States Rev Up for Clinton Stimulus Program
The president's economic plan promises billions to fund projects that have the potential to create jobs quickly. State officials are ready to spend, but less confident about when jobs will pick up. VIEW FROM THE STATES
RALEIGH, N.C., and AUSTIN, TEXAS — ROAD work ahead!
If President Clinton has his way with Congress, motorists will soon be seeing this sign more often. As part of Mr. Clinton's $31 billion economic stimulus package, the president wants projects that can be enacted quickly. For the most part, that means more road graders and pavers at work.
So far states have identified $6.87 billion in projects that can be put to contract in the next 30 to 90 days if Congress supplies the money, according to a survey by the American Association of State Highway and Transportation Officials.
If the projects are shared on the same 80 percent federal, 20 percent state basis normally used, Congress would have to provide an additional $5.5 billion in transportation funding over the $21.8 billion appropriated for next year as part of a 1991 highway bill.
The group of state highway and transportation officials reports that only two states, Ohio and Hawaii, indicated they would have difficulty spending additional federal funding in this fiscal year.
In the last fiscal year, all 50 states failed to spend about $500 million out of the $18 billion appropriated.
But that doesn't necessarily mean that a lot of new jobs will be created by the increased federal spending. State officials say that the number of jobs created by such projects will be insignificant compared to unemployment numbers.
The National Governors' Association, whose members made a case last week before a House subcommittee for more infrastructure spending, estimates that a billion dollars of federal spending will create up to 60,000 jobs, directly and indirectly.
However, Gov. Jim Edgar (R) of Illinois told the subcommittee that 126,000 jobs would be created if the 1991 highway bill, formally called the Intermodal Surface Transportation Efficiency Act or "Ice Tea," received an extra $3.8 billion in funding next year.
If Congress appropriates the full Clinton stimulus package of $31 billion - which includes job-retraining funds and tax incentives for small businesses - more jobs would be created. But no one knows if it will really produce the 250,000 new jobs promised by President Clinton this year.
Some economists are skeptical. "We are trying to find historical precedent for that many jobs from such a relatively small stimulus," says James Padinha, chief economist of First Interstate BanCorp. "Thirty billion spread over a $6 trillion economy is rather small."
But even limited federal spending can benefit economically hard-pressed parts of the United States, labor experts say. "You know, almost anything would be bound to help," says Herbert Bienstock, an economist and labor expert with Queens College, of the City University of New York.
A look at how the Clinton stimulus program will affect a few key states across the country: California
Though California's jobless rate dropped this week from 9.8 percent to 9.5 percent, it still hovers well above the national rate of 7.1 percent.
Jack Kyser, chief economist for the Los Angeles Economic Development Corporation, says Clinton's economic stimulus package may put a significant dent in the unemployment figure.
"Any construction that goes on here will have a significant multiplier effect," Mr. Kyser says, "from cement, to steel, to manufacturing to high-tech."
But other economists remain wary. "In a general sense, it's easy to say any stimulus is good," says Steve Levy, director of the Center for the Continuing Study of the California Economy. "But people here are waiting for the details."
To ready themselves for the expected infusion of federal funds, dozens of municipal agencies are already preparing inventories of bridges, roads, sewers, and other public projects badly in need of repair, or that need to be brought into compliance with state or federal laws.
"We have asked every city and county in the state to give us a list of projects that could be under contract within 90 days," says James Drago, a spokesman for the California Department of Transportation.
Economists in California say that, even more than the infrastructure spending, the state will welcome Clinton's proposed tax breaks for start-up businesses. Dozens of companies have discarded highly talented designers, engineers, and craftsmen in mid-career who are thinking now is the time to start their own business.
But some experts warn that jobs created by tax incentives could be offset by those lost through further cutbacks in the defense budget. The defense and aerospace industries centered in southern California could be forced into further consolidation and downsizing. The industries have already lost about 500,000 jobs since 1989.
The part of the Clinton program that elicits the most skepticism in California is the president's job-retraining proposal. Thousands of unemployed defense and aerospace workers in the Golden State have already been retrained in such fields as hazardous-waste cleanup, only to find no work available in their new field.
"Given their past experience, and age, and salary expectation where do you put them?" asks Joe Wahed, economic analyst for Wells Fargo Bank. Texas
Texas had 690,000 people out of work in December; the unemployment rate was 7.7 percent. But the $130 million in road repair projects that could be begun within 120 days would directly employ just 3,120 people and cost $24 million, says Robert Wilson, assistant director of highway design at the Texas Department of Transportation.
