in Houston, Texas

As federal stimulus turns 2, Texas’ stimulus jobs -- largely government jobs -- wind down

Thursday, Feb 17, 2011, 10:05AM CST
By Mark Lisheron
federal stimulus sign

The 15 men weatherizing homes for the Nueces County Community Action Agency have done their work well. So well that they will soon be without jobs.

The crews, employed by Corpus Bayside Investments in Corpus Christi, like thousands of people in Texas and across the country, have jobs that would not exist without the more than $800 billion American Recovery and Reinvestment Act.

Today, on the second anniversary of President Barack Obama’s signing of the stimulus act into law, those thousands are coming to see that without the federal government or some government continuing to pay them that their jobs will, by legal definition, go away in the coming months.

“Once the two years is up, bottom line when this job is done those crews are going to have to be laid off,” Tom Criser, executive vice president for Corpus Bayside, says. Criser hired the men specifically to meet the needs of the stimulus contract he bid on for Nueces County. “We knew from the beginning it was going to be temporary.”

At the time of its passage, the president, basking in the historic importance of the bill, promised the huge infusion of taxpayer-backed funding would be a quick tonic for the economy and would put people back to work. Economists and politicians are likely to argue forever about whether the two full years it has taken for the economy to stir fits the definition of a stimulus and whether redistributing taxpayer money by presidential fiat helped or hurt that effort.

The number of jobs created by the stimulus has also been disputed from the start. The Congressional Budget Office has stubbornly clung to an estimate of 3.3 million jobs created. Recovery.gov, the website created by the Obama Administration to track the stimulus, reports a fraction of that amount -- 585,654 jobs reported by the agencies who received stimulus funding through this past December.

In November, Texas Watchdog reported that stimulus jobs in Texas cost about $130,000 per job --- and a handful of them cost more than $1 million apiece. The figures were based on comptroller’s office reports on the 38,160 jobs created in Texas with $5 billion in stimulus funds.

Whatever the number, not until this last month has the national unemployment rate dropped to 9 percent, almost a full percentage point higher than the unemployment rate two years ago when the Recovery Act bill was signed.

The nation, however, is just now getting a glimmer of what is going to happen to those stimulus jobs when the money runs out. Of the $275 billion of the stimulus not paid out in tax benefits or entitlements, the states have spent $179.8 billion or about 65.4 percent of the total, according to the current Recovery.gov figures. The state of Texas has spent $19.1 billion or more than 78.1 percent of the $25.1 billion in stimulus funds it was awarded, according to the most recent figures kept by the state Comptroller.

Very quietly and months before the funding will run out, the state House Committee on Federal Economic Stabilization Funding, formed in February of 2009 to oversee the stimulus in Texas, has been dissolved, its chairman, Rep. Jim Dunnam, D-Waco, beaten in a November election.

In December, the committee left behind an 83-page interim report to the Legislature that, although laden with testimony from people involved, arrived at very few substantive conclusions about the impact of the Recovery Act on Texas. In its final paragraph, the report echoes what many are now saying about it.
The Recovery Act was designed to be temporary. In the quarters following its peak impact, the amount of stimulus outlays and tax reductions will decline and the impact on the level of GDP and employment will begin to lessen as it does so.
In a state where 7 out of 10 stimulus jobs were in public education, the cry has already begun going up in the state’s biggest school districts. On top of an overall dismal fiscal picture, the Houston Independent School District in late January notified at least 170 people with stimulus jobs their funding would be gone by June. But this is the same district that last fall was spending $18 million in stimulus cash on more than 200 employees it admitted it did not need.

In Austin, where district administrators are looking at cutting more than 1,000 positions, 120 of those are currently being paid with stimulus dollars, AISD spokesman Andy Welch says. Many of the jobs are in special education, remedial education and parental support, jobs that some prospective hires turned down knowing the funding was finite, Welch says.

“The truth of the matter is, school districts did what the state did with the stimulus, used it to prop up existing programs and balance budgets,” Welch said. “It allowed us to limp along for another two years. Well, we’ve limped along right to the cliff.”

Roger MeinersMEINERS
Roger Meiners, an economist at the University of Texas at Arlington, says he wonders why people are surprised to learn that temporary funding means temporary employment. Meiners, who has been sharply critical of the overall effectiveness of the stimulus, says most of the jobs were created in the public sector and will have to be sustained with tax money or disappear.

“They threw a bunch of federal money at a problem that they didn’t solve, and now the bill is coming due at the state level,” Meiners says.

Weatherization program a study in how stimulus played out

The Weatherization Assistance Program in Nueces County and elsewhere in Texas typifies the way stimulus has worked. From a pool of $5 billion, U.S. Department of Energy gave the state Department of Housing and Community Affairs nearly $327 million to distribute to local agencies to make low income homes more energy efficient.

