2009-02-26 / Local & State

Federal Stimulus Law Comes To Pennsylvania

By Marc Levy ASSOCIATED PRESS WRITER

HARRISBURG, Pa. (AP) - Gov. Ed Rendell said it himself: The $787 billion federal economic stimulus law is good, not great. Among those who either supported it or benefited from it, he wasn't alone in pointing out its flaws.

With the goal of jerking America out of its downward economic spiral, the law signed Tuesday by President Barack Obama slaps a Band-Aid on some local and state government budget gaps and spreads tax breaks across a wide spectrum of taxpayers - among many other steps.

Still, it wasn't perfect.

Pennsylvania's top two Democrats - Rendell and U.S. Sen. Bob Casey - both said the law should have done more to address the nation's failing infrastructure, a problem particularly acute in older states like Pennsylvania.

"To make it a great bill, I would have significantly increased the infrastructure'' spending in it and given fewer tax cuts, Rendell said earlier this month.

Pennsylvania is expected to get a share of about $16 billion from the bill. More than $2 billion of that will go toward resurfacing crumbling highways, replacing rusting bridges, improving drafty homes and bringing water and sewer systems up to modern environmental standards.

State officials estimate many billions more will be necessary to fix these problems, leaving policymakers with many of the same questions to answer.

Transportation Secretary Allen D. Biehler, appearing Thursday before the House Appropriations Committee, was peppered with questions about the stimulus funding and longterm options for paying for transportation.

Biehler responded that Pennsylvania's future is likely to be shaped by nascent discussions on the renewal of the federal surface transportation funding law.

Modern ideas like charging motorists for highway miles traveled or building high-speed rail systems could be the direction the federal government encourages states to take, Biehler said.

Absent that, there are no big ideas being pushed in Pennsylvania since the federal government rejected the state's application to toll Interstate 80 and the Legislature deep-sixed Rendell's proposals to lease the Pennsylvania Turnpike and tax oil company profits.

"There's an awful lot of legislators that are thinking about the issue right now,'' Biehler said in an interview Friday. "I'm sure (Rendell's) door would be open if they want to have this discussion.''

For small-business owners, the stimulus law delivers a grabbag of tax breaks - for instance, they can expense nearly twice as much equipment and can write off more losses in 2009.

But in the end, the National Federation of Independent Business did not support the law. It allowed some spending that has no ties to economic growth and did not grant the tax break sought by the NFIB: a holiday from the 6.2 percent Social Security payroll tax that both employers and employees pay on wages, said the group's tax counsel, Bill Rys.

"We wanted to put a more immediate punch back into businesses,'' Rys said.

A "buy America'' provision in the law that applies to iron and steel stands to help one of Pennsylvania's home industries - but the amount of the stimulus spending and the speed with which the law passed caused heartburn at the offices of the Pennsylvania Manufacturers Association.

The Pennsylvania Chamber of Business and Industry did not take a position on the stimulus, and otherwise felt that a provision boosting unemployment compensation payments was a way to help people during a painful time.

But the chamber is concerned that getting the federal benefit money will require Pennsylvania to expand its eligibility for state unemployment benefits - potentially hanging a much bigger burden on the state's taxpayers in future years.

Questions about the stimulus law dominated last week's House Appropriations Committee hearings on the state's 2009- 10 budget, as state officials were still trying to learn more about how the stimulus money must be used.

The committee chairman, Rep. Dwight Evans, D-Philadelphia, had no ill words for the stimulus law. The billions it will bring to Pennsylvania on top of the billions Pennsylvania already has approved under Rendell for infrastructure projects puts the state in a strong position to compete for investment, Evans said.

The next step is up to Pennsylvania's public officials to use the money wisely without getting bogged down in political disputes.

"The only challenge is whether you're going to have smart government or dumb government,'' Evans said.

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