U.S. Senator Blanche Lincoln

Economic Recovery Dollars on Their Way to Arkansas

Arkansas Recovery Website

The American Recovery and Reinvestment Act of 2009:  What will it mean for Arkansas?

 The American Recovery and Reinvestment Act of 2009 is balanced legislation that will provide much-needed tax cuts for Arkansas’s small businesses and families hit by the economic crisis.  The recovery bill also includes timely, targeted, and temporary investments that will help create new jobs, improve our communities, and strengthen our economic security.  These time-sensitive investments will help put Arkansans back to work and help put our economy back on the right track. 

Tax Relief

• Working Arkansans with incomes up to $75,000 will be eligible for a refundable tax credit of up to $400.  Married couples filing jointly (with a combined income of less than $150,000) will be eligible for an $800 credit.  Taxpayers can receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks or through claiming the credit on their tax returns for 2009 and 2010.  Approximately 986,000 Arkansas taxpayers will qualify for the credit.

• Arkansas’s Social Security retirees, government retirees not eligible for Social Security, disabled veterans and individuals that receive benefits from the Social Security Administration who do not qualify for this tax credit are eligible for a $250 Economic Recovery Payment.

• First-time homebuyers will be eligible for a credit of up to $8,000 for the purchase of a principal residence.  Senator Lincoln cosponsored a modified version of this credit during the economic recovery bill debate.

• Arkansas taxpayers will be able to deduct state and local sales and excise taxes paid on the purchase of new cars, light trucks, recreational vehicles, and motorcycles through 2009 (phased out for taxpayers with adjusted gross income in excess of $125,000 for individuals, $250,000 for joint filers).

• 107,000 Arkansas taxpayers will be protected by the Alternative Minimum Tax fix.

• The families of approximately 167,000 children in Arkansas will benefit from the expanded child tax credit (up to $1,000 per child).  Senator Lincoln has long-championed making the refundable child tax credit available to more working families with children.   

• More than 184,000 Arkansans will receive a tax break on the first $2,400 of their unemployment benefits.  The recovery bill includes Senator Lincoln’s provision to allow the temporary suspension of federal income tax on the first $2,400 of unemployment benefits per recipient.  Arkansas’s jobless will also see a $25 per week increase in benefits and be eligible for up to 20 weeks of extended benefits through December 31, 2009.

Education

• 44,000 additional Arkansas students will qualify for a $2,500 tax credit to help afford the cost of higher education.

• Arkansas’s 75,000 Pell Grant recipients will be eligible for a maximum award of $5,350 for higher education expenses (up from $4,360).

• Arkansas will receive more than $7 million for Head Start to allow additional children to participate in the program, which provides critical development activities that prepare children for future success in school.

Nutrition, Housing, and Child Care

• Arkansas will receive $1 million through the National School Lunch program to feed low-income school children.

• $223 million provided through the SNAP hunger initiative will help feed approximately 389,000 Arkansans in need.  Mark Zandi of Moody’s Economy.com estimates that $1 in food stamps generates $1.73 in economic activity.

• More than $857,000 will support senior meal programs in Arkansas.  Funding will help address increases in food and fuel costs at a time when many programs are reducing meal deliveries or closing meal sites.

• Arkansas’s community action agencies are expected to receive more than $13.6 million to offer assistance to the growing numbers of working families hit by the economic crisis.  Housing and mortgage counseling, jobs skills training, and food pantry assistance will be offered through the Community Services Block Grant.

• Arkansas will receive $25 million to provide quality child care services for low-income families who increasingly are unable to afford the high cost of day care (Child Care and Development Block Grants).

What the American Recovery and Reinvestment Act of 2009 will mean for Arkansas’s small businesses:

Because the economic slowdown and credit crisis have placed a particularly difficult burden on Arkansas’s small businesses, Senator Lincoln fought to include provisions that will provide them access to capital and tools to help sustain and grow their business.

• Lincoln helped secure extensions of the small business expensing limits and bonus depreciation, which allows businesses to immediately write off fifty percent of the cost of depreciable property purchased in 2009. 

• In addition, Lincoln helped craft a provision that will allow small businesses to carry back losses in 2008 for up to five years.  This benefit will allow these businesses to credit their current losses against previously profitable years. 

• Lincoln’s amendment to reduce the built-in gains holding period on subchapter S corporations is also part of the recovery bill.  This provision will allow many businesses organized as S corporations to immediately access their own “trapped” capital without penalty.    

What the American Recovery and Reinvestment Act of 2009 will mean for job creation and economic development in our state:

Infrastructure and Job Creation

• $351.5 million for Arkansas’s highway priorities.

• $24.7 million for Arkansas through the Drinking Water State Revolving Fund and $26 million through the Clean Water State Revolving Fund to address water infrastructure needs. 

• $22 million for Arkansas’s law enforcement agencies through the Edward Byrne Memorial Justice Assistance Grant (JAG) Program.

• $7.5 million for economic development projects through the Community Development Block Grant program–a signature program for Arkansas’s cities, counties and local communities to create jobs, spur economic development and small business opportunities.

• Qualified economic development projects in Arkansas should receive funding as a result of Senator Lincoln’s efforts to increase the New Markets Tax Credit allocation.  These projects would provide construction jobs initially, followed by health care, education, and industrial development jobs. 

New Energy Technologies

• The bill provides a long-term extension of the renewable energy production tax credit and an election to claim the renewable energy investment tax credit in its place.  These renewable energy incentives will provide entrepreneurs with capital and result in the creation of more “green jobs” in Arkansas.  Senator Lincoln has pointed to the use of woody biomass and animal waste as new energy technologies that can spur the creation of new green jobs in Arkansas.

• Arkansas will receive $39.2 million to fund state government energy technology research and development programs (State Energy Program grants).

• Arkansas will receive $50 million to cover some of the costs of insulating low-income residences (Department of Energy’s Weatherization Assistance Program).

Health Care

• Arkansas will receive an additional $730 million in our federal Medicaid matching payment.  As one of the poorest states in the nation, Arkansas relies heavily upon Medicaid funding as a safety net. The number of Medicaid recipients is expected to rise as Arkansas’s unemployment rate rises.  Medicaid dollars serve as critical stimulus for health care providers and facilities.  As a result of Senator Lincoln’s efforts, Arkansas will receive more funds than were provided in the original House bill.   

Education and Employment

• Arkansas will receive more than $444 million for education and other services, including K-12; higher education; and school modernization, renovation or repair.
  
  
• Arkansas is expected to receive approximately $113 million (in both 2009 and 2010) to use to finance renovations, purchase equipment, develop course material, and train teachers at “qualified zone  academies”—any public school that is located in an empowerment zone or enterprise community that is designed to cooperate with businesses to enhance academic curriculum and increase graduation rates (Qualified Zone Academy Bonds).
  
• Arkansas will receive $7.5 million to help communities meet their needs of skilled workers (Dislocated Workers State Grants).

• Arkansas will receive $3.45 million to match unemployed individuals to job openings through state employment service agencies (State Employment Service Grants).

       The above tax relief provisions and investments do not represent the total funding for Arkansas, but serve as a snapshot of how the recovery bill will impact our state. 

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