Beebe, Congressional Reps Prepare for Stimulus Bill

State officials have been busy preparing for the influx of federal money that Arkansas will receive if Congress approves the nationwide economic stimulus package, with a special emphasis on the job-creating aspect of the plan.

The $819 billion version passed by the House of Representatives in January is estimated to bring nearly $2 billion to Arkansas. The Senate, as of the first week of February, was considering a $900 billion proposal.

Gov. Mike Beebe, asked before House passage of the bill how many jobs the recovery bill would create in Arkansas, said it was far too soon to even speculate. That said, the American Recovery & Reinvestment Act of 2009 has sparked excitement. It’s the kind of excitement that had the governor downright chuckling with enthusiasm about the possibilities.

“First and foremost, this package needs to do two things: One, give the taxpayers something for their money, something they actually need, and two, put people to work, so that all these folks who are either scared about losing their job or the folks that have lost their jobs will have meaningful employment,” Beebe said in an interview last week.

To insure it would do just that, the governor had staff members in Washington, D.C., consulting with the Arkansas congressional delegation as the bill made its way through the House committees.

“In the House, we’re well-positioned with Congressman Berry being on Appropriations and Congressmen Ross being on Energy & Commerce, where a lot of this stuff is getting done,” Beebe said. U.S. Rep. Marion Berry represents the First District, and U.S. Rep. Mike Ross represents Arkansas’ Fourth District.

In the Senate, Arkansas holds some sway as well. Sen. Blanche Lincoln sits on the Finance Committee, and Sen. Mark Pryor was recently named to the powerful Appropriations Committee.

The amount of money the recovery package will ultimately deliver to Arkansas remains fluid. The plan is a moving target. Most officials, however, expect it to be passed and signed into law before the end of February.

Officials in state and local government are preparing their spending priorities now because they have to hit the ground running. President Barack Obama has made it a use-it-or-lose-it proposition. In a December speech, he said of his plan: “If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.”

Arkansas does not intend to lose any of its money.

The federal money would go to an array of programs — Medicaid, an extension of jobless benefits, education — and Arkansas leaders said they would be glad to get it. The House bill also includes tax cuts for business and individuals.

A rough consensus among Beebe and Arkansas’ representatives in Washington has emerged concerning what any injection of federal money should do. It should create jobs quickly, alleviate the immediate economic suffering of those most battered by the recession and address long-term economic development issues in the state.

“The emphasis has to be on stimulating the economy,” Pryor said. “You can’t do that through the tax code.”

Lincoln listed three goals for the recovery plan: help “working families, the consumers that have been hit by this economic crisis. We want to focus on job creation, not just for the immediate [term], but job creation that is long term and sustainable, and we want to create confidence in people — workers and consumers, businesses, industry.”

Rep. Vic Snyder emphasized immediate help for workers and families affected by the downturn. The plan “needs to include things that we know how to do. We know how to extend unemployment insurance, we know how to make sure Medicaid is well funded for states, we know how to make sure food stamps are strong — those kinds of things that deal with the short-term needs that families can have in times of rising unemployment.” He also stressed that the bill contained no earmarks. Earmarks are money for a particular project, such as the infamous “Bridge to Nowhere.”

The House bill does, indeed, provide assistance to the neediest in Arkansas, with $269 million directed at the food stamp program, for example.

Although Arkansas isn’t hurting as badly as some parts of the country, it is hurting. The state’s unemployment rate jumped to 6.2 percent in December compared with 5.7 percent the previous month. The national jobless rate was 7.2 percent. And the state has seen a steady string of announcements of layoffs in various business sectors.

Interviewed after passage of the bill, Berry said its “first priority is to create jobs. A lot of this was saving jobs.” The bill also allocated money to state and local governments so they could avoid laying off workers. Arkansas is set to receive $585 million over two years from the State Fiscal Stabilization Fund.

Asked where that money would go, Richard Weiss, director of the state Department of Finance & Administration, said, “That’s a good question. We have not received to my mind good guidance on that. We’ve received guidance that it can’t be spent for general operational purposes.” He added that he expected the final proposal to include guidelines regarding the spending of the $585 million.

“We also funded infrastructure that had been underfunded since [former President Ronald] Reagan,” Berry said. “The biggest chunk of the money as far as infrastructure is concerned is going to go to highways. There’s going to be a considerable amount going to waterways and flood protection.”

“We did it in such a way as to get it out as quick as we possibly could and to create as many jobs as we could possibly could and at the same time not put out more money than could be responsibly used,” Berry said.

Moving on Infrastructure

One of the fastest, most direct ways to put people to work is on infrastructure projects. Beebe pointed to “roads and bridges and transmission lines, particularly for green energy, particularly for wind energy, broadband access into the rural communities. Those are actual things that benefit the taxpayers, that they will for years and years to come really get something out of in exchange for their money. And it is their money.

“Secondly, it will actually require companies and people to be hired to do those things, so it will actually put wages in people’s pockets.” That “will benefit everybody not even directly affected by the stimulus [plan], such as restaurants and automobile dealers and furniture dealers and appliance dealers and all the other folks that rely on people to spend their money in the retail environment.”

