National stimulus plan could reach UK

By Jill Seelmeyer

The federal economic stimulus bill expected to be signed by President Barack Obama on Tuesday may affect both Lexington and UK.

Congress passed the $787 billion stimulus plan late Friday evening. The bill is focused on stimulating the economy through tax breaks and includes over $100 billion in state aid.

For Kentucky, the combination of spending and tax cuts total almost $7.2 billion under the plan.

Lexington submitted a $556 million list of infrastructure projects, which include a new downtown transit center and an expansion of a wastewater treatment plan.

Susan Straub, a spokeswoman for Mayor Jim Newberry, said Friday it is too early to tell exactly what kind of aid Lexington will receive, but the city hopes to receive funding for areas such as infrastructure, improving energy efficiency, education, health care and electronic health. Funds will most likely be distributed through categories, not by projects, she said.

“There’s always competition for these kinds of funds,” Straub said. ”Different kinds of money require different things.”

Straub said Kentucky is in a competitive position to receive funds, and the state government is not worried about qualifying for federal aid from the stimulus plan.

While it remains unclear how much funding UK can expect to see from the plan, certain aspects of it will be beneficial for both the city and the university, Straub said, referring specifically to a project aimed at building a Newtown Pike extension, which would provide a new way to get to UK.

Straub said because a large portion of funding is focused on increasing scientific research, UK can hope to receive funds to further its effort to become one of the country’s top-20 research universities. The stimulus plan includes $3 billion in science research funds available nationally.

“Researchers at the university will need to compete for this money by having good research ideas,” Don Mullineaux, a professor in the School of Management, said in an e-mail to the Kernel.

Mullineaux said the plan will have little immediate direct effect on most UK students and that the long-term effect will depend on whether or not the plan works.

“If the economy gets weaker than expected, UK could suffer still more funding cuts. If this happens, tuition would probably rise even more than presently anticipated,” Mullineaux said.

Ken Troske, the director for the Center for Business and Economic Research at UK, said the plan includes an increase in college tax credits and a $500 increase for students with Pell Grants, which are given to low-income students.

Troske said even with the stimulus plan, he doesn’t think it will have a major impact on the growth of the economy overall, causing student enrollment to continue to increase.

“In difficult economic times, students are more likely to enroll in school and less likely to drop out,” Troske said, noting the increase in UK’s student retention rate this semester.

Mullineaux said there are good and bad things about the plan. If you focus on the good you might be optimistic, he said, but the program will cause a very substantial deficit and government debt.

“The burden of this debt, if it continues, will fall much more heavily on current UK students than on their parents or grandparents,” Mullineaux said.