Policy Practice Group actively lobbied on the Act, focusing on specific provisions that some our government relations clients engaged us to successfully lobby.