Uneven economic jolt

Uneven economic jolt

September 6th, 2009 by Pam Sohn and Andy Sher in News

Staff Photo by Tim Barber Progress at the Chickamauga Lock is taking shape inside the "horseshoe," according to Lockmaster Matt Emmons. The lock work has received $57.5 million.

Staff Photo by Tim Barber Progress at the Chickamauga...

Nearly seven months after Congress agreed to pump $787 billion into America's faltering economy, most of the cash promised to Tennessee and Georgia has been released by the federal government, but less than 30 percent has been paid out by the states.

Passed in February, the American Recovery and Reinvestment Act has cut taxes for workers, boosted jobless benefits, helped finance new cars, put first-time buyers in homes and paid for summer youth training.

The sweeping stimulus package also has kick-started highway paving, home weatherizations and environmental cleanups on city brownfields and Manhattan Project-era buildings in East Tennessee.

To date $1.1 billion of Tennessee's $5.2 billion in stimulus funds and nearly $2 billion of Georgia's $6.5 billion has been spent.

Critics claim much funding for construction and government programs is trickling too slowly through the government processes intended to make it "transparent" and accountable.

Meanwhile, the number of people unemployed has grown.

In the months since President Barack Obama signed the stimulus law into effect, Tennessee has lost 77,046 jobs and Georgia has lost 93,128 jobs.

"It's nice to get extra unemployment benefits, but what I really need is a job," said Anthony Thurman, a 49-year unemployed maintenance man who was looking for work last week. "I've never seen the economy this bad before."

And some critics, like U.S. Sen. Bob Corker, R-Tenn., say the money is paying for things state governments should and would have capitalized anyway. In his town hall meetings around Tennessee last month, Sen. Corker called the stimulus package "ridiculous."

"I think all of us knew from the beginning that the stimulus bill was more of a three- or four-year spending package that had a lot to do with social spending and not near as much to do with actually stimulating the economy," he said.

The Obama administration estimates the stimulus plan ultimately will create or save 70,000 jobs in Tennessee and 106,000 in Georgia, part of a nationwide employment gain of at least 3.5 million jobs.

Irvin Johnson, a 19-year-old Brainerd worker, is among those employed today because of the stimulus plan. His job as an intern at the Tennessee Department of Labor and Workforce Development in Chattanooga came through the summer youth employment program, rejuvenated this summer by the stimulus package after a 12-year absence.

"It's been hard in this economy to find a job, but I hope this job will help get me on track and find another job," he said

Mr. Johnson is among nearly 20,000 teens across Tennessee and Georgia who got summer jobs this year from part of the $56 million in federal funds targeted at providing jobs and training for disadvantaged youths.

Looking for the corner

Many economists say the economic downturn would have been worse without the stimulus, but even supporters concede it didn't provide the immediate jolt many had hoped it would.

"I don't think it's worked as well as it should have yet," said Jerry Lee, president of the AFL-CIO in Tennessee. "But there is no doubt we needed something to stimulate the economy, and I think it should do a lot to help our economy over time."

David Penn, director of the Center for Business and Economic Research at Middle Tennessee State University, said most of the impact from the stimulus plan is yet to come.

"I think it could have been structured to be more front-loaded and give a more immediate jolt to the economy, but unemployment certainly would be higher and the economy weaker today without the stimulus plan," he said.

Tennessee Democratic Gov. Phil Bredesen's top deputy, John Morgan, is helping spearhead oversight of state government's $3.2 billion share of stimulus - the part that will pave roads, build bridges and support classrooms.

Cumulative totals by state department and agency show that as of mid-August, just $845.8 million had been disbursed.

State officials say that much spending - by the nature of how it will help - won't be reflected in stimulus "transparency" accounting for some time.

For instance $519 million in education will be stretched over two years to forestall program cuts in higher education and K-12 programs.

Mr. Morgan said an "expectation gap" was created by talk from Washington about the stimulus' impact. That talk "led people to believe this money was somehow going to flood out into the economy in a matter of a few weeks, and we were going to see incredible results. It was never going to be that way," he said.

