Stimulus jobs fall short of goal

By KEVIN WOSTER - Rapid City Journal - Associated Press Saturday, December 12, 2023

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More than nine months into President Barack Obama's $787 billion stimulus program, South Dakota is well below projections in a key measurement of success: jobs.

In pitching the massive federal spending package late last winter, the Obama administration offered state breakdowns in jobs expected to be saved and created.

In South Dakota, it was 10,000. But the state is well short of that goal and is clearly behind track to achieve it over two years.

According to a running total on the federal Recovery and Reinvestment Act Web site, 2,200 jobs in South Dakota have been created or saved. But even that figure is difficult to assess, since it doesn't distinguish between new and preserved jobs. In addition, companies reporting the job numbers admit there is a great deal of latitude in the way they report the numbers.

"It's a relatively wide path in terms of calculating the number of jobs," state budget director Jason Dilges said.

There also is a confusing inconsistency for what is deemed "jobs saved or created" in the list of stimulus awards and projects in South Dakota. J&J Asphalt of Rapid City, for example, reported 38 jobs saved or created through a $500,000 stimulus award. Yet, those 38 jobs essentially represent almost all of the existing work force at the company.

J&J operations manager Melissa Austin said she wasn't saying in her report that all of those jobs would be lost without the stimulus money. But she believed that essentially listing the company's entire work force met the reporting guidelines.

"It's the verbiage," she said. "It's a perplexing form that you fill out."

But the job at Ellsworth Air Force Base was more than report fodder for the company, Austin said. It was important in assuring that the company's work force would stay busy during a difficult financial period, she said.

"In fact, that particular job was a huge chunk of our spring asphalt paving."

The timing of the work affects how jobs are reported, said Brad Kurtz, president of Dean Kurtz Construction Co. in Rapid City, which has a number of contracts through the stimulus. They include a joint project with FourFront Design, for lighting upgrades in Ellsworth Air Force Base buildings, worth $1.7 million.

That project is listed as creating .37 of a job. Other projects by Kurtz show similar job creation or none at all.

"A lot of that has to do with timing," Kurtz said. "It just so happens that by the end of the first reporting period, we'd gotten quite a few contracts but hadn't started to work on them. Most are currently in the design phase."

Kurtz doesn't expect a flood of new jobs to be created, however. The company will have to add "a couple of people" to help with project management duties during the increase in work through the stimulus. He agreed that there is plenty of gray in the reporting process.

"It's pretty subjective, really, because you just have to give them a number if you've actually hired," he said. "Otherwise, you kind of estimate if you're keeping some of your existing shop busy."

On the Pine Ridge Indian Reservation, the Lakota Funds Native American loan program reported 25 jobs through $676,000 in stimulus funds. But eight of the jobs were the Lakota Funds staff, and the other 17 were at new businesses — a small sawmill and a sandwich shop — that likely would have been funded without the stimulus.

A quick look at the stimulus awards and projects listed for South Dakota online (www.recovery.gov) reveals an inconsistent mix of money and jobs. A $500,000 stimulus award might be listed as saving or creating 10, 20, or even 40 jobs, while an award of $3 million or $4 million may create none.

Some of that is because of the great diversity of jobs and services and vendors. Some is because money has been committed to certain projects, but work hasn't yet begun. And some is because determining job creation is as much art as science in the vendors who benefit from the stimulus dollars.

"I really think assigning jobs to this is tough, because it's hard to quantify," Dilges said. "And really, at the end of the day, you can say we created or saved this many jobs. I can't prove it. I'm just going by what the vendors tell us."

Beyond questions of jobs saved or created, there is the looming problem of jobs being lost, seemingly in spite of the massive influx of federal money.

South Dakota officials estimate the state has lost about 8,600 jobs since the fall of 2008. And even with the 2,200 jobs saved or created in the state, according to the federal recovery Web site, the state is still thousands of jobs behind. The Bureau of Labor Statistics reports a loss of more than 5,000 manufacturing jobs alone in the state between August of 2008 and August of 2009.

And despite hundreds of millions of dollars in spending in South Dakota already, the state unemployment rate sits at 5 percent — much lower than most states and half of the national average but much higher than normal in South Dakota. The state's unemployment rate was 4.6 percent when the stimulus plan was passed last February.

