Stimulus funds are here, but where can we find the money—and how can we use it—while the economy recovers?
When President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into effect on Feb. 17, we didn’t hear the end of it. The man hardly had time to settle into the Oval Office before designating $787 billion of federal funds for an economic stimulus.
Was he crazy?
Was it too little, too late, a cure-all, or just a Band-Aid?
The mammoth package aimed to launch shovel-ready projects into action, create upward of 3.5 million jobs and help communities get back on their feet—all with the hopes of jumpstarting an economic recovery. The question is: Are we really recovering?
Many Republican leaders say “no.” But, according to Congressman Sam Farr (D-California), the ARRA is not the failure the GOP claims. It is merely taking awhile for the results to show.
“I think it is very difficult for them to say this is a failure,” says Farr. “Like Barack said, it’s going to take a long time. I think you [may not] even see the uptake until early winter or late into the last quarter of this year.”
Although visible results may be delayed, stimulus funds are streaming into communities at a steady pace. But here in California, where an estimated $85 billion of the total stimulus sum is being spent, the financial crisis may be so dire that, some feel, not much can fix it—not even a federal boost.
According to Farr, California’s fiscal mess—and inability to match or partner with federal funds—has led to a weakened effect of the Recovery Act on the Golden State. “With other states, the stimulus money has been very beneficial and more visibly beneficial than is noticed in California because of the state’s own problems,” he says. “California is worse off than any other state.”
Farr says that the federal government purposely designed the stimulus funds so that they would sidestep the state and instead be granted to local governments, agencies and businesses.
“We don’t want states holding on to the money,” he says. “The reasoning for this stimulus package was to get money into the hands of people who would spend it as fast as possible. That’s why we bypassed Sacramento and put the money into school districts [for example], because we knew the state would sit on it.”
Santa Cruz County has received an estimated $27 million in direct stimulus grants, up to $40 million including a ration of the State Fiscal Stabilization Fund, and even more if one-time Social Security payments, extended unemployment benefits and tax credits are taken into account. Local agencies and efforts from school districts to the sanitation district and health centers to workforce projects have received ARRA grants. Take note of a small sampling of these programs, and how they are putting stimulus rewards to work in the Santa Cruz area.
Renewable and clean energy projects are a pre-eminent feature of the Recovery Act, which gave $16.8 billion to the U.S. Department of Energy for projects focused on the development of clean and efficient energy. One such project is the Weatherization Assistance Program, which received $5 billion nationwide and $192 million in California. The program hopes to help low-income families reduce their energy bills and “green” their homes.
The term “weatherization” refers to making energy efficient adjustments (from installing new doors and windows to replacing water heaters and refrigerators) to a home in order to reduce energy use and costs. According to Lizet Moreno of Central Coast Energy Services (CCES), weatherizing a home can save said home $400 per year in energy bills.
CCES has been offering weatherization services to the Central Coast for almost 30 years, and expects to receive $4 million via three ARRA grants to ramp up their services. The company is currently busy doing outreach – they have $2 million of ARRA funds to use before the deadline next year, and are on the search for homes to spend it on. “Before we received the funds we didn’t really have a need to do outreach as much as we do now,” says Moreno. “[But] we have to spend the money so we can continue to receive those amounts.”
The benefits of the weatherization program are manifold: low-income households will save money (which they can spend on “more pressing family issues,” according to Farr’s stimulus website), legions of homes will become more energy efficient, and jobs will be created to make it all happen. According to Moreno, CCES will hire 90 people to complete the stimulus funded weatherization projects, some of whom will be transitioned into full-time positions. In partnership with the Summer Youth Employment Program, CCES designated 20 of those jobs for low-income youth ages 18 to 24. Job creation will be the most visible way the program will stimulate the economy, says Moreno.
“At this time, to be able to provide 90 jobs anywhere, from any company, is a big accomplishment and big task, given the way the economy is right now,” she says.
Santa Cruz County Community Credit Union (SCCCCU)
Big banks aren’t the only ones getting bailed out—local banks are getting a federal boost, too.
SCCCCU is certified as a Community Development Financial Institution (CDFI) through the U.S. Treasury Department, which funds CDFIs based on a competitive grant application process. When SCCCCU filed their application for $1.2 million last October, it had no way of knowing that CDFIs were soon to receive $100 million from the stimulus bill. Because of this increase in funding, its request for $1.2 million was met with $2 million—an alteration they were happy to accept.
“We said ‘sure, we’ll take $2 million!’” remembers Sheila Schat, director of community development and outreach for SCCCCU. “It was an unusual situation where there was more money than anticipated—which is great because it goes to organizations that were hardest hit by the recession.”
As large national banks hit rock bottom, lose customers, or get bought out or bailed out, she says the U.S. government seems to be putting a greater emphasis on the value of CDFIs.
“Under the Bush administration, CDFI was not funded nearly as well as what industry analysts perceive to be the case with the Obama administration,” says Schat. “The CDFI is projected to increase funding to organizations like ours, which is big news for underserved and distressed communities.”