The department, which had an annual budget of $13 million for its comparatively modest weatherization program, needed to hire dozens of state workers to handle the distribution of the money and the paperwork alone. The program got off to a a slow and troubled start in which it reduced its goal of weatherizing units from 56,000 to 38,000. Shoddy workmanship resulted in managerial shakeups and millions of stimulus dollars being stripped from local programs.

Weatherization has rebounded, with contractors statewide completing 26,743 units and the department spending $140.6 million or 43 percent of the $327 million total through the first week in February, according to department director Michael Gerber.

The Nueces County Community Action Agency is one of the stars of the weatherization effort. Housing and Community Affairs gave the agency $3.2 million. The agency has spent $2.7 million or more than 84 percent, higher than all but one of the largest contracts among the nearly four dozen agencies statewide doing the work. Their quality of work record has been very good.

Because Housing and Community Affairs faces the possibility of having to return millions of stimulus dollars if it can’t spend its sum by the August deadline, agencies like Nueces County might be able to pick up extra stimulus work, Alma Barrera, community services director, says.

If not, Nueces County will meet its goal of 443 units weatherized months ahead of schedule. The eight people Barrera hired, seven of them to do weatherization assessments, will be let go once the stimulus runs out.

“I wish we could get more funding. I’m proud of this team and the work they’ve done. They are revved up,” Barrera says. “But we knew what we were getting into. We looked at it as a once-in-a-lifetime opportunity, and we didn’t want to waste it.”

In spite of the fact that more than half of the weatherization money is not yet spent, employment of contract workers statewide during the quarter that ended in December was down to 860 from 940 the previous quarter.

“It was clear with the weatherization program that the money was going to come to an end,” Gerber says. “Our view on the job picture in that internally, we’d like to keep people in-house and find other opportunities. On the external front, when the stimulus funds are gone, they’re gone, and so are the jobs. Our hope is that in the end these folks can find other work.”

Meiners sees Gerber’s outlook - trying to find a way to keep workers on the public payroll while shedding the private-sector jobs - as a fatal flaw with the Recovery Act as a genuine jobs engine.

“You’re certainly not creating employment in areas that are self-sustaining. It seems to be a lot of bureaucratic foolishness to me,” Meiners says. “The federal government is very good at this, giving agencies starter money for this or that program and then leaving it to the states to maintain it when the money runs out.”

Long-term solutions sought

The state Department of Transportation would appear to have been impervious to these problems. Unlike Housing and Community Affairs it was large enough and bureaucratic enough to easily take on the $2.2 billion it received. Its mission of creating and maintaining infrastructure was at the core of President Obama’s mission for the Recovery Act.

Without it, as many of 15,000 Texans in the construction trades might have been out of work in the first six months of the stimulus, according to Tom Johnson, executive vice president for the Associated General Contractors of Texas.

“The stimulus was a lifeline that was extremely important to us,” Johnson says.

In just four years, however, the amount of work the department has under contract has dropped to about $9 billion from $16 billion. The state is facing a budget shortfall some say is more than $20 billion. And for the past three years, the department has been under considerable pressure to expand its vision beyond road building and repairing.

Around the country, construction industry leaders like Johnson are expecting the end of stimulus to deal contractors a significant blow. Johnson isn’t ready to predict layoffs, but he said without the added cushion of stimulus dollars, TxDOT is likely to focus its efforts on major projects, leaving smaller contractors with the leavings.

“Right now, all the balls are in the air, and they are going to be in the air for the next three or four months,” Johnson says. “What know what will happen after that.”

Contrary to the promises of the President, the American Recovery and Reinvestment Act was not a final answer to the problems he identified.

“The stimulus was a stopgap measure, not a long-term solution,” Johnson says. “And I don’t think there is anyone at the federal or the state level who has the appetite for a long-term solution.”
 
***
Contact Mark Lisheron at 512-299-2318 or mark@texaswatchdog.org.

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Photo of a federal stimulus sign by flickr user Steve Rhodes, used via a Creative Commons license.
Comments
Rich
Thursday, 02/17/2011 - 11:22AM

Like everything the government does, it comes to an end. The government can't put together projects without spend taxpayer's money. I myself did not benefit from any of the work created by the stimulus and remain out of work in the Houston area. If the stimulus worked we would not be at 8.2% unemployment here. I have lost two ways, one missing stimulus employment and now I am a 99er (93er in Texas).

Roddy Stinson
Saturday, 02/19/2011 - 10:12AM

Kudos to Lisheron. Excellent example of objective reporting and clear, concise wordsmithing.

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