Wednesday, January 21, 2009

House Economic Recovery Plan Addresses US Conference of Mayors' Priorities

January 16, 2009

TO: The Mayor

FROM: Manuel A. Diaz, Mayor of Miami, President

Tom Cochran, CEO and Executive Director

SUBJECT: House Economic Recovery Plan Addresses USCM Priorities

The House of Representatives yesterday released its "American Recovery and Reinvestment" Plan. The summary document states, "In the next two weeks, the Congress will be considering the American Recovery and Reinvestment Bill of 2009. This package is the first crucial step in a concerted effort to create and save 3 to 4 million jobs, jumpstart our economy, and begin the process of transforming it for the 21st century with $275 billion in economic recovery tax cuts and $550 billion in thoughtful and carefully targeted priority investments with unprecedented accountability measures built in."

As you will see in the following summary, we received funding in every one of the 10 program areas we called for in our MainStreet Economic Recovery Plan. In addition, many of the programs that have been funded represent long-term priorities that the Conference of Mayors has been leading on and promoting for years, including many priorities we called for in our Mayors' 10-Point Plan: Strong Cities, Strong Families, for a Strong America. These investments total $358.1 billion – not including the tax provisions for which estimates are not yet included.

This would not have been possible without the work of all of you and the Conference staff.

Following is an analysis of the key components of the House package, in the context of the Five National Forums we held on: 1) Environment and Energy; 2) Infrastructure; 3) Poverty; 4) Crime; and 5) Arts and Tourism. The language on proposed funding levels and descriptions comes directly from the House press release.

Please note, this legislative package will have to go through the House and Senate, and we must continue to push to make sure that the details address our priorities and that it reaches President Obama quickly. We will continue to share details as more information becomes available, and we will discuss this issue in greater detail at our upcoming 77th Winter Meeting on January 17-19, 2009.

If you have any questions, please contact Tom Cochran at (202) 744-9110 or Ed Somers at (202) 744-9223.




I. Environment and Energy ($32.40 Billion)

Local Government Energy Efficiency Block Grants: $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions. (Note: Of this total, $3.5 billion is specifically for the new Energy Efficiency and Conservation Block Grant (EECBG). The remainder is for the State Energy Program.)

Reliable, Efficient Electricity Grid: $11 billion for research and development, pilot projects, and federal matching funds for the Smart Grid Investment Program to modernize the electricity grid making it more efficient, secure, and reliable and build new power lines to transmit clean, renewable energy from sources throughout the nation.

HOME Investment Partnerships: $1.5 billion to help local communities build and rehabilitate low-income housing using green technologies. Thousands of ready-to-go housing projects have been stalled by the credit crunch. Funds are distributed by formula.

Energy Efficiency Housing Retrofits: $2.5 billion for a new program to upgrade HUD sponsored low-income housing to increase energy efficiency, including new insulation, windows, and furnaces. Funds will be competitively awarded.

Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.

Diesel Emissions Reduction: $300 million for grants and loans to state and local governments for projects that reduce diesel emissions, benefiting public health and reducing global warming. This includes technologies to retrofit emission exhaust systems on school buses, replace engines and vehicles, and establish anti-idling programs. 70 percent of the funds go to competitive grants and 30 percent funds grants to states with approved programs. Last year EPA was able to fund only 27 percent of the applications received.

Energy Efficiency Grants and Loans for Institutions: $1.5 billion for energy sustainability and efficiency grants and loans to help school districts, institutes of higher education, local governments, and municipal utilities implement projects that will make them more energy efficient.

Job Corps Facilities: $300 million to upgrade job training facilities serving at-risk youth while improving energy efficiency.

Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.

Brownfields: $100 million for competitive grants for evaluation and cleanup of former industrial and commercial sites - turning them from problem properties to productive community use. Last year EPA was only able to fund 37 percent of Brownfields applications.

Superfund Hazardous Waste Cleanup: $800 million to clean up hazardous and toxic waste sites that threaten health and the environment. EPA has 1,255 sites on its National Priority List, selected based on a hazard ranking system. There are many Superfund sites ready for construction, but not funded due to budget shortfalls and over 600 sites with ongoing construction that could be accelerated.

Leaking Underground Storage Tanks: $200 million for enforcement and cleanup of petroleum leaks from underground storage tanks at approximately 1,600 additional sites. There are an estimated 116,000 sites with the potential to contaminate important water supplies.