Chairman of the Federal Reserve Ben Bernanke sang their praises in a speech in Washington on June 17, saying, “As many communities struggle with rising unemployment, high rates of foreclosures, and vacant homes and stores, these organizations lead efforts to stabilize their neighborhoods.”
SCCCCU was one of nine CDFIs across the nation to receive stimulus money. Schat speculates that their application was chosen because it showcased their commitment to small business lending, an effort that is in line with the ARRA’s mission of creating jobs as well as helping small businesses who have been sucked down by the economic whirlpool. Because lending at national banks has tightened, Schat says these CDFI grants will enable local banks to lend to small business owners who are having a hard time getting a loan elsewhere.
She says to expect visible benefits from increased small business lending. “A direct result of lending is keeping small businesses afloat and maintaining and creating new jobs in the community,” she says, adding that SCCCCU will have no problem meeting the grant requirements. “It’s certainly not hard for us to get the money out.”
Not everyone is totally satisfied with the shakedown of the stimulus effort. As part of the ARRA, the Santa Cruz County Department of Public Works (SCCDPW) received a $3.14 million grant through cover_light.jpgthe Regional Transportation Commission and will be given a second, $1.5 million grant next year. While these grants will create around 65 and 30 local construction jobs, respectively, Director of Public Works John Presleigh says they do little to fix the county’s dilapidated roadways.
Road conditions are determined by the pavement condition index (PCI), which operates on a scale of zero to 100 with 100 being a perfect road. According to Presleigh, the county’s overall road rating is 52 – a number area leaders would like to see in the 70 range or higher. The money allowed the department to hire Watsonville-based Granite Construction to fix-up portions of four of the county’s worst roads: Carlton Road, Green Valley Road, San Andreas Road, and Pine Flat Road, all of which have ratings between 15 and 25.
“It has certainly helped a couple of the worst roads in the county [where] we’re doing improvements, that’s great,” Presleigh says. However, he adds, these projects hardly make a dent in the $75 million worth of road maintenance needs he says the county is back-logging. In addition, he is disconcerted with the lack of follow-up on the stimulus grants. “The money we got in stimulus funds gives us a new road but it doesn’t give us the money to maintain it at a high level,” he says. “It doesn’t provide for maintenance.”
This catch would be less problematic for Public Works if they weren’t already facing cuts to funding: the department funds road maintenance with local gas tax revenues, which the state was threatening to pilfer in recent budget negotiations. As it stands now, Sacramento is instead discussing deterring the gas tax revenue for six months.
“That is money that supports us to maintain roads,” says Presleigh. “If we had lost that money it would’ve been horrendous.”
City Public Works departments throughout the county are also commencing on ARRA-funded road projects. The City of Santa Cruz received $1.35 million for repaving parts of Market Street, Morrissey Boulevard, and West Cliff Drive. Capitola will be putting their $230,000 roadwork grant toward repaving 41st Avenue between Capitola and Clares Streets. Watsonville got $1.2 million for road repairs, and Scotts Valley will be using its $275,000 to rehabilitate Bean Creek Road and $350,000 to construct a sidewalk along Whispering Pines Drive.
Nationally, the ARRA designated $45 billion for roads, bridges and transit systems. California’s share is estimated to be more than $3.6 billion.
Homeless Persons Health Project
The ARRA-funded projects underway at the Homeless Persons’ Health Project (HPHP) are exemplary of the twofold stimulus mission: the first amount, an Increased Demand for Services (IDS) grant, has allowed HPHP to expand their capacity to help underprivileged populations; the second, a Capital Improvement Program (CIP) grant, gives them funds to start several remodeling and refurbishment projects, thereby creating jobs.
HPHP, a project of Santa Cruz County’s Health Services Agency that provides free or discounted health care to local homeless and uninsured persons, was one of four Central Coast community health centers to receive an IDS grant through the U.S. Department of Health and Human Services, which doled out $338 million to centers nationwide. HPHP’s $224,451 grant prevented lay-offs that would’ve totalled 2.3 full-time jobs, supports the staff at their Coral Street clinic, and allowed them to open two half-day, single-provider clinics.
Christine Sippel, senior health services manager for HPHP, says the “increased demand for services” grants are intended to do exactly that. “They meet the increased demand for health care services that have happened across the country as result of the recession,” she says.
She spoke with GT before the 2009 Santa Cruz County Homeless Census and Survey was released on Tuesday, Aug. 4 and exact figures were known. However, she said it felt like there had been an incontrovertible surge in need for homeless services in Santa Cruz over the past year. Surprisingly, the census showed an unexplainable 19 percent drop in homelessness in Santa Cruz since 2007. Homelessness in Watsonville, however, increased by 75 percent, probably due to unemployment rising from 17 to 26 percent. Still, with 73 percent of homeless persons reported to have a disabling condition, there has been a strong need for health services. “Our demand has been significant,” says Sippel. “We’ve had a full waiting room everyday at the Coral Street clinic.”