The numbers don't lie, say critics of the stimulus program.

"I think it's hard to argue with any credibility that this has been a success," said South Dakota Sen. John Thune, a Republican who voted against the stimulus bill. "You may be able to argue that there are some jobs that have been saved or even created for that matter. But what I'm telling you is that in the net, South Dakota is losing jobs."

Others argue, however, that it's premature to judge a stimulus plan that hasn't reached its full impact and was approved and implemented during one of the most debilitating economic crises since the Great Depression. Dilges expects more jobs to be created and saved as more stimulus money reaches projects and programs throughout the state.

And supporters of the stimulus say it's also unfair to base success or failure of a complicated economic infusion solely on jobs.

South Dakota Rep. Stephanie Herseth Sandlin voted for the stimulus plan while working with other moderate House Democrats in the Blue Dog Coalition to persuade Obama to impose cost-saving measures in future spending bills. And despite the bill's inability to prevent job losses in South Dakota, Herseth Sandlin said the stimulus bill "has worked for the state."

Projects and programs in South Dakota are expected to receive about $1 billion through the stimulus package, and state government will receive and distribute more than $600 million. The state already used almost $160 million to plug holes in the past two budgets, which left another $65 million that could still be available for the next budget, beginning next July. That has saved jobs and programs that would otherwise have been cut, Herseth Sandlin said.

Education, roads and bridges, first-time home buyers, transit systems, water projects and many other essentials in South Dakota have benefited, and "the list goes on and on and on," Herseth Sandlin said. As for the initial administration estimate of 10,000 jobs created/saved, Herseth Sandlin said "a lot of us questioned where they were coming up with those numbers." She said the bigger question is how many jobs would be lost without an economic infusion — something that's difficult to quantify.

"This was about preventing the loss of even more jobs in South Dakota and across the nation. Jobs are only one measure, and I think it's important that we ask the question: 'What would have happened if we had not passed the recovery act?'"

Democratic Sen. Tim Johnson and his staff point to one project after another that has benefited from stimulus money. They include money for water projects, schools, roadwork and reservations' needs.

The impact of the funding will grow as more stimulus money arrives and work on projects progresses, said Julianne Fisher, Johnson's communications director.

"There is still more money coming out. The goal was not just to infuse money into the economy and step back and say, 'OK, we've done everything we could,'" Fisher said. "The goal of the recovery act was to last over a certain period of time and help businesses as they are coming out of this recession."

The full effect of the stimulus money won't be felt for some time, and additional jobs are likely to be created as more money comes in, Fischer.

So the jobs total is likely to rise, although it already has been revised down from an earlier state pronouncement: The state reported in October that more than 1,400 jobs had been created or saved, thanks to the stimulus money, but that figure has now been revised down to 1,237. That's just the jobs saved or created by stimulus money distributed through the state. The 2,100 figure on the national Web site includes direct stimulus disbursements to or through federal agencies in the state, local governments and organizations or businesses.

The downward adjustment in the state tally wasn't a change in actual jobs, but rather a revised calculation, Dilges said.

"It was the way you have to calculate job numbers" that changed," he said. "It wasn't that we laid off folks or anything."

South Dakota is struggling with an unusually lengthy downturn in key revenue streams, including sales and use tax, contractors excise tax, bank and insurance company taxes and video lottery proceeds. As a result, the state faces a potential budget shortfall of up to $170 million for the next fiscal year, which begins July 1, 2010, according to Dilges and Gov. Mike Rounds. But things would have been much worse if the state hadn't used stimulus money to help the previous and current budget years.

It's difficult to determine how many jobs that money saved, but surely it saved some, Dilges said.

"If we didn't have the (stimulus) money, would we have cut jobs in education, for example? Well, likely we would have," he said. "Would we have cut 10 or 20 percent of the teachers in South Dakota? No, but maybe some would have been cut. And maybe districts would have used more reserves, and maybe we've have looked at more revenue sources.

"That's where it gets tricky," Dilges said.

Tricky is the whole process, involving painful paperwork and guidelines that seem fluid. But the money's good.

"It's not that much fun," Dilges said. "But that's the price we pay to accept almost $650 million."

___

Information from: Rapid City Journal, http://www.rapidcityjournal.com

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