Closed Military Bases: $300 million for cleanup activities at closed military installations allowing local communities to redevelop these properties for productive use. The Department estimates that there is a $3.5 billion environmental cleanup backlog at bases closed during previous BRAC rounds.

NOAA Habitat Restoration: $400 million for ready-to-go habitat restoration projects.

Energy Tax Incentives: Long-term extension of renewable energy production tax credit; Temporary election to claim the investment tax credit in lieu of the production tax credit; Coordination provisions with new grant program for renewable energy projects being designed by the Energy and Commerce Committee (sections 45 and 48 projects); Clean Renewable Energy Bonds ("CREBs"); Qualified Energy Conservation Bonds; Energy efficiency and conservation tax incentives under sections 25C, 25D and 48; Smart energy conservation, energy efficiency, and renewable energy R&D credit; Refueling property credit expansions.

II. Infrastructure ($102.65 Billion)

Highway Infrastructure: $30 billion for highway and bridge construction projects. It is estimated that states have over 5,100 projects totaling over $64 billion that could be awarded within 180 days. These projects create jobs in the short term while saving commuters time and money in the long term. In 2006, the Department of Transportation estimated $8.5 billion was needed to maintain current systems and $61.4 billion was needed to improve highways and bridges. (Note: USCM called for the Surface Transportation Program (STP) as the mechanism for distributing Highway Infrastructure funds. This is NOT the distribution mechanism in the House proposal. Under the House proposal, 45 percent of the highway infrastructure funds are distributed using the STP with 62.5 percent of those funds being distributed to local areas "located in economically distressed areas as defined by Section 301 of the Public Works and Economic Development Act of 1965.")

Transit New Construction: $1 billion for Capital Investment Grants for new commuter rail or other light rail systems to increase public use of mass transit and to speed projects already in construction. The Federal Transit Administration has $2.4 billion in pre-approved projects.

Transit Upgrades and Repair: $2 billion to modernize existing transit systems, including renovations to stations, security systems, computers, equipment, structures, signals, and communications. Funds will be distributed through the existing formula. The repair backlog is nearly $50 billion.

Transit Capital Assistance: $6 billion to purchase buses and equipment needed to increase public transportation and improve intermodal and transit facilities. The Department of Transportation estimates a $3.2 billion maintenance backlog and $9.2 billion in needed improvements. The American Public Transportation Association identified 787 ready-to-go transit projects totaling $15.5 billion. Funds will be distributed through the existing formulas. (Note: USCM also called for operating assistance to help stabilize fare increases. This is NOT mentioned in the House summary.)

Amtrak and Intercity Passenger Rail Construction Grants: $1.1 billion to improve the speed and capacity of intercity passenger rail service. The Department of Transportation's Inspector General estimates the North East Corridor alone has a backlog of over $10 billion.

Clean Water State Revolving Fund: $6 billion for loans to help communities upgrade wastewater treatment systems. EPA estimates a $388 billion funding gap. The Association of State and Interstate Water Pollution Control Administrators found that 26 states have $10 billion in approved water projects. (Note: USCM called for grants as we had in mid 1980s, but these are loans. In addition, the distribution system is challenged in many states that do not allow some cities to apply for funding.)

Drinking Water State Revolving Fund: $2 billion for loans for drinking water infrastructure. EPA estimates there is a $274 billion funding gap. The National Governors Association reported that there are $6 billion in ready-to-go projects, which could quickly be obligated. (Note: USCM called for grants as we had in mid 1980s, but these are loans. In addition, the distribution system is challenged in many states that do not allow some cities to apply for funding.)

Rural Water and Waste Disposal: $1.5 billion to support $3.8 billion in grants and loans to help communities fund drinking water and wastewater treatment systems. In 2008, there were $2.4 billion in requests for water and waste loans and $990 million for water and waste grants went unfunded.

Corps of Engineers: $4.5 billion for environmental restoration, flood protection, hydropower, and navigation infrastructure critical to the economy. The Corps has a construction backlog of $61 billion.

Bureau of Reclamation: $500 million to provide clean, reliable drinking water to rural areas and to ensure adequate water supply to western localities impacted by drought. The Bureau has backlogs of more than $1 billion in rural water projects and water reuse and recycling projects.

Watershed Infrastructure: $400 million for the Natural Resources Conservation Service watershed improvement programs to design and build flood protection and water quality projects, repair aging dams, and purchase and restore conservation easements in river flood zones.

School Construction: $20 billion, including $14 billion for K-12 and $6 billion for higher education, for renovation and modernization, including technology upgrades and energy efficiency improvements. Also includes $100 million for school construction in communities that lack a local property tax base because they contain non-taxable federal lands such as military bases or Indian reservations, and $25 million to help charter schools build, obtain, and repair schools.

