FRANKFORT, Ky. – The state is anxious to see how much money would come our way from the over $800 billion federal stimulus bill proposed by President Obama. With a vote expected on the bill in the U.S. House next month, it could be only a matter of months before our state and local governments gets some relief should the bill clear Congress.

At the same time, we know better than to count chickens before they hatch, so to speak. The bill might not pass for quite a while. And even if it does, a state legislative economist told us last week not to expect much this fiscal year when the recession has about bled us dry. Any fiscal impact on the state, he said, will most likely take hold next fiscal year which begins on July  1.

First, let’s look at what the bill proposes. The bill, in a nutshell, is a combination of tax cuts and increased spending to reduce get money flowing again and get the nearly 2 million people who lost their jobs in the recession, and then some, back to work. The tax cuts, which would include tax credits for workers and families and tax offsets for businesses, total around $275 billion. Increased spending to put people to work on infrastructure projects, fund unemployment insurance and other programs or projects would total around $550 billion.

If all goes well and the bill has the impact that the President and the bill’s supporters hope, some estimate that an additional 3 to 4 million jobs would be created by the stimulus. That is great news if the stimulus works as planned. Right now, based on testimony from our staff economist in the Legislature, that is a big “if”.

I know that isn’t the most positive outlook, and the economist says he really can’t say at this point what the impact will be because of shaky economic conditions. My point is that such uncertainty is the very reason we must be cautious about relying any future stimulus windfall—we don’t even know what the effect of the stimulus, if any, will be.

Here’s what we know, from the staff economist’s report: The stimulus can be very helpful to Kentucky if it occurs while we are still are in deep recession since inflation would not be much of an issue. But if stimulus money and cuts take hold when the U.S. begins to move out of recession, whenever that may be, it could hurt the economy by putting more demand on goods and services and more pressure on inflation.

So, in other words, how much money will be allocated to the states under the bill won’t make much of a difference if the money isn’t pouring into the state at the right time, so say the experts.

Another factor in how well Kentucky fares from any potential stimulus is the provisions under which allocations of federal money are made. It is a given that having more people at work will generate more income tax and sales tax by increasing citizen buying power. But states also have to consider an increase in federal funding for some programs would require additional state matching funds over what they have budgeted.

Some good news is the economist said he does not believe the bill would require the state to payback any funding it receives to boost its unemployment insurance trust fund, which is just months away from being depleted. And it requires the feds to pay more for Medicaid—a program that now consumes over 20 percent of state budgets.

He also told lawmakers that work projects planned in the bill to improve national road, transit and other systems could be temporary work or could sustain jobs depending on what kinds of projects are in place. That is what will determine long-term impact of those jobs, he said.

Some lawmakers sound hopeful about the stimulus, others less so. One lawmaker said he believes that any long-term economic recovery cannot really take place until the U.S. stabilizes its financial system. Others were hopeful that the bill would include funding for rural areas in need of help. Right now, there are no clear cut answers. It looks like all of us, even the experts, will just have to hope for the best and see what happens.