The American Rescue Plan Act in Southwestern Vermont
On March 11, 2021 President Biden signed the largest piece of economic legislation in the history of the U.S. Senate. The American Rescue Plan Act (ARPA) has within it over $1.9 trillion in economic relief. We’ll quickly breakdown what the bill does for Vermonters, the State of Vermont, and Vermont businesses.
For Individual Vermonters:
Direct Payments
– $1,400 direct payments per individual with $1,400 available per child.
– this will bring an estimated $731 million into Vermont as 89% of the state’s filers are eligible
UI Benefits
– $300 extra weekly benefit until September 6th, 2021 (Labor Day)
– first $10,200 of benefits not taxable
– American Rescue Plan Act pays 100% of the cost of premiums for those on COBRA
Child Tax Credit
– Possibly one of the biggest strides toward reducing child poverty in our country amounts to a guaranteed income to families with children:
– credit increase $3,600 for children under 6
– credit is now fully refundable
– credit should now be remitted in periodic installments
– 17-year-olds now included
Child and Dependent Care Credit and FSAs
– Makes the entire credit refundable for tax year 2021.
– The credit is also expanded: $4000 maximum credit per qualifying individual and $8000 for two or more individuals.
– Allows individuals to put aside $10,500 a year tax-free for childcare in an FSA, as opposed to normal $5,000.
Earned Income Tax Credit
– claimants can use 2019 income
– For tax year 2021, the maximum credit for individuals without children increases from $543 to $1,402.
– Repeals the maximum age limit of 65
– Lowers the minimum age from 25 to 19.
– Maximum investment income threshold is increased from $2,220 to $10,000.
Additionally, nearly every Vermont Household will see savings on insurance from ACA expansion and revisions in ARPA.
For the State of Vermont
Our little state is looking at a total haul of about $2.7 billion when most everything is accounted for in the American Rescue Plan Act. Vermont will bring in an incredible $1.36 billion from the state and local aid component of the bill that will have restrictions and flexibility similar to CRF dollars, however, with more flexibility and a timeline to spend it of about 3.5 years. Also different from CRF, the state will have $1.052 billion available for the state legislature to allocate and about $197 million reserved for municipalities. There is an additional $113 million for state infrastructure projects.
As reported by Senator Leahy's Office:
$1.35 billion from the Coronavirus Relief Fund (includes $113 million for infrastructures such as broadband and $197 million for Vermont municipalities)
$731 million in Economic Impact Payments to Vermonters
$293 million for Vermont K-12 Schools
$152 million for Rental Assistance
$65 million for Vermont Colleges and Universities
$50 million for Homeowner Assistance
$47 million for Childcare Subsidies and Support for Childcare Providers
$27 million for Vaccine Distribution
$20.7 million for LIHEAP
$14.3 million in Public Transit Funds
$7.9 million for Burlington Airport and Vermont State-Owned Airports
The state would not receive all of the money at once, as it did with CRF, instead, it will receive it in two separate tranches; one with 50% within 60-days after the bill is signed (June) and another within a year. It is unclear what restrictions are exactly around those tranches, however, what is clear is that we are in for another late summer of fall legislative session to allocate the dollars.
The general consensus coming from the virtual Montpelier is that this is a golden opportunity. Vermont is faring much better than anticipated due to stronger than expected sales and personal income tax. This funding is being looked at less as a bailout and more as an investment to build Vermont back stronger, as indicated by the Secretary of administration, Susan Young in a letter to the Senate Committee on Appropriations.
For Vermont Businesses;
The APRA is less sweeping for businesses, however, it does open up some eligibility for PPP, fund the State Small Business Credit Initiative at $10 billion, and create a $29 billion grant program for restaurants. $5 billion of the Restaurant Grant Program is reserved for small businesses and restaurants can receive these grants if they already received PPP, they will just need to subtract that amount from their award.
The indication from D.C. is that the remaining need for businesses will need to be addressed by the state grant programs.
Not in the package, was an extension of the Paycheck Protection Program beyond the March 31st deadline. The House Small Business Committee came to a bipartisan agreement on Thursday to extend the program’s ability to accept applications two months (until May 31st) and process and fund those applications until three months (June 31st).