The bill gives Arkansas $200 million for renovation and repair of education facilities. The governor noted that Arkansas had already taken steps in that direction, with the Legislature’s approval in 2007 of almost $500 million to build and upgrade Arkansas schools.

“That doesn’t mean we don’t need some more help,” he said, but the other areas he’d ticked off were a greater priority.

As for who decides how the money is spent within the mandated categories, Beebe said that all the states’ governors were of one mind in wanting as much flexibility as possible.

“Every state is different,” he said. “President Obama has indicated to the governors that he believes the governors are in the best position to know the needs of their own states.”

Road Work

Dan Flowers, director of the Arkansas Highway & Transportation Department, said recently that the agency was expecting to get $372 million in stimulus money, but that “bottom line” — after various formulas were applied — the agency would have $358 million in extra highway money.

(By the time the House bill was passed, it contained $370 million for highways and bridges.)

“The funding that comes to us will have certain strings attached,” he said. Fifty-five percent of the stimulus money will go to the state highway departments. Forty-five percent will be allocated to cities and counties.

Under the current proposal, cities and counties have only 90 days to spend 50 percent of their stimulus funds after the measure receives final approval, Flowers said. The highway department has 120 days. If the cities and counties can’t spend that proportion within the 90 days, that money goes to the state highway department. The state highway department has been chronically underfunded, and, Flowers said, the agency should have no problem spending any and all of its stimulus money.

Because Washington wants to get the money in the pipeline immediately, it’s targeted at “shovel-ready” or “ready-to-go” highway projects. The American Association of State Highway & Transportation Officials asked highway agencies throughout the nation to submit lists of their ready-to-go projects. The Arkansas highway department’s latest list includes 130 projects with a total cost of $1.1 billion.

The state Highway Commission will decide which projects get funded, but most of the highway priorities are well-known. Pryor, for one, mentioned the Bella Vista bypass. This $225 million project, the largest on the highway department’s ready-to-go list, would upgrade U.S. Highway 71 to relieve traffic congestion in Bella Vista in Benton County. The upgrade would extend north to Missouri.

Beebe indicated that he expected the commission and department to seek input from the executive and legislative branches of state government concerning project funding.

Flowers declined to list his top five, but noted that the agency had been working on certain improvement projects for some time. Among these are the Highway 67 corridor going northeast from Little Rock to Walnut Ridge, Highway 425 across north Arkansas, Highway 71 or the future Interstate 49 corridor, Highway 167 from Sheridan to El Dorado and Highway 65 from Pine Bluff to Lake Village. And in central Arkansas, reconstruction of the Interstate 430-630 interchange is on the ready-to-go list.

Although these transportation infrastructure improvements are needed and will aid in overall economic development, the emphasis is on getting people to work. In terms of jobs, Flowers said a rule of thumb is that for every $1 billion spent on highways about 37,000 jobs are impacted, either directly or indirectly.

Other beneficiaries of an infusion of federal money for highways are, obviously, construction companies and contractors, the providers of material like sand, asphalt and gravel, and equipment manufacturers and dealers.

Despite the need for speed in taking advantage of stimulus money, Flowers said the bid process would remain the same, as would standards.

“We’ve had discussions with the contracting associations — the association of general contractors, the asphalt paving association, the concrete paving association, the Disadvantaged Business Enterprise association — and told them the best we could what the level of funding would be,” Flowers said. “The feedback we’ve gotten from them is that the materials will be available, the equipment will be available, and the personnel will be available, and they believe they can accomplish this program.”

“We’re getting ready to go,” Flowers said.

Beebe: Expect Ripple Effect From Stimulus

Gov. Mike Beebe said the economic recovery plan would create jobs in a number of ways.

“If across the nation a lot of this money goes for roads and bridges … you’ve got people like Caterpillar who will increase sales of their heavy equipment and machinery, particularly road graders.” Caterpillar recently announced it would locate a plant in North Little Rock.

So not only will individual workers or construction companies benefit, but equipment and material suppliers will see a rise in orders, he said. And that means that manufacturers will have more business.

“I picked Caterpillar because they’re coming to Arkansas and even though they’ve announced huge cutbacks, none of that will affect their Arkansas operation, according to what they’ve said. And the Arkansas operation is where they’re going to make all the road graders,” Beebe said.

“Let me give you another example: our steel mills. If you’re talking about bridges and bridgework, the steel industry that’s been cutting back will see increased orders.”

Workers who perhaps have seen their hours cut may see them restored.

“This will permeate in terms of jobs, hopefully, far beyond just the actual construction workers and engineers and people who are hired to do the infrastructure work. It will expand to suppliers and manufacturers. And then theoretically, all these people will have more paychecks and then they might buy that car. They might buy that refrigerator.

“Or they might actually say, ‘OK, now is the time for me to go ahead with these interest rates and buy that house. I’ve got a good job. It looks like things are going to last for several years.’”

“It’s going to pick this economy up. They’re not going to spend this in one year. So confidence starts to get restored. Theoretically, that’s how it’s supposed to work. And applying some common sense, you can see where that could work.”

As for the ultimate effect of the recovery plan, Beebe hopes it will accomplish what it’s supposed to accomplish: “The end of the recession and the beginning of the comeback.”

“These are the times when you need all the leadership you can get at every level,” he said. “Pulling together as a nation now more than ever is what we’ve got to have.”