Education Technology: $1 billion for 21st century classrooms, including computer and science labs and teacher technology training.

Wireless and Broadband Grants: $6 billion for broadband and wireless services in underserved areas to strengthen the economy and provide business and job opportunities in every section of America with benefits to e-commerce, education, and healthcare. For every dollar invested in broadband the economy sees a ten-fold return on that investment.

DTV Conversion Coupons: $650 million to continue the coupon program to enable American households to convert from analog television transmission to digital transmission.

Health Information Technology: $20 billion to jumpstart efforts to computerize health records to cut costs and reduce medical errors.

State and Local Governments Tax Provisions: Allow financial institutions to purchase state and local bonds and other changes; Repeal AMT limits on new private activity bonds; Taxable bond option for governmental bonds; School construction bonds; One year deferral of withholding tax on government contractors.

III. Poverty, Work and Opportunity ($214.35 Billion)

Community Development Block Grants: $1 billion for community and economic development projects including housing and services for those hit hard by tough economic times.

Neighborhood Stabilization: $4.2 billion to help communities purchase and rehabilitate foreclosed, vacant properties in order to create more affordable housing and reduce neighborhood blight.

Homeless Assistance Grants: $1.5 billion for the Emergency Shelter Grant program to provide short term rental assistance, housing relocation, and stabilization services for families during the economic crisis. Funds are distributed by formula.

Public Housing Capital Fund: $5 billion for building repair and modernization, including critical safety repairs. Every dollar of Capital Fund expenditures produces $2.12 in economic return. $4 billion of the funds will be distributed to public housing authorities through the existing formula and $1 billion will be awarded through a competitive process for projects that improve energy efficiency.

Housing Tax Provisions: Remove repayment requirement on $7,500 first-time home buyer credit for homes purchased after 2008 and before termination of credit (June 30, 2009); Coordination provisions with new grant program for low-income housing being designed by the Financial Services Committee.

Economic Development Assistance: $250 million to address long-term economic distress in urban industrial cores and rural areas distributed based on need and ability to create jobs and attract private investment. EDA leverages $10 in private investments for $1 in federal funds.

Lead Paint: $100 million for competitive grants to local governments and nonprofit organizations to remove lead-based paint hazards in low-income housing.

Small Business Credit: $430 million for new direct lending and loan guarantee authorities to make loans more attractive to lenders and free up capital. The number of loans guaranteed under the SBA's 7(a) business loan program was down 57 percent in the first quarter of this year compared to last.

Training and Employment Services: $4 billion for job training including formula grants for adult, dislocated worker, and youth services (including $1.2 billion to create up to one million summer jobs for youth). The needs of workers also will be met through dislocated worker national emergency grants, new competitive grants for worker training in high growth and emerging industry sectors (with priority consideration to "green" jobs and healthcare), and increased funds for the YouthBuild program. Green jobs training will include preparing workers for activities supported by other economic recovery funds, such as retrofitting of buildings, green construction, and the production of renewable electric power.

AmeriCorps Programs: $200 million to put approximately 16,000 additional AmeriCorps members to work doing national service, meeting needs of vulnerable populations and communities during the recession.

Compassion Capital Fund: $100 million for grants to faith- and community-based organizations to provide critical safety net services to needy individuals and families.

Extension of Unemployment Benefits: Benefits Extension: $27 billion to continue the current extended unemployment benefits program – which provides up to 33 weeks of extended benefits –through December 31, 2009 given rising unemployment. Increased Benefits: $9 billion to increase the current average unemployment insurance benefit from roughly $300 per week, paid out of state trust funds, by $25 per week using Federal funds, through December 2009. There are currently 5.3 million workers receiving regular UI and an additional 1.9 million receiving extended benefits.

Supplemental Nutrition Assistance: $20 billion to provide nutrition assistance to modest-income families and to lift restrictions that limit the amount of time individuals can receive food stamps.

Senior Nutrition Programs: $200 million for formula grants to states for elderly nutrition services including Meals on Wheels and Congregate Meals.

Afterschool Meals: $726 million to increase the number of states that provide free dinners to children and to encourage participation by new institutions by increasing snack reimbursement rates.

Child Care Development Block Grant: $2 billion to provide child care services for an additional 300,000 children in low-income families while their parents go to work. Today only one out of seven eligible children receives care.