Mr. Wilson adds that "you always like to get money to do available jobs any time you can. We got plenty of needs, there's no doubt about that."
He says the state would spend any new money from the Clinton administration to repair existing highways. But he adds that highways are in better shape in Texas than in other parts of the country. North Carolina
Gov. James Hunt (D) of North Carolina has sent Clinton a list of $42.9 million in airport improvements, $48.5 million in transit spending, and $368.7 million for 212 highway construction projects.
The most important highway projects involve expanding some of the Interstate roads. For example, the state would like to widen Interstate 85 between Gastonia and Charlotte, the state's largest city. I-85 would grow to a total of six lanes. As of 1991, some 60,000 vehicles per day used that stretch of road.
Another proposed project is the completion of a loop around the central business district of Fayetteville. The state estimates about 30,000 people per day use the road which has been under construction since 1985.
It takes so long to build, says Bill Jones of the state highway department, that the highway is built in sections as funding becomes available. "It can take seven to nine years to build a major highway," he explains. South Carolina
Neighboring South Carolina has a much less ambitious program.
According to South Carolina's response to a survey by the American Association of State Highway and Transportation Officials, the state would spend $15-25 million to accelerate its bridge-replacement program and repaving programs.
The state also says it could spend another $25 million on projects which are currently delayed by the regulatory process. Georgia
Georgia has compiled a list of $4.2 million in projects that can be started by March and $45 million that can be ready to go by the summer.
Among the Peach State projects is a widening of Interstate 95 south of United States freeway 17 to the Ogeechee River at a cost of $11 million. "Traffic volumes are causing I-95 to become congested, which affect air quality and other forms of pollution, " says Jerry Stargel, a spokesman for the Georgia Department of Transportation.
The other major expenditure is the replacement of the Jekyll Island bridge at a cost of $8 million. "That's past due to be replaced," Mr. Stargel says. "It's usually just hanging up all the time." Florida
Ben Watts, Florida's secretary of transportation, estimates the state could spend about $335 million on new transit, road, bridge, and port projects. However he says he will not compile a specific list "until I know how much money is available, what the criteria are, and what the time frame is."
Mr. Watts says he does not want to disappoint communities with promises he cannot keep.
Despite his concern, he says the state could go to contract on an expansion of Interstate 75 from four to six lanes.
"The most strain is from truck traffic from the Florida Turnpike to the Georgia state line," Watts says.
Watts says Florida would love to use some new federal money for mass-transit projects such as new rail commuter lines. However, these projects cannot be ready in 90 days. "What we would like is some flexibility," he concludes. Illinois
Michael Lawrence, Governor Edgar's spokesman, says that under a fully funded federal highway bill, Illinois would get an additional 4,600 jobs. That would put one person to work in the state for every hundred who are unemployed there.
"I don't think the governor advertised this as ... the cure-all for unemployment," Mr. Lawrence says. "Obviously, that's a small percent of people out of work, but for those 126,000 who would be in those jobs, it would be very important. If you're unemployed in this country, you're unemployment rate is 100 percent, no matter what the nation's unemployment rate is."
"If President Clinton is looking for ways to stimulate the economy, this is one way," he adds. New York
New York is readying for President Clinton a list of highway, housing, sewer, and parking-lot projects expected to total from $500 million to $1 billion, says David Egner, spokesman for Gov. Mario Cuomo (D).
The Empire State had 721,000 people unemployed in December, an 8.5 percent rate.
The latest national unemployment statistics show a jump in unemployment for New York City, from 11 percent in December to 13.4 percent in January.
Unemployment traditionally jumps somewhat in January, as companies lay off part-time workers, notes Samuel Ehrenhalt, regional commissioner for the US Bureau of Labor Statistics. But the latest round of numbers is "troubling" because they are much higher than had been anticipated, he says.
Rosemary Scanlon, chief economist for the Port Authority of New York and New Jersey, says that many of the jobs lost in those states involve high- paying professional positions. Whether those professional, middle-class-oriented jobs will ever come back to this region, Ms. Scanlon says, is highly questionable.
Thus, most New York experts stress that while a jobs program would be helpful in creating short-term jobs, it would not restore positions lost in such upscale industries as finance and banking.
Moreover, the actual dollar impact of such a program is expected to be modest.