FOCUS:ECONOMY
Economic stimulus bill gets off to a sluggish start
Slow-flowing funds, delayed local spending result in limited impact on local employment
WASHINGTON — The mammoth economic stimulus bill that passed early this year created or saved just 231 jobs in the Buffalo metro area as of the end of September, a Buffalo News analysis of federal reports shows.
That figure is understated to an unknown degree because saved education jobs are not reported on the local level.
But there’s no doubt that, overall, the $787 billion stimulus bill has not yet had a huge impact on local employment for two reasons:
The federal funds have been flowing slowly to Erie and Niagara counties.
And recipients seemed to be in no rush to spend what they got.
Despite the slow start, the region eventually should get a huge boost from the federal funding. The Buffalo News analysis, based on federal reports filed by those who received the money as of Sept. 30, found $408.6 million already awarded to the Buffalo area.
Of that total, only $67.79 million had actually been received as of the end of September, and only $8.27 million had been spent. Those figures echo a national trend that shows the stimulus aid trickling out of Washington.
In other words, in a nation where the unemployment rate climbed last month to 10.2 percent — the highest level since 1983 — the federal government’s main effort to turn around the economy has yet to take hold.
And that’s a matter of huge concern to Rep. Brian Higgins, a Buffalo Democrat who voted for the bill, and Rep.
Chris Lee, a Clarence Republican who voted against it.
“It’s slow. It’s sloppy,” Higgins said of the handling of the stimulus money. He termed the 231 jobs created or saved locally an “unimpressive” figure.
Lee agreed.
“This was supposed to be a stimulus package, and we’re now nine months later, and you look at the numbers, they’re abysmal in terms of what’s ultimately been spent,” he said.
Federal officials in Washington caution that the alternative — rushing the stimulus money out the door — could have encouraged fraud, waste and abuse.
“This is the taxpayers’ dollars. That’s money you don’t want to go to waste,” said Andrea Mead, a spokesperson at the U. S. Department of Housing and Urban Development, one of the biggest providers of funding to the Buffalo area.
Highway projects
There’s no doubt that the stimulus money has already had some impact locally.
Some 55 local highway projects are under way because of the federal aid, ranging from the reconstruction of Maple Road near the University at Buffalo to the rebuilding of four roads near the inner harbor.
Of those projects, 47 were less than 50 percent complete as of Sept. 30. Five were more than half finished and three had not yet been started — but none was completed.
Projects managed out of the local office of the state Department of Transportation, which includes some projects being built in the Southern Tier, have created or saved 53 jobs, the most of any agency or company under the stimulus bill.
The DOT won more money — $99.18 million — than any other local agency or company, and also leads the lists of money received and money spent.
Meanwhile, the University at Buffalo and Installs Inc., a Buffalo company that manages the installation of television equipment nationwide, each listed 24 jobs created or saved.
An influx of funding for medical and scientific research led to new post-doctoral and technician positions at UB, said Jorge V. Jose, vice president for research at the university.
The number of new jobs at UB is likely to rise.
“We’re still getting money, and we expect to get more,” said Jose, noting that university officials are happy with the amount of stimulus money they have been able to win: $18.3 million as of Sept. 30.
Turning that money into countable jobs is a tricky task.
While some new people have been hired, UB doesn’t receive the money as soon as it is allocated.
Once the money arrives, it takes time to hire people, he added. In addition, some of the stimulus work will be performed by professors already at UB, meaning some of the money was used to partially fund professor salaries.
As a result, the number of jobs created falls short of 24.
That’s not the case at Installs Inc., which hired 24 employees for its call center at its Buffalo headquarters after winning stimulus contracts to manage the installation of digital converter boxes in 35 states.
The real number of jobs coming from those Federal Communications Commission contracts is even higher, because Installs got so much work that it had to contract out some of it to another call center, said CEO Thomas C. Hunt.
But because the digital TV conversion was a temporary 12- week program, only 10 of those 24 hires remain at Installs Inc.
“It was still a good thing for them, for us and for the 30,000 people we helped, 3,900 of them in New York State,” Hunt said.
Shot in the arm
“A stimulus can be a shot in the arm or a long-term thing,” he added. “This was a great shot in the arm.”
The Buffalo School District and other districts got a shot in the arm, too, from the provisions of the bill aimed at shoring up the finances of government budgets devastated by the loss of tax income.
