Stimulus Package Likely to Have Major Impact on Businesses

By: Kristine Danz - Partner, Ice Miller's Business Group

Category: Economy

The American Recovery and Reinvestment Act of 2009, commonly known as ARRA or the stimulus bill, is one of the most significant economic recovery bills passed since the Great Depression. The ARRA contains a package of spending provisions and tax incentives with an estimated cost of $787 billion. While the implementation processes have not yet been fully developed, the stimulus bill clearly demonstrates the priorities of the U.S. Congress and the Obama administration with respect to dealing with the financial and economic crisis currently facing the United States as well as the rest of the world. Several industry sectors in the American economy will benefit from the stimulus bill and the following are some of those key areas.

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Employment
Companies who are the beneficiaries of funds from the stimulus bill should take note. New whistleblower provisions and employment-related provisions touching on immigration law are included in the legislation. In addition, there are compensation restrictions in place for executives of public companies receiving Troubled Asset Relief Program (TARP) funds.

Corporate Tax
A number of important business tax relief provisions are contained in the stimulus bill including a five-year carryback of 2008 net operating losses for qualified small businesses. The legislation also expands the volume for the New Markets Tax Credits program.

Education
President Obama has made education a key component of the stimulus bill. More than $43 billion has been allocated to the Department of Education and an additional $9.9 billion in tax credit bonds for the land acquisition for, or construction, rehabilitation or repair of public school facilities.

Transportation
Before the ink could dry on the stimulus bill, many political pundits were calling transportation and infrastructure one of the big winners. The amount allocated for transportation infrastructure investment is $64.1 billion, according to the House Committee on Transportation and Infrastructure. Most of these funds go toward highway and bridge construction projects, mass transit such as public transportation and high-speed rail projects as well as aviation programs.

Agriculture and Rural Development
The Obama administration's rural agenda includes a safety net for family farmers and a program to connect rural America through affordable broadband coverage. Both of these programs will receive support through the stimulus bill with $4.8 billion allocated to the Department of Agriculture for farming aid and rural development projects through the use of grants, loans and guarantees for broadband infrastructure programs and rural water, waste water and water disposal programs.

Renewable Energy and Green Projects
"Green" projects and programs may be another way the federal government is hoping to pull the struggling economy out of the red. The stimulus bill provides for billions of dollars of tax relief for qualifying energy and climate change projects through changes in the renewable energy tax credits, the Department of Treasury renewable energy grant program and energy and transmissions appropriations.

Health and Life Science
The stimulus bill intends to provide federal assistance to states for health insurance coverage through Medicaid for children and those in danger of losing their coverage. Other big recipients include the National Institute of Health, the Department of Health and Human Services and the health information technology exchange programs.

Public Housing
The stimulus bill is welcomed news for the public housing sector. The funds will be allocated between several different housing initiatives including $4 billion to be used for capital and management activities for public housing agencies, $2 billion for neighborhood stabilization programs, and $1.5 billion for homeless prevention efforts.

Homeland Security
As the nation focuses its attention on a struggling financial sector, there is still work to be done to improve our national security. Approximately $2.8 billion will fund a variety of programs through the Department of Homeland Security including border protection, aviation security, bridge construction and repair as well as railroad and port security assistance.

Tax-Exempt Bonds and Tax-Credit Bonds
The stimulus bill modifies several federal tax laws affecting tax-exempt bonds including creating a two percent safe harbor and creating a new type of tax-credit bond called Build America Bonds. Recovery zone economic development bonds and manufacturing bonds and a number of other bond provisions are outlined in the stimulus bill.

If you'd like more information you can view a chart detailing key provisions that could impact business at http://www.icemiller.com/enewsletter/ARRA/StimulusPkg.htm. You can also contact Kristine Danz at kristine.danz@icemiller.com.

This publication is intended only for general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about the information contained herein. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.

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