Chattanooga Metropolitan Airport

* Received $3 million for capital improvements.

Northwest Georgia

* Walker and Catoosa counties received $2.2 million for road work on Highways 1 and 2.

Hamilton County

* To net about $8 million in construction and renovation funding for greenways, sidewalks and CARTA.

Chickamauga Lock

* Received $57.5 million, including $25.5 million for valves, gates and bridges, $27 million to fabricate the new approach walls for the new lock and $5 million to complete the coffer dam.


* The Cumberland Plateau town's 50-year-old sewage treatment tank collapsed early this year. The city has received a $6.2 million low-interest loan to build a new wastewater system to serve homes in Grundy, Marion and Franklin counties. Forty percent of the 1.79 percent interest loan already is forgiven and the city will not have to repay it.

Oak Ridge National Laboratory

* Received $755 million for the environmental cleanup to demolition of Manhattan Project-era buildings. Included is $292 million for Y-12 plant cleanup, $144 million for the East Tennessee Technology Park and $80 million for DOE's Transuranic Waste Processing Center.


* Expects $24 million over two years to pay for energy-efficiency projects, capital programs and operating assistance, including $3.4 million for central boiler replacement, $3.3 million for campus security upgrades.

Chattanooga State

Expects $4 million of aid, including $1 million for central parking lot construction.

Tennessee and Georgia

* Cleaner air with drive-ins for diesel trucks to reduce their long-term idling. Tennessee's $2 million in recovery money and Georgia's nearly $1 million will install a network of electric hookup overnight stations and other initiatives.

* Cleaner water with $5 million in Georgia and $4.6 million in Tennessee to remove nearly 100 leaking and abandoned underground fuel tanks

* 25,000 homes weatherized in 18 to 36 months using $223.8 million and creating 16,500 new jobs. In Hamilton County, alone, $4 million is expected to tighten 500-600 homes.

Chattanooga and Chickamauga Military Park

* Received $380,000 for repair of vandalized monuments, landscape restoration and to put a dent in the park's $36 million backlog of deferred needs.

Cherokee National Forest (Tenn.)

* Received more than $2.8 million for projects for facilities, trails, new wells and water systems.

Chattahoochie National Forest (Ga.)

* Netted almost $3.3 million for bog restoration, hemlock woolly adelgid treatment, road and bridge repair, campground and trailhead maintenance, new restrooms and wastewater systems, dam repair and waterline replacements.

Source: Federal and state officials

Stimulating the economy

Tennessee, Georgia and Alabama* have immediate approval to spend 70 percent to 80 percent of the $15 billion in announced tri-state stimulus projects, but less than 30 percent of the money actually has been paid out.

Announced Available Paid out

Tennessee $5.2 billion $3.6 billion 69 percent $1.1 billion 22.5 percent

Georgia $6.5 billion $5.2 billion 80 percent $1.9 billion 29.7 percent

Alabama $6.5 billion $2.6 billion 78 percent $714.9 million 21.4 percent

* Not all stimulus money is funneled through state governments.

Source: Recovery.gov

Jobs created or saved

Federal and state officials say the program also has or will create or save, over two years:

* 70,000 jobs in Tennessee

* 106,000 jobs in Georgia

* 51,000 in Alabama

Source: Recovery.gov

He acknowledged there were early federal struggles to implement the national program, along with changing guidelines for states and temporary slowdowns to ensure Tennessee's own efforts were adequate to ensure that the money was spent wisely.

But he said state agencies responded well.

"We feel good about where we are," he said.

Mr. Morgan said stimulus opponents "are going to criticize it for being slow, they're going to criticize it for spending money on the wrong things, they're going to criticize it anyway they can because they were just against it, and there's a political dynamic to this I think we all understand."

Understanding the process

The federal government's Recovery.gov Web site breaks down stimulus money aimed at states in three broad categories: announced, available and paid out.

Tennessee spokeswoman Lola Potter likened the "available" category to corporate-approved travel money.