For the Buffalo schools, the federal infusion will total a whopping $45.21 million.
“We did not have to lay off any employees, which was a plus,” said Superintendent James A. Williams.
Williams did not respond to a request for more details of the number of school jobs saved locally, which are not listed in the reports filed with the federal recovery board.
In one of the many quirks in the federal stimulus data, saved elementary-and secondary-school jobs are reported by state departments of education in capitals around the country — meaning New York reported 18,603 saved or created education jobs in Albany when those jobs are really located in schools all across the state.
Another one of the data’s quirks is that it combined jobs saved and jobs created.
In some cases, such as that of the schools, the distinction is clear. Most schools aren’t hiring new employees with the federal money for one obvious reason.
“It’s a two-year plan, and you have to stay away from hiring, because in two years this money is going away,” said Williams, noting that districts would then be left to pay the tab for any new hires.
In most cases, though, there’s no way to know if an agency or company hired people or merely used the federal funds to keep people on the payroll. And that’s troubling to Lee, the Clarence congressman.
“I have a very difficult time determining what is a saved job,” he said. “It’s very ambiguous.”
That’s by no means the only thing that’s ambiguous about the stimulus money.
Several government agencies, ranging from the office of Buffalo Mayor Byron W. Brown to the Buffalo Municipal Housing Authority to the state DOT, either did not respond to inquiries about the stimulus money they received, or did not respond until the deadline for this story had passed.
Nevertheless, Cheryl Arvidson, a spokesperson for the Recovery Accountability and Transparency Board, noted that the information that the federal government had gathered and released about the stimulus projects was unprecedented.
“Never, ever, has anyone who received federal money been held accountable in this way,” she said.
The data available at www.recovery.gov far outstrips that which was ever publicly available about other federal expenditures. Each of the thousands of listings shows how much money was allocated, how much has been received, and how much was spent. A list of the Erie and Niagara county projects, compiled from the federal web site, is available online at www.buffalonews.com . Some of the details are missing because the recipients of the aid did not supply them to the government.
Failure to keep up
The most relevant detail to politicians is that while the stimulus bill was billed as a jobs creator, the nation’s unemployment rate increased to 10.2 percent — the highest rate in 26 years — in October.
The stimulus bill simply has not been able to keep up with the pace of job losses in the overall economy. The recovery board reports that the bill has saved or created 640,329 jobs— while the Labor Department said the economy shed 589,000 jobs between September and October alone.
“More debt, more spending, higher taxes and growing the size of government clearly has not worked,” Senate Republican Leader Mitch McConnell of Kentucky said on Friday.
Democrats reacted in a more modulated way.
“While the stock market has rebounded and we’ve begun to make long-term stimulus investments in infrastructure and energy projects, we are not creating jobs fast enough and must take additional, immediate steps to help save and create jobs,” Sen. Kirsten E. Gillibrand, D-N. Y., said.
Gillibrand said the business tax cuts and the extension of unemployment benefits and the first-time homebuyer tax credit, which Congress finalized last week, would help boost the economy, and President Obama said the same thing.
“History tells us that job growth always lags behind economic growth, which is why we have to continue to pursue measures that will create new jobs,” Obama said in his first remarks on the higher unemployment rate.
Obama, who said in February that the bill would create up to 4 million jobs over two years, never mentioned the stimulus in those remarks on Friday.
Then again, it’s possible he will be crowing about it in the coming months, as the bill fully takes effect.
Nationwide, of the $158.7 billion in stimulus money that had been awarded as of Sept. 30, only $36.7 billion had been sent to its recipients.
“Criticism that infrastructure spending funded by the stimulus has been slow to get started is valid,” Mark Zandi, of Moody’s Economy.com, told the congressional Joint Economic Committee recently. But this is partly because safeguards against funding unproductive or politically driven projects have slowed things down.”
Spending on stimulus-funded infrastructure projects is picking up now, and could give the economy a strong boost next year, said Zandi, who, like many economists, credits the stimulus bill’s aid with stopping the economic free-fall of earlier this year.
While there had been an early emphasis in the stimulus debate on moving the money out quickly, Higgins said that idea was stymied when it was decided to funnel the money through state governments, adding an extra step to the process.
And federal officials indicated they were simply being careful about doling the money out to its recipients.
“It will get there,” Arvidson said. “If you rush the money out, you could have more problems.”
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