Federal Stimulus Bill Details

Provisions of Interest to ACEC Member Firms

ACEC's Katharine Mottley provides an analysis on the recently passed Stimulus Bill.

The House has passed the stimulus bill as amended by the Senate, and the President is expected to sign it on Friday.  Most of the $1.9 trillion package is focused on individuals (e.g. stimulus checks and unemployment benefits) and COVID-19 response in the form of funds for vaccine distribution, school reopening, and similar priorities.  The following provisions may be of interest to ACEC member firms:

  • $350 billion in funding for state/local governments (note: language was included by Majority Leader Schumer barring any state/local government that accepts these funds from cutting taxes during the covered period – please see below for more detail)
  • $30 billion for transit
  • $8 billion for airports
  • $1.7 billion for Amtrak
  • $3 billion for the Department of Commerce Economic Adjustment Assistance program
  • $50 billion for FEMA's Disaster Relief Fund
  • $10 billion for a new Critical Infrastructure Projects program to help States, territories, and Tribal governments carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to COVID-19
  • Extends the employee retention tax credit, as expanded in the December 2020 Consolidated Appropriations and Coronavirus Relief Act, through the end of 2021
  • Extends the payroll tax credits for emergency sick leave and emergency family leave under the 2020 Families First Coronavirus Response Act through the end of 2021
  • Extends the Section 461(l) excess business loss limitations for non-corporate taxpayers that was put into place by the 2017 Republican tax bill by one year through the end of 2026

More information related to restrictions on the $350 billion in state/local government funding:

  • The stimulus bill provides $350 billion in funding for states, territories, tribes and local governments, to be distributed based on a formula.
  • The funds can be used:
  • To respond to the covid health crisis or the resulting economic impact on households, small businesses, nonprofits, and tourism.
  • To provide premium pay to governmental employees doing essential work.
  • To provide governmental services to the extent that the governmental entity has lost revenue during the pandemic.
  • Restrictions:
  • State, territorial, tribal and local governments that accept this funding cannot directly or indirectly use it to cut taxes or delay a tax increase during the covered period (March 3, 2021 until December 31, 2024).
  • State, territorial, tribal and local governments also cannot use these funds to shore up their pension plans.

There was concern among Senate Democrats that some states would accept the federal funding for the allowed purposes and then turn around and cut taxes.  The language was not vetted at all and may not be constitutional, as well as will likely have unintended consequences.  We don’t know how broadly Treasury will apply this language but we’re wondering if it could extend to state legislation making expenses covered by PPP loan forgiveness deductible at the state level (this will not affect federal tax deductibility of expenses covered by PPP loan forgiveness). 

Katharine

Katharine Mottley

Vice President, Tax and Regulatory Affairs


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