Jobs for 12,400 in bill for state

Also, Obama measure would allocate Arkansas $982 million

MICHAEL LIPKIN
ARKANSAS DEMOCRAT-GAZETTE

Arkansas would receive nearly $1 billion and gain at least 12,400 jobs mostly for construction if President Barack Obamas $447 billion jobs bill is passed as it currently stands, according to White House estimates released Tuesday. The $981.9 million proposed for Arkansas would be spent on repairing roads and bridges, modernizing schools, preventing teacher layoffs, and refurbishing vacant and foreclosed-on homes. The figure does not include payroll tax cuts for employers and employees, or extension of unemployment benefits. The White House released state-by-state analyses as it works to convince the public of the need for the American Jobs Act. Obama

unveiled the bill last week in a speech before a joint session of Congress and is now on the road promoting it. The bills largest provision would be a payroll tax cut for employers and employees through 2012, worth $240 billion. It would also allot another $140 billion for schools and construction. That would be paid for by increasing taxes on private equity managers and individuals making more than $200,000 a year and families making more than $250,000 a year. It would also raise taxes on oil and gas companies by eliminating exemptions. The payroll tax cuts would affect 50,000 businesses in Arkansas, according to White House estimates. A household with the states median income, around $37,000, would save
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about $1,150 under the plan. Many of the planned programs will be proportionate to states populations. Not counting the cost of the tax credits and unemployment benefits, 0.75 percent of money in the bill would be spent in Arkansas, which has 0.94 percent of the nations population. Gov. Mike Beebe, a Democrat, supports the infrastructure spending, said his spokesman Matt DeCample. The governor has said all along that infrastructure is a good investment in both the jobs they create and the benefits to the state, said DeCample, who added that the governor was still studying much of the bill. Republicans have criticized the proposed tax increases and said they want to pass some parts of the legislation, such as the employer tax cuts, separately. While I commend President Obama for presenting tax cuts as a component of his plan, this spending approach sounds very similar to the last stimulus proposal which we all know has not worked, Lt. Gov. Mark Darr, a Republican from Springdale, said in a prepared statement. Like families across this state and our country, our government has to learn how to be fiscally responsible. Democrats and Republicans in Arkansas congressional delegation said they wanted more time to analyze the bill before commenting substantively on its impact on the states economy. Most of the money allocated for Arkansas would go toward construction jobs: $370.5 million for repairing highways and other transportation projects, $270.7 million to renovate public schools, and $20 million to rehabilitate vacant and foreclosed-on properties. Combined, that would create about 8,300 jobs, according to the White House estimates. The central focus of the bill, the tax cuts and incentives on new hires, is not likely to have a large impact on jobs, said Michael Pakko, chief economist for the Institute of Economic Advancement at the University of Arkansas at Little Rock. The cuts will save employers only a few thousand dollars per employee compared with the tens of thousands they are paying for salaries and benefits. Its not clear to me that those short-term rewards are really going to make a big difference to employers, Pakko said. Hiring someone is akin to a capital investment, a long-term investment. Whats going to make a difference is a potential increase in demand in the long-run. The payroll tax cuts for employees, however, will improve the economy somewhat as they are spent on consumer goods or used to pay down debt, he said. The bill is focused on construction jobs because it is an industry where the government can have a substantial, immediate impact, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. In terms of direct impact the government can have, there are relatively few industries it can affect, Deck said. When you start going down the list, it becomes less clear what role the federal government plays in ... industries [such as the media and finance] on a normal basis. Whereas, its their job to build and improve highways. Some of the nations greatest losses tied to the struggling economy are in the construction and manufacturing sectors, Deck said. Most state officials have not looked at Obamas plan in detail and are not sure how the bills final wording would restrict their spending. A ny t h i n g t h a t g o e s through Congress is suscepti-

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ble to a whole lot of changes, said DeCample. Well look the proposal over, but its too far ahead to really plan on what you would say to school districts or anyone else about the use of that money. The Arkansas Highway and Transportation Department had its $400 million construction budget nearly doubled by the 2009 federal stimulus money. The department used the money to accelerate its construction schedule by a year. If given a similar increase, the department would likely take the same approach, said department spokesman Randy Ort. We have hundreds of projects in the pipeline at any given time, and we appreciate any additional funding, Ort said. But we still have lots of questions. The bill has several requirements to get projects under way quickly, such as mandating that the projects be completely federally funded to avoid jurisdictional delays. It would also require half of the funds to be spent within a year of the bills passage. The Transportation Department has not studied all of the legislations timebased requirements, Ort said. Those time frames are crucial to us to decide what projects we can use the money for. Without looking at it further, I cant say what we would put it towards, he said. Spending on school modernization has other restrictions: the money cannot be used for everyday maintenance and must supplement, and not supplant other public funding. The Arkansas Department of Education said it was already spending about $190 million in state funds over the next few years to modernize public schools by replacing roofs and installing air conditioning. Some of that funding is expected to come from the states $93 million surplus, said department spokesman Seth Blomeley. While we have funding for this year, its unclear how much well have in the future, he said. But because construction of some of the projects wont begin until next year, it is unclear if those projects would qualify for the funding, Blomeley said. Another $278.3 million would be spent to prevent teacher and first-responder layoffs, and would save 4,100 such jobs in Arkansas, according to the White House. But because the Arkansas codes doomsday provision protects teachers from layoffs in the event of budget cuts, there have been relatively few education layoffs in the state. Fewer than 200 teachers were laid off this year, Blomeley said, and many of those were because of declining enrollment in their schools. That means its possible they wouldnt be rehired even if there were additional funding. After the 2009 stimulus, Arkansas had to negotiate with the federal government on how it could spend money designated for protecting teaching jobs that were in no danger of being lost. The state was allowed to use the funds to improve classroom technology. But we just dont know what theyre going to require this time around, Blomeley said. Under the bill, Arkansas would also receive $42.4 million for facilities improvement and equipment at community colleges, and a national job training program for low-income youths and adults, which could train nearly 5,000 in Arkansas.
Information for this article was contributed by Toby Manthey of the Arkansas Democrat-Gazette.