"It's sort of like the same thing you do at work for travel. You get it approved first," she said. "The money is there, it's ready (for reimbursement after the travel is done). It's allocated to your state, but it's not been awarded; it's been approved.

"The road work is that way, too," she said. "We have to spend the money. It has to be finished. And then we pay them (the contractors)."

State figures examined by the Chattanooga Times Free Press show that, as of Aug. 21, the Tennessee Department of Transportation had spent just 8.3 percent, or $48 million, of the $572 million in highway and bridge funding it is getting from the stimulus package.

TDOT Chief Engineer Paul Degges said officials sought to balance needs such as getting money out quickly with targeting economically distressed areas, creating or maintaining as many jobs as possible on projects with long-lasting impact and keeping work within a three-year time frame.

"The very first thing we looked at was, well, if we just wanted to spend money in a hurry, we could just do a bunch of resurfacing," Mr. Degges said. "And some states have done that. They have spent largely their entire (stimulus) funds on resurfacing ... I just didn't think that was responsible. I didn't think it would create jobs across the construction sector."

Instead, Tennessee went with a mix of projects, including resurfacing and small bridge repair or replacement. But the state also included major projects such as rerouting road beds, widening roads and installing new interstate interchanges, Mr. Degges said.

State figures provided to the U.S. House Transportation and Infrastructure Committee indicate Tennessee has 190 of its planned 193 projects under way.

Mr. Degges said the $48 million spent so far may seem small to some, but it reflects disbursements to companies for work already performed. Tennessee does not pay a contractor up front on a job.

He said he believes the projects are picking up speed and, by year's end, he expects about 45 percent of the state's expenditure of transportation stimulus money should be made.

Local governments and Georgia also have faced some time-crunch challenges.

Weatherization programs have been around for 30 years, but the stimulus is kicking them into high gear. Georgia Department of Energy spokesman Shane Hix said the Peach State is receiving $124.5 million for its weatherization program, up from the usual $3 million yearly allocation.

That increase means more contractors are needed. And those contractors had to be found, hired and trained, said Chattanooga's Bernadine Turner, an administrator in the city's Neighborhood Services Office.

"In the past year, we did 117 homes, but with the money we're getting now, we can do 500 or 600 homes a year."

What's ahead

In a speech noting the 200-day mark since the American Recovery and Reinvestment Act was approved, Vice President Joe Biden said last week that $62.5 billion in tax cuts has been delivered, $1.9 billion in contracts has been awarded to small businesses and more than 10,000 transportation projects have been approved.

With that, much of the planned spending from the stimulus plan should begin this fall. The federal government is reviewing applications for billions of dollars of proposals for high-speed train corridors and smart-grid power upgrades. Chattanooga and its power distributor have applications for both such projects.

In the immediate future, the Chattanooga Area Regional Transportation Authority expects soon to begin awarding contracts for paving, equipment and vehicle purchases.

"We've spent only about $60,000 (of an anticipated $4.7 million in aid) so far," CARTA Executive Director Tom Dugan said. "But now that our grant request has been accepted (in July), we expect to have most of the stimulus money we project getting spent by next March."

Sen. Corker, who doesn't credit the stimulus package for the recent hopeful economic signs, thinks the next initiative should be to expand on the $8,000 tax credit for first-time homebuyers.

"It should have been 15 percent," he said. "Since housing is what brought us down, our effort should be focused on stimulating that."

Another longer-term payoff is education, some say.

Over the next two years, the University of Tennessee at Chattanooga will get an extra $24.1 million and Chattanooga State Technical Community College is in line for another $4 million.

UTC already has spent about $4 million to buy new computers, begin energy-efficiency upgrades and hire part-time faculty to handle a record student enrollment this fall, said Richard Brown, UTC's vice chancellor of finance.

With UTC tuition already up 7 percent this year, Dr. Brown said the recovery money has a broader short-term impact, as well.

"It is helping us to limit our increases in tuition and fees because we recognize families are having a hard time during this recession," he said.