WASHINGTON – “Rhode Island will get a major financial boost from this federal economic recovery plan,” U.S. Sen. Jack Reed said of the $789 billion legislation expected to be approved today by both houses of Congress.

About $825 million in local investments and incentives are included in the trimmed-down bill, which reconciles differences between the earlier House and Senate versions.

The measure is expected to save or create 12,000 jobs in Rhode Island, down from the 13,000 expected under a larger previous version. (READ MORE) It includes about $400 million in investments in local schools, roads, infrastructure and other critical programs, and about $425 million for local Medicaid and health care programs, based on estimates by the Senate Appropriations and Finance panels, Reed’s office said.

The compromise version of the American Recovery and Reinvestment Act of 2009 – although smaller than either of the earlier measures (H.R. 1, sponsored by House Appropriations Committee Chairman David R. Obey, D-Wis.; and S-1, sponsored by Senate Majority Leader Harry Reid, D-Nev.) – still will be one of the largest spending measures ever approved by U.S. lawmakers.

Its provisions for individuals include:

• Protection against the alternative minimum tax (AMT) for more than 26 million families nationwide, including about 100,000 Rhode Islanders.

• A refundable “making work pay” tax credit of up to $400 per worker and $800 per married couple, for both 2009 and 2010, plus stimulus payments of $250 apiece to Social Security and SSI beneficiaries and disabled veterans.

• A refundable first-time home-buyer credit of up to $8,000.

• A sales-tax deduction on new new cars, light trucks, recreational vehicles and motorcycles purchased in 2009.

• A temporary suspension of income tax on the first $2,400 of unemployment benefits any one individual receives in 2009.

• An “American Opportunity” education tax credit, in 2009 and 2010, of up to $2,500 of the cost of college tuition and expenses paid during the tax year.

For state and local governments, the measure also includes:

• Incentives for the modernization of unemployment insurance programs that, according to calculations by the R.I. Department of Labor and Training, could bring the state as much as $23.6 million in new funding. (One controversial provision: An expansion of the unemployment benefits system to cover people who leave work to care for an ailing family member.)

• An indirect benefit of probably reducing municipal borrowing, by as much as 8 percent, analysts told Bloomberg News. This reduction is likely to increase demand for the municipal bond that are issued by states, cities, towns and regional agencies, enabling them to reduce their borrowing costs.

The measure is likely to help the U.S. economy “begin to tick up in third quarter of 2009, but the biggest effect of the stimulus bill is in 2010,” Yale University economist Ray Fair told Bloomberg News. “The hope is, with the stimulus, that we actually stop losing jobs by the end of this year,” added Josh Bivens, of the Economic Policy Institute.

“Passing this bill is a critical first step to helping families, businesses and communities across the country,” said Reed. “It will not solve all of our problems, but inaction or relying on the failed policies of the past are not an option.

“We are putting more money into the hands of families and also relieving pressure on state and local budgets. We also need to get credit flowing again and strengthen oversight of our financial markets to prevent a recurrence of this type of economic crisis.”

Additional information about the American Recovery and Reinvestment Act of 2009 and other congressional legislation, is available from the Library of Congress at thomas.loc.gov.