The CIP grant will also help HPHP expand access and services. For this grant, HPHP picked six projects throughout the community to put the funding toward. The projects include turning the old Watsonville courthouse into the new Mental Health Services headquarters, enlarging the Coral Street clinic’s waiting room, and building a 24-hour “recuperation center” at the Homeless Service Center for homeless persons in recovery or recently discharged from the hospital.
According to Sippel, this grant is especially helpful because capital improvement funds are few and far between. “We haven’t had any money to spend on capital improvement for at least 20 years,” she says. “Everything is overdue.”
While some stimulus recipients, like those behind road repairs, see the rewards as appreciated boosts that lack necessary follow up, Sippel says that the transitory nature of ARRA funds works well with HPHP’s situation.
“The hope is as the economy picks up, more people will have insurance and there will be less need for uninsured care,” she says. “This is a short-term influx of funds to help with a limited time problem.”
The ARRA designated the largest amount, $15.4 billion, to Health Care, which includes the funds given to community health centers.
Compared to other sectors receiving stimulus money, law enforcement got a smaller piece of the pie at $4 billion. One billion of that chunk was designated for the COPS Hiring Recovery Program, which awards local law enforcement agencies funds through a competitive grant application process. The grants provide 100 percent of the funding for entry-level salaries of new hires or rehired officers for 36 months, including benefits, and requires police departments to retain these positions for 12 months after the funding ends.
Every city in Santa Cruz County, except for Scotts Valley, was awarded a grant to create or retain jobs. These funds come at a particularly tough time for our local police departments as all have been struggling with severe budget shortfalls. In recent months, the City of Santa Cruz, for example, eliminated two vacant police officer positions, laid off a records clerk and came close to laying off 10 sworn officers. As the only ones in the county to receive the full amount they requested, the Santa Cruz Police Department received $1.97 million. This amount will prevent lay-offs within the department, and enables the city to avoid its next round of budget cuts. Capitola got $291,217, which is enough for one new hire, and the Watsonville Police Department (WPD) is working with $1.08, the equivalent of three officers.
Before “all the hacking to the budget” began, says Watsonville Police Chief Terry Medina, the city had 75 full-time sworn police officer positions. They were forced to eliminate six of those positions, all of which were vacant. He says the department was able to avoid lay-offs because the staff agreed to take furloughs, cut overtime in half, and reduce their hours. Their ARRA grant, coming through the U.S. Department of Justice, will allow them to hire for three of those positions, bringing the roll call back up to 72.
Medina says one downfall to this situation is that the benefit won’t be immediate. If they hire someone new it will be 18 months before they have completed training and are helping on the streets. But they may have no choice.
“If it’s someone we can hire from another department we can have them in eight to 10 weeks,” he says. “The problem is no one is jumping departments right now because they are afraid of going to the low end of the totem pole.”
Regardless of timing, Medina is excited to have three additional officers at work in the city –one of which will most likely be assigned to the investigative bureau, which he says has been “slammed.” The additional manpower is helpful, if not the silver bullet they were hoping for.
“It’s not a cure all,” says Medina. “It helps a great deal within the community when we get these people involved, but it doesn’t help us with the budget deficit. It’s not like we can take the money and put people back on full time.”
At $30.2 billion, tax relief is the largest beneficiary of California’s $85 billion portion of the stimulus pot. According to Congressman Farr’s Recovery Act guidebook, 95 percent of America’s working families are eligible for one or more of the resulting tax incentives being offered this year. But there are impending deadlines. The year has passed the mid-way mark. (Have you looked into your tax breaks yet?) Take note of a brief list of things that residents could be getting tax credit for.
Social Security: Perhaps the most recognized incentive to come out of the ARRA, the One-Time Economic Recovery Payment is a single $250 payment to individuals who receive Social Security, Railroad Retirement or veteran’s compensation or pension benefits, or those receiving Supplemental Security income.
First-time Homebuyer: Taxpayers who purchase a home before Dec. 1, and haven’t owned one in the past three years, are eligible for increased and expanded tax breaks for 2009.
New Vehicle Purchase: Now’s the time to drive off with that dream car—the ARRA is giving a tax break to taxpayers who buy a new car (or multiple new cars) before Jan. 1, 2010.
Greening Your Home: To encourage homeowners to make their homes more energy efficient, the Recovery Act includes a tax break that will cover up to $1,500 of home improvements finished in 2009 and 2010.
Making Work Pay: This tax credit lowered the tax-withholding rate for 2009 for 120 million American households, according to the IRS.
College: Tuition’s gone up and times are tough for family finances, but paying for college just got a little easier – the stimulus bill includes a tax break for parents and students paying for the first four years of college.
The Recovery Act is huge, very huge. Luckily, one of its facets is transparency and there are many websites that can be helpful. Here are just a few: