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Stimulating the Crossroads: No. 1: Does the federal package work?

By BY GABE SEMENZA - GSEMENZA@VICAD.COM
Dec. 26, 2009 at 6:26 a.m.
Updated Dec. 27, 2009 at 6:27 a.m.


WHAT'S NEXT?

Each day for the next six days, the Advocate will report about each sector that received funding, including housing, schools, roads, municipal and other, a category that lumps awards that don't fit snugly under broad characterizations.

On Saturday, the Advocate will report on Kingfisher Marine Services Inc., the private company that received $44 million in stimulus funds.

Editor's note: This is the first in a seven-part series that details federal stimulus funding to the Crossroads. On Monday, the Advocate reports on funding for highways, roads and sidewalks.

Crossroads' agencies received approval for $74 million in economic stimulus funds this year, an Advocate analysis of federal records shows.

The $787 billion American Reinvestment and Recovery Act, passed by Congress in February, aims to stimulate a U.S. economy reeling in the wake of recession, lawmakers say.

Many in the Crossroads fought for their sliver of the pie. Even so, not everyone agrees the money will stimulate long-term prosperity in this region.

No matter which side of the fiscal fence you stand on, a few certainties emerge:

-- Local leaders debate the best uses of the $74 million.

-- Some federal promises appear over-inflated.

-- In many cases, tracking simple awards - of the 67 awarded to 37 agencies - is a complicated mess.

DID THE MONEY FUEL JOBS?

Stimulus funding approved for this region spans several sectors, including housing, schools, roads, municipal and more. The money went or will go to various projects and purposes: Modernization of public housing, teacher training and the purchases of new, cleaner buses, just for starters.

The federal government said the stimulus money would also create and save jobs.

From the $74 million approved for agencies in this region so far, 126 new jobs were created - and many of those are temporary, according to an Advocate review of how area agencies spent or will spend the money.

Mary Ann Wyatt, Victoria County Republican Party chairwoman, questions spending money on short-term jobs.

"I don't really consider that job creation, I'm sorry," Wyatt said. "You want long-term opportunities, a chance to continue on. It seems to be that those jobs may be great for a quick push. Then the government can say we've done something. If workers don't continue to be part of the economy, it's not that great."

BULK OF NEW JOBS

The Texas Department of Transportation and Workforce Solutions of the Golden Crescent created the bulk of new jobs from federal money.

The federal government awarded the state transportation department $8.4 million to rebuild roads and highways in the Crossroads.

Workforce Solutions of the Golden Crescent used money from one award to subsidize summer jobs for 16- to 24-year-olds. Those subsidized jobs ended when the summer did.

Dale Fowler, president of the Victoria Economic Development Corps, said improved highways should help the region's economic future by laying the foundation for better commerce flow.

"I also believe the stimulus dollars will help the short-term economy due to an increase in construction jobs - highway construction and housing retrofits," he said. "Unfortunately, when those jobs are complete, the true stimulus will pretty much be over."

Fowler said the money could have been better used by fueling federal loan guarantees for the nuclear industry, which eyes Victoria County as a potential plant site.

Nuclear plant construction and permanent on-site jobs, coupled with other awards to private industry, would have gone much further in stimulating employment growth, he said.

Only one private company in the region received stimulus funds. King Fisher Marine Services Inc. in Port Lavaca received approval for $44 million to dredge along the coast, according to federal records. Neither it nor its parent company will comment, let alone say how many new jobs it will form.

Wyatt remains unimpressed.

"Well, I'm not sure I'm opposed unilaterally to the stimulus," Wyatt said. "If we're going to use tax dollars to stimulate the economy, it ought to be in areas where we can see the accomplishments and have measurable guideposts. This money is almost amorphous. We know it went. We just don't know what it accomplished. I don't see any stimulus. That I don't like."

WHAT VALUE DO RETAINED JOBS HOLD?

Many public agencies describe the federal guidelines for calculating jobs retained as confusing. Others suggest the money saved existing jobs that might have otherwise been cut.

The City of Yoakum, for example, reports 18 retained jobs to repair the foundations for six public housing units. Two other jobs were retained to fix plumbing damaged from shifting soil. The city is unsure whether those jobs will persist once work is done.

Advocates for Children and Families Inc. in Victoria received $74,000 for temporary cost of living increases for 60 select employees - those who earned a bachelor's degree. Those 60 jobs are classified as retained.

Stephen Jabbour, head of the Victoria County Democratic Party, said despite the fuzzy math, the stimulus works.

"Government infusion of money into the economy stemmed unemployment," Jabbour said. "It keeps people from being fired, policemen on the streets. I think there was a danger the country would slip into hard recession with massive unemployment. I think we can debate how it should have been applied, but it had a tangible and psychological benefit."

Had money not been distributed and used to pay salaries - as in the case at many area school districts - regional unemployment would have climbed even more quickly, he said.

"Highway construction doesn't necessarily translate to immediate jobs, but over the long term it will," Jabbour said. "Funding to rehab houses promotes the economy. We know schools are severely under-founded. The stimulus helped."

Victoria County's unemployment rate dipped marginally from October to November, a slow-but-steady sign the stimulus works, supporters say.

STIMULATING HEADACHES

Debate about whether the stimulus funds work will, no doubt, continue. Snafus, however, arose beyond just counting true retained jobs.

A few highlights:

Some of the federal stimulus money awarded didn't stimulate anything. Some of the federal money distributed to some taxpayer-funded agencies replaced typical yearly state funding. In those cases, the state distributed the federal dollars and then banked in a rainy day fund the money it typically pays.

Some local agencies - the Community Food Bank of Victoria, for example - didn't know they were approved for federal stimulus money. The food bank's parent agency failed to notify it about the award.

Some agencies approved for funding were omitted from federal records. Mid-Coast Family Services was approved for $495,000 to help the homeless. Because of lag times in the reporting of the Texas Department of Housing and Community Affairs to federal agencies, this award does not show in the current federal database.

Leaders of Victoria County government applied for about $20 million - including a $15 million airline extension road award - but thus far failed to receive approval for any money. The government could reapply as of Dec. 16 for portions of leftover amounts so far unallocated during the first waves of federal funding.

METHODOLOGY AND NOTES

To determine regional effects of stimulus funding, the Advocate:

Analyzed a federal stimulus database of awards approved from Jan. 1 to Oct. 30 - the most recently updated records.

Isolated regional agencies from the federal database by extracting them via the recipient's Zip code. Then, the Advocate isolated other agencies awarded money for work to be performed within the region.

Contacted local agencies to confirm awards. Then, each agency detailed the award's rationale, work to be performed and jobs to be created. To calculate the 126 new jobs created, the Advocate counted a new full-time job as one job and a part-time job as one-half job.

Notes include:

Three area agencies failed to return repeated phone and written requests for award details. They include Kingfisher Marine Services Inc. in Port Lavaca, a private company and the largest beneficiary of stimulus funds in the region; Woodsboro Independent School District and the Austwell-Tivoli Independent School District. In these rare cases, the Advocate relied on federal records to report award amounts, work to be performed and jobs created when available.

Of the $74 million approved for awards, not all money is distributed. Some agencies received full payments; some agencies receive ongoing partial payments; others haven't received any money. Each award maintains different distribution guidelines.

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