Yesterday I took some notes from an economics professor at the UM. He had some info on how this stimulus affects Montana. Here's what I wrote down:
- $626 million for the State of Montana, in his opinion a little low per capita.
- 1/3 of that is for highway funding, he reminded us that many city streets are considered highways, such as Brooks, Russell, and Reserve here in town. He suggested that most likely this stimulus will allow projects such as the Russell St expansion to take place.
- In his opinion a lot of the stimulus money is going to go into programs that the State of Montana was most likely going to do. Which means that Montana will have hundreds of millions of extra money with this bill.
- In regards to Montana's economy as a whole, "one of the better in the nation." The reason why is that our economy isn't based on most of the volitile businesses at this point. Montana didn't see the big gains, and we're not seeing the big drops.
- Montana governor Brian Schweitzer has stated that Montana has a $250 million "rainy day" fund in the bank, just in case. When you compare this to California who is $40 billion in debt, or Kansas who is going to be bouncing checks to it's teachers, Montana is in a very good (and safe) position.
This information came to me via the National Association of Realtors:
This is the official release from the National Association of Realtors:
So here's what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.
In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).
We did make a run at the $15,000 credit - and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of ‘what we are willing to give up to get a $15,000 tax credit' and kept the debate again, on how much it should be. It's pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution - there is much more to come and we are working diligently with the Administration to help ‘unclog the pipeline' and get capital flowing into housing again.