Posted on 04/11/2008 6:30:43 PM PDT by NormsRevenge
Gov. Arnold Schwarzenegger has jetted up and down California in recent weeks trumpeting his own stimulus plan for the state's ailing economy.
He has promised to create at least 12,500 new jobs by releasing nearly $750 million from public works bonds voters approved in 2006 for transportation, housing and flood-control projects.
"People need jobs," Schwarzenegger said at a news conference last month announcing one of the largest chunks of new spending, nearly $400 million for public transit projects. "We are going to create those jobs and pump this money as quickly as possible back into the economy."
An Associated Press review finds the projects are expected to create fewer than half the number of direct jobs that Schwarzenegger has promised.
Evidence also is elusive that hundreds of millions of dollars of the spending will go to create jobs for the 114,500 construction workers and 58,000 financial-sector employees who lost theirs over the past two years because of California's residential real estate bust. Those are the very workers Schwarzenegger has targeted for help.
Among the findings:
- Nearly $150 million, or roughly 40 percent, of the money the governor has announced for transportation projects will likely go to companies in Alabama and East Coast states that are building clean-fuel and other transit buses. Those vehicles would be shipped back to public transportation agencies in California.
- The governor's largest flood-control project - $139 million for an improved levee north of the capital - would create work for roughly just 80 people this year, most of whom already are employed by Sacramento-area construction firms.
- Affordable housing projects - the most labor-intensive and natural fit for the state's out-of-work residential construction workers - would not begin until late this year and could be delayed until next year if developers continue having trouble securing loans. The housing projects also would not directly create nearly as many construction jobs as Schwarzenegger has said.
The governor's job projections are so high because the formulas used to predict employment were provided by lobbyists and construction advocates and assume a wide economic ripple effect from the increased state spending. That includes thousands of eventual jobs for doctors, waitresses, insurance salesmen and auto mechanics, as well as gains in virtually ever other service industry sector.
Schwarzenegger spokesman Aaron McLear said the governor's job projections were grounded in reputable studies and were far more conservative than federal estimates for job creation from public investment.
"The larger point for the governor is these are creating jobs, and the governor is finding creative ways to create jobs," McLear said.
Schwarzenegger persuaded voters to approve the bonds in 2006 and has cast his effort to speed up the spending as coming at the perfect time for a state that was among the hardest-hit by the housing collapse. The state's unemployment rate reached 5.9 percent early this year, and lawmakers still must close a budget gap of more than $8 billion before the start of the new fiscal year in July.
Economists, however, say even in a best-case scenario, Schwarzenegger's stimulus efforts and 12,500 new jobs amount to a drop in the bucket in California's $1.6 trillion economy.
They say it would have little if any ability to pull the state out of its slump. It also would have a negligible effect on the state's unemployment rate.
In January, the unemployment rate hit 5.9 percent as the state lost 20,300 jobs. In February, the rate dipped to 5.7 percent as the state regained nearly 26,000 jobs.
"The 12,500 number - if it is true - is not nothing, but it shows the very limited power of states to fight recession," said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy in Palo Alto. "The state has 17 million jobs, and all the spending (Schwarzenegger) is talking about is less than $1 billion. That's less than one-tenth of one percent of the state's economy."
On Thursday, Schwarzenegger also applauded $3.5 billion in bond spending approved by the California Transportation Commission.
"We are not just sitting by and waiting for the economy to pick back up," Schwarzenegger said. "By using bond money to leverage private investment, we can create jobs and pump up the economy." Schwarzenegger did not offer specifics on how many jobs would be created by the $3.5 billion.
Last month, however, he said the transit projects would create 7,200 jobs, and the affordable housing construction another 5,300, for a total of 12,500. He also announced $16 million to retrain workers displaced by the housing slump, including those in the banking and mortgage industries.
On March 7, Schwarzenegger stood at the entrance to the Bay Area Rapid Transit Transbay Tunnel, which is in need of strengthening in case of an earthquake, to announce the $394 million in bond spending and 7,200 jobs he said would come from public transit projects.
The state funding Schwarzenegger touted that day cannot be tied directly to a single new job at the construction site he used as a backdrop.
Schwarzenegger announced $24 million for the project, but the BART District already has secured nearly $1 billion of the $1.3 billion cost through bonds that will be repaid by local taxpayers.
If the state had not contributed $24 million "it was going to get done anyway," BART spokesman Linton Johnson said.
Johnson said subsequent phases of the project scheduled for next year, or even later, might have been delayed without the money Schwarzenegger promoted. But mostly the state funding allows BART only to proceed with its preferred funding schedule, which means it can wait longer to issue and repay its own bonds.
Dozens of the other transit projects Schwarzenegger announced that day also appear unlikely to create as many jobs as might be expected for Californians.
For example, more than 40 of the 106 projects do not include physical construction of new transit facilities. Rather, they will pay for new or refurbished city buses.
The largest share, $50 million, will go to the Los Angeles County Metropolitan Transportation Authority to add 95 compressed natural gas buses to its fleet of roughly 2,500.
The transit authority has recently bought most of its new buses from North American Bus Industries, based in Anniston, Ala., because there are few bus manufacturers left in California that can compete for such contracts, said Rick Jager, the authority's spokesman.
The company, which would have an edge for new contracts, manufactures most of its buses in Hungary and assembles them in Alabama.
Schwarzenegger's estimate of the jobs that would be created from such transit projects begins with a generic formula: $1 billion in state transportation funding translates into about 18,000 new jobs.
That formula was provided by the California Infrastructure Coalition, a group of contractors and other transportation advocates. It assumes not only direct construction and manufacturing jobs, but also those created "indirectly" and those "induced" by increased transportation funding. So-called "induced" jobs include those in "retail, purchases, housing, doctors and dentists, banking and insurance," according to the model.
McLear, Schwarzenegger's press secretary, stressed that the governor's estimates were still among the most conservative available. The U.S. Department of Transportation, for example, estimates that $1 billion in federal investment leads to more than 47,000 new jobs.
If only direct jobs that are likely to remain in the state are included, Schwarzenegger's $394 million in transit projects would produce closer to 2,500 construction jobs, not 7,200, according to the model.
Schwarzenegger also has said a combined $142.5 million for affordable housing projects will create 5,300 jobs.
That number was derived from a formula provided by the National Association of Home Builders, a lobbying group. As with the transportation projections, the housing estimate also assumes indirect job creation from the long-term "impact that occurs when the new home is occupied," according to the model. Those jobs include new positions at restaurants and auto repair shops, for example.
According to the model, the number of direct housing-related construction jobs would be less than 3,000. But it's also unclear if and when many of those projects could begin. Developers need to obtain loans for the balances of the projects, even as credit markets have severely contracted.
"The timing will be the key," said Levy, the economist. "Can the permits be approved and these jobs created before the economy rebounds anyway?"
Why don’t they just cut taxes?
I’m waiting for programs to start such as WPA. Now I now what my parents heard from FDR during the depression. Public works projects.
Because thats a Republican thing, and A(R)nold (like McCain) doesn't see why anyone would be that stupis!
stupid! Damn someone cut my taxes!
Thats 60 thousand a job.
But, but, but Arnold knows how to spend your money better than you do.
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