Head Start: $2.1 billion to provide comprehensive development services to help 110,000 additional children succeed in school. Funds are distributed based on need. Only about half of all eligible preschoolers, and less than 3 percent of eligible infants and toddlers, participate in Head Start.

Community Services Block Grant: $1 billion for grants to local communities to support employment, food, housing, and healthcare efforts serving those hardest hit by the recession. Community action agencies have seen dramatic increases in requests for their assistance due to rising unemployment, housing foreclosures, and high food and fuel prices.

Community Health Centers: $1.5 billion, including $500 million to increase the number of uninsured Americans who receive quality healthcare and $1 billion to renovate clinics and make health information technology improvements. More than 400 applications submitted earlier this year for new or expanded CHC sites remain unfunded.

Emergency Food and Shelter: $200 million to help local community organizations provide food, shelter, and support services to the nation's hungry, homeless, and people in economic crisis, including one-month utility payments to prevent service cut-off and one-month rent or mortgage assistance to prevent evictions or help people leave shelters. Funds are distributed by formula based on unemployment and poverty rates.

Low-Income Home Energy Assistance: $1 billion to help low-income families pay for home heating and cooling at a time of rising energy costs.

Temporary Assistance for Needy Families: $2.5 billion for block grants to help states deal with the surge in families needing help during the recession and to prevent them from cutting work programs and services for abused and neglected children.

Economic Development Assistance: $250 million to address long-term economic distress in urban industrial cores and rural areas distributed based on need and ability to create jobs and attract private investment. EDA leverages $10 in private investments for $1 in federal funds.

IDEA Special Education: $13 billion for formula grants to increase the federal share of special education costs and prevent these mandatory costs from forcing states to cut other areas of education.

Title I Help for Disadvantaged Kids: $13 billion for grants to help disadvantaged kids in nearly every school district and more than half of all public schools reach high academic standards.

Pell Grants: $15.6 billion to increase the maximum Pell Grant by $500, from $4,850 to $5,350.

College Work-Study: $490 million to support undergraduate and graduate students who work.

Student Loan Limit Increase: Increases limits on unsubsidized Stafford loans by $2,000.

Higher Education Tax Credits: Simplification of education credits with $2,500 credit for first four years of higher education expenses (increase income limitations), with credit partially-refundable (40 percent refundable).

Medicaid Aid to States (FMAP): $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent, with additional relief tied to rates of unemployment. This approach has been used in previous recessions to prevent cuts to health benefits for their increased low-income patient loads at a time when state revenues are declining.

Periodic Census and Programs, Communications: $1 billion for work necessary to ensure a successful 2010 census, including $150 million for expanded communications and outreach programs to minimize undercounting of minority groups.

Distressed Areas: Provide tax exempt bonds and tax credit bonds to "recovery zones." These tax exempt bonds and tax credit bonds can be used for a wide array of purposes to stimulate economic development, including job training and education. A "recovery zone" would be an area within a state, city or county that has exhibited high unemployment, foreclosures or poverty. These bonds would be allocated automatically to states and large municipal governments based on the number of unemployed individuals within that area.

Tax Relief for Individuals: "Making Work Pay Credit"; Expand Earned Income Tax Credit (EITC); Increase in child tax credit, $0 floor.

IV. Crime ($4.00 Billion)

State and Local Law Enforcement: $4 billion to support state and local law enforcement including $3 billion for the Byrne Justice Assistance formula grants to support local law enforcement efforts with equipment and operating costs, and $1 billion for the COPS hiring grant program, to hire about 13,000 new police officers for three years. The grantee is responsible for at least 25 percent in matching funds and must commit to use their own funds to keep the officer on board in the fourth year.

V. Arts and Tourism ($4.70 Billion)

National Endowment for the Arts: $50 million for preventing or recouping job losses in the nonprofit arts sector.

Border Ports of Entry: $1.15 billion to construct GSA and Customs and Border Patrol land ports of entry to improve border security, make trade and travel easier and reduce wait times, and to procure non-intrusive inspection technology at sea ports of entry, which is used to scan cargo containers to reduce the risk that containers can be used to smuggle weapons of mass destruction.

Airport Improvement Grants: $3 billion for airport improvement projects that will improve safety and reduce congestion. An estimated $41 billion in eligible airport infrastructure projects are needed between 2007-2011.

Transportation Security Administration Explosive Detection Systems: $500 million to install Aviation Explosive Detection Systems in the nation's airports, improving security, and making life easier on travelers by speeding security lines. Funds are competitively awarded based on security risk.