Stimulus brings $124 million to area, but some question valueThe Obama administration’s bid to jump-start the economy — the American Recovery and Reinvestment Act of 2009, commonly known as the “stimulus” — has been praised and vilified. In South Dakota, as elsewhere, ARRA supporters or opponents largely stack up along party lines, but those lines blurred over the past two years as the funds helped to weatherize homes, get roads built, improve water systems, install dams, extend broadband access, pay teachers and accomplish other goals.
By: Ross Dolan, The Daily Republic
The Obama administration’s bid to jump-start the economy — the American Recovery and Reinvestment Act of 2009, commonly known as the “stimulus” — has been praised and vilified.
In South Dakota, as elsewhere, ARRA supporters or opponents largely stack up along party lines, but those lines blurred over the past two years as the funds helped to weatherize homes, get roads built, improve water systems, install dams, extend broadband access, pay teachers and accomplish other goals.
The goal of the program was to stimulate spending, create jobs and spur investment in a stagnant economy. According to a Daily Republic analysis, the newspaper’s 17-county coverage area has been allocated about $124 million in stimulus money. Officials charged with spending that money vary in their assessments of its effectiveness, with most acknowledging a short-term benefit but questioning the program’s long-term impact on the area and the nation.
The federal website www.recovery.gov shows South Dakota as a whole was awarded $1.314 billion of the national $787 billion stimulus pie between Feb. 17, 2009, and Sept. 30 of this year. The state has received $659.2 million of that amount, according to the federal government.
The total, statewide allocation breaks down to 331 contracts worth $173 million, 1,670 grants worth about $1.077 billion and 53 loans totaling $64.59 million.
Meanwhile, the state’s own stimulus website, www.recovery.sd.gov, shows that as of Sept. 30, South Dakota had spent $566 million of the $711 million in stimulus money it had received.
State Budget Director Jason Dilges said the state and federal figures don’t agree for several reasons. In some cases, there is an overlap in the state and federal numbers. Also, he explained, some federal grants were not made through the state, but directly to organizations and private entities.
The state has spent its allocated money on categories labeled infrastructure, education, public assistance, public safety and “other.”
Administering the program has been challenging, Dilges said.
“There are tons and tons of reporting requirements that we agreed to when we accepted the stimulus and that have been burdensome.”
But the state has tracked the federal money without adding another office or more staff, which Dilges said he’s proud of.
The city of Mitchell and the Mitchell School District received a combined $11.23 million of Davison County’s $23.3 million stimulus allotment. About $6.7 million of the city’s allotment was used for runway reconstruction at Mitchell Municipal Airport.
Runway rehabilitation was scheduled for 2010 or 2011, and the city had several plans ready to go, Sebert said. Being shovel-ready enabled the city to take advantage of the stimulus money when the program became available.
Sebert is not certain the stimulus was a good deal for taxpayers.
“It brought projects like the airport forward by a year or two; however, when you get into some street projects, the stimulus probably delayed those projects,” Sebert said.
Using the stimulus money meant Mitchell had to meet more stringent federal guidelines, rather than state guidelines, for street redevelopment.
That meant, explained Sebert, a delay as some plans were changed to meet different requirements for handicap sidewalk ramps.
Airport projects are usually paid with federal dollars, he said, with 3 percent city and 3 percent state matching funds.
Government financing for runway projects would be the same with or without the stimulus, he said, but there’s no way of knowing how long it would have taken to get the federal dollars without the stimulus.
“If we didn’t get the stimulus money, I’m not sure when we would have been able to get it done,” Sebert said. “The project was scheduled for 2012, but it could have been set back until 2013 or 2014, or until money was available from Congress. It definitely moved things up.”
The Mitchell School District received several grants for Mitchell Technical Institute as well as K-12 education, said Superintendent of Schools Joe Graves.
“There were a few really good grants for Mitchell Technical Institute,” Graves said, including $206,000 for MTI to train dislocated workers and $100,000 to update the energy program curriculum to focus on green energy.
Another $12,785 was earmarked to purchase food-service equipment for the district. Graves said the district used the cash to purchase equipment for the kitchen at the new Longfellow Elementary School.
Another $424,259 was given to supplement remedial reading and math programs for two years, and the district hired several new teachers for two years to work with K-3 students. A $661,127 award will be used to boost the district’s special education program, Graves said. It will employ teachers and aides and additional psychologists to assess at-risk students.
