Cash to Va. from stimulus package goes far beyond $4.8 billion estimate

Millions of Virginians will see direct benefits of the federal economic-stimulus package Wednesday, as tax credits start to show up in worker paychecks and food-stamp benefits rise 13.6 percent.

A tax credit amounting to $400 a year for most workers will benefit more than 2.9 million Virginia taxpayers. The credit will reduce the taxes withheld from most workers' paychecks by about $13 per week in 2009 and about $7.70 per week in 2010.

The boost in food-stamp benefits will aid more than 608,000 of the state's neediest residents. The food-stamp increase alone will bring an additional $355 million in higher benefits over five years, as well as $5.3 million to help social-services departments administer caseloads that have swollen by 20 percent since mid-2007.

The increase in food-stamp benefits will mean an additional $32 a month for the typical Virginia household on food stamps, according to state officials, and advocates say every dollar in food stamps will generate up to $1.84 in spending as poor families are able to spread their meager resources further to purchase necessities.

"Obviously, it has a huge impact," said Jill A. Hanken, staff attorney at the Virginia Poverty Law Center. "What do people do with their food stamps? They go buy food. . . . It's going to help the grocers and the families and beyond."

State and local officials, advocates, and business interests are still trying to figure out how much money to expect under the American Recovery and Reinvestment Act, the massive stimulus package proposed by President Barack Obama and adopted by Congress -- and how it can be spent.

The law is sending $4.8 billion to Virginia to distribute among a wide array of programs, but that doesn't include the tax credits, $330 million for projects at federal military bases, and a boost of up to $187.5 million in unemployment insurance, depending on whether the state expands some benefits.

Other money from the stimulus package is flowing from federal agencies directly to programs and facilities throughout the state.

On Friday, for example, the Department of Health and Human Services gave $5.2 million to 24 community health centers in Virginia to expand their services, and the Federal Aviation Administration awarded $5 million in competitive grants to rebuild a runway at a Franklin airport and to replace a high-tech mobile training facility the state uses to train firefighters at eight major airports to respond to emergencies.

"Individual programs are competing nationally and winning," said Virginia Secretary of Transportation Pierce R. Homer, who is overseeing the distribution of more than $811 million in stimulus funds given to the state for highway, rail and transit projects. And that doesn't include $1.5 billion in nationwide grants for transportation projects.

Much of the stimulus money flowing through the governor's office is subject to evolving rules that determine how it can be allocated and spent. Mental-health officials are taking part in a national conference call next week to determine how to allocate $10.3 million in funds for intervention services to infants and small children to prevent them from needing special education programs later.

Local government officials also are waiting on guidance before deciding how to handle $730 million in direct aid for schools, which doesn't include an additional $281 million for special education and $165.3 million for the needy schools under federal programs that have their own rules for spending the money.

Gordon Hickey, press secretary to Gov. Timothy M. Kaine, said the state knows how much money is going to localities. "What we don't know is how it's going to be broken down with the localities and what the rules are."

The biggest chunk of stimulus money is coming to the state's Medicaid program for the poor, almost $1.3 billion. Most of it, more than $962 million, already has been inserted into the state's two-year budget as part of an infusion to prevent deep cuts that Kaine said would have cost the state more than 7,000 jobs.

However, federal rules forced the state to spend about $200 million of its own money to restore programs that it had cut, including about 200 slots for services to mentally retarded residents under a waiver program that helps them avoid institutional care.

The state also will have to produce matching funds to take advantage of other federal aid, including about $4.3 million in Medicaid funds to help hospitals pay for indigent care.

The biggest political fight centers on unemployment-insurance benefits. Virginia is already eligible for $62.5 million in federal money to boost the state's dwindling trust fund for paying benefits, which are soaring because of job losses in the recession. But the stimulus act requires the state to expand some benefits if it wants an additional $125.5 million in unemployment benefits.

Kaine said last week that he will ask the General Assembly to make two changes that would allow unemployed people to receive benefits even if they are looking for part-time jobs or participating in job-training programs. Business lobbyists and House Republicans say they will fight the proposals at the assembly's veto session on April 8.

The state's unemployed already are receiving an additional $25 a week in benefits under the stimulus act. The higher benefits began at the end of February and will end in mid-2010. The state also is getting $13.7 million in stimulus funds to administer the program.

The recession also is putting pressure on Virginia's food-stamp program, which is getting $5.3 million over two years to help local social-services agencies cope with a caseload that has risen from 232,000 cases in July 2007 to more than 280,000 cases now. The rules aren't changing for income eligibility, although some people who are able to work won't lose their benefits after 90 days, as they do now.

But the amount of money going into electronic food-stamp debit accounts will increase dramatically on Wednesday, with an additional $14 million a month coming into Virginia's program through September, according to the Center for Budget Policy Priorities, an advocacy group in Washington. Virginia social services think the estimate is high, but they agree that the additional money will give poor families and local businesses a boost.

"The idea is to put more money into the economy," said Thomas J. Steinhauser, director of benefit programs at the Virginia Department of Social Services.

Contact Michael Martz at (804) 649-6964 or .