School districts throughout The Daily Republic’s readership area received similar support at levels proportionate to their size.
Historically, Graves hasn’t been a fan of using grant money to hire additional teachers, because the funding isn’t sustained and salary needs are ongoing.
“It’s a tough choice,” he said. “If you’ve got 400,000 bucks, you’re not going to use that money to just buy ‘stuff,’ ” he said. “You’re going to purchase people’s time and put teachers in front of kids and help them to learn.”
But once the grant money is gone, it’s gone.
“That means that next year we’re going to wind up cutting positions,” Graves said.
The money helped the Mitchell district, Graves said, but “it wasn’t like we got new money to do new things. We used the money to do exactly what we were doing in the past.”
Graves said the extra money for job re-training at tech schools such as MTI has been a good thing, but it does nothing to assure that jobs will be available after a student’s training is completed.
The tight times have made people with jobs cautious about plunging into retirement.
“People are holding onto jobs longer than they would have had the recession not ended,” he said.
That’s especially the case in education. Once times are better and economic security is restored, Graves predicted, “We’re going to see a rash of retirements — especially in education.”
“The feds can’t keep pumping money into state economies forever,” he said, and a fading stimulus program means the state must start incurring more of the previously covered expenses.
That’s the way it has to be, Graves said. “A stimulus that remains isn’t a stimulus.”
U.S. Sen. John Thune, R-S.D., is more pointed in his criticism of the stimulus. He said in a statement that “the long-term economic impact of the amount of borrowing needed to pay for the stimulus will likely negate many of the short-term benefits.”
U.S. Sen. Tim Johnson, D-S.D., has been supportive of the stimulus. “The senator feels it has given a much-needed shot in the arm to local communities during a recession,” said spokeswoman Julianne Fisher.
Outgoing South Dakota Gov. Mike Rounds has accepted the money, but has done so somewhat reluctantly.
“The governor has said that if we have two options — we either use the money, or we turn it back in and somebody else uses it —then we may as well use it. And that’s basically been his position,” said press secretary Joe Kafka, noting the lion’s share of the state’s stimulus money has been spent on roads and bridges.
On balance, Kafka said, “it has helped us get through some very difficult budget years.” The governor said this week in his budget address to the Legislature that stimulus money has been used to plug budget gaps in recent years, but as the flow of stimulus money wanes, more state reserves will have to be used to balance the budget in fiscal year 2012.
“The stimulus dollars that came into the state were extremely well-timed,” said state Rep. Lance Carson, R-Mitchell. “That allowed us to do some things and to balance our budget without using our reserves — especially this last year.”
Carson said the severity of the economic downturn required some degree of government intervention, and he believes the funds have been well spent.
Especially important was the availability of education funds to re-train unemployed workers, Carson said.
But what about next year?
Carson summed up the state’s financial forecast with a single word: “bleak.”
“We know we’re up against a real tough situation and we’re probably looking at cuts. The stimulus dollars helped us to postpone the inevitable.”
Carson isn’t a doomsayer. He believes the state’s economic candle is burning brighter and views the general uptick in “help wanted” advertising as a positive sign.
“Everybody’s looking for help. When the stimulus dollars first started flowing in, employers were cutting jobs,” he said.
The state’s current unemployment rate is 4.5 percent, only slightly lower than the 4.6 percent rate in February 2009 when the stimulus was adopted by the federal government. The feds report that the stimulus funded 3,459 jobs in South Dakota between July and September of this year.
Stimulus money may be a good short-term aid, said state Sen. Mike Vehle, R-Mitchell, but long-term it won’t drive the state’s economy. Only true productivity, he said, will accomplish that.
“All we’re doing is moving money — borrowing from a future set of folks to give it to a current set of folks,” Vehle said. “But it’s not creating new value.”
The stimulus gave the state some leeway in recent budget years, but Vehle believes the state will have to tap into budget reserves in the coming fiscal year. He doubts, however, that lawmakers will approve using more than 20 percent of that emergency cash, the current balance of which is $107 million.
The most effective use of the stimulus money was for roads and bridges and infrastructure projects, Vehle said. Some high-dollar road jobs included:
* About $22.7 million in federal money to rebuild 10 miles of the westbound lanes of Interstate 90 between White Lake and Mount Vernon.
* $9.6 million to rebuild eastbound I-90 between Mount Vernon and Plankinton.
* And about $6 million to repave section of highways 1804 and 50 in the Geddes area. Spencer Quarries, which has divisions in Mitchell and Spencer, was a major contractor on that and other projects.
Vehle noted that some other stimulus money was spent to buy personal-care items such as shampoo for lower-income people. He has no problem with social programs, he said, but he believes social improvement projects are best funded by programs designed for that purpose, and not by stimulus money.
“If you’re doing something for a social purpose you’re not doing anything to stimulate the economy. That’s where the stimulus program went off the track,” he said.
Help for more people
Deb Cahoy, of the Rural Office of Community Services in Lake Andes — which serves a 22-county area — said stimulus money “really opened up our programs to people we normally wouldn’t be able to assist.”
ROCS received nearly $6 million, according to the federal government.
ROCS received grant funding of $813,960 for direct services to help families. It’s not unusual for the program to receive such funding; this time, however, it received more and was able to help families earning up to 200 percent of the federal poverty level income guidelines, instead of the normal 125 percent guideline typically used by the program.
That means the program could help a family of four making $44,100 annually under the 200 percent guidelines (it was $27,563 under previous 125 percent guidelines), or $29,140 (normally $18,213) for a family of two.
The money was used for utility assistance, past-due rent or mortgage payments, first month’s rental deposit for would-be residents new to the state, public transportation, new employment expenses (gasoline, uniforms or tools), food vouchers, personal-care items (shampoos, soaps, deodorants, which ordinarily are not allowed), and prescriptions for families without any sort of prescription coverage.
“This was an opportunity to help people we never helped before, and probably never will again,” Cahoy said.
Cahoy said the stimulus money also helped transportation and nutrition programs that have no income guidelines, including:
* The replacement of five badly needed buses and one van for the organization’s transportation program.
* Expansion of the elderly nutrition program by giving clients not previously served 5,011 home-delivered meals at accost of $30,016 and 5,492 site-delivered meals at a cost of $32,897.
ROCS received a $4.88 million state-administered block grant that it is using weatherize 617 homes in its service area — again, under the higher 200 percent income guidelines. The two-year program work calendar is already full.
“We’ve got more applications than we can shake a stick at,” Cahoy said.
The grant created 10.5 jobs and pumped thousands into local economies as work crews purchased building materials, gasoline and more.
It will be tough to be without the money when the funds run out, Cahoy said, “but it was wonderful for our service area.”
Data infrastructure wasn’t neglected, as evidenced by two multi-million-dollar grants.
In Brule County, Midstate Communications, of Kimball, received two grants totaling roughly $9 million to provide broadband access to homes and businesses in the Chamberlain/Oacoma area.
In McCook County, Triotel Communications, formerly the McCook Cooperative Telephone Company, will get more than $12 million in the form of a grant/loan for a three-year project to provide broadband Internet service to Salem, Alexandria, Emery, Spencer, Canova and other rural areas.
Triotel already developed a fiber network for the McCook Central school system, said district network administrator Brad Wilkins, but district demands are heavy on the system. The expanded system will open up more resources for other users, he said.
Students in the district use the broadband system every day and also to take remotely taught classes through the state’s Dakota Digital Network. More bandwidth is essential for today’s business and education systems, he said.
American Indian tribes also benefited from several stimulus projects. The federal stimulus website says the Crow Creek Sioux Tribe received $1.443 million, the Yankton Sioux Tribe received $7.346 million, and the Lower Brule Sioux Tribe received $6.447 million.
In the Wagner area, the Yankton Sioux Housing Authority received several grants, among them two awards totaling $1.68 million to rehabilitate low-cost rental units. The project included a full range of improvements from new roofs to more efficient furnaces.
Yankton Sioux Tribal Chairman Robert Cournoyer said the stimulus money, for everything from education to the housing improvements to upgrade the 40-year-old rental units, was put to good use.
Like Vehle, Cournoyer believes the stimulus created a few temporary jobs, but long-term need remains for money to bring in industry and develop permanent jobs.
“In the short term it did help,” Cournoyer said, “but long-term it really hasn’t done anything. But maybe spurring the economy is what it was intended to do.”