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Home / Articles / News / Features /  The Stimulus Spin
04.07.10 cover

The Stimulus Spin

Which projects did your government pay for?

April 7, 2010, 12:00 am
In virtual reality, the economic stimulus looks like the product of some idealized government of the future—transparent, accountable and effective.


So it appears via the snazzy website of the New Mexico Office of Recovery and Reinvestment. The site boasts charts, graphs and maps galore, all set beneath Gov. Bill Richardson’s smiling portrait.

In reality reality, the Recovery Office exists in a drab, sparsely furnished wing of a state office building. The only sign announcing the presence of an agency overseeing $3.3 billion in taxpayer funds is a black-and-white computer printout, much like an office reminder to clean the break-room fridge. Inside, the place gets dumpier. For some reason, cardboard has been taped over the men’s room trash can. Over one busted urinal, another printout reads:

Careful
Valve stem sticks
Please jiggle if water keeps
running


Some might see the low-rent trappings as an encouraging sign of governmental thrift. But considering that the whole point of the stimulus is to, well, stimulate a stagnant economy through government expenditures, busted plumbing doesn’t exactly scream “recovery.”

Indeed, the run-down innards of the Recovery Office suggest a Potemkin stimulus—with a propagandistic online facade masking real economic rot.

Congress passed President Barack Obama’s stimulus package—an $800 billion spending program officially known as the American Recovery and Reinvestment Act—in February 2009. The following month, Richardson put former Gov. Toney Anaya in charge of assessing proposals and tracking the state’s stimulus haul, trusting him “to cut through the bureaucracy and red tape.”

At a press conference back then, Richardson said, “We need to target this money where it is needed most: creating jobs in New Mexico communities.”

More than a year later, what have the billions bought?

First, due credit must be given to that cool website: Obama’s stimulus delivers on its promise of transparency. Electronic reports made publicly available by the state and federal recovery offices allowed SFR to examine the accounting of New Mexico’s 1,900-plus stimulus-funded projects in detail. To see what opportunities might’ve been missed, we reviewed thousands of pages describing projects proposed by the public. We interviewed Anaya and stimulus contractors. We fiddled with spreadsheets until our eyeballs hurt.

After all that, this is what we learned. Here are six things New Mexicans should know about the stimulus—and what it means for real economic recovery.


   The stimulus is Godzilla, big and slow.
Nationwide stimulus spending is already bigger than the entire US agricultural sector. It’s also way, way bigger than New Mexico: The stimulus could buy everything produced or sold in the state three times over with billions of dollars to spare. In the last fiscal year, stimulus spending totaled roughly $280 billion—or $1.90 for every $100 spent on goods and services made within the US.

It would seem such fantastic sums simply must boost the economy, but most of the money has yet to materialize in communities around the country. As of the end of March, nearly 60 percent of the total nationwide stimulus money had yet to enter the economy, according to the nonprofit investigative journalism site propublica.org. In a sign of New Mexico’s relative sluggishness, approximately 66 percent of the state’s $3.3 billion allocation has yet to be spent.

“It’s still not fast enough,” Anaya says. “Bureaucracy being bureaucracy, if you don’t prod it, it’ll slow down.”

At the same time, he blames some sluggishness on democracy itself. In part to underscore Obama’s pledge of government transparency, the White House set up special accounting rules for “recovery” funds, adding what Anaya calls “horrendous reporting requirements” to existing federal rules.

“As a country we insist on transparency, we insist on honesty—no fraud, waste or abuse. All of that means process, and process translates into delays,” Anaya says.

2    The recession is King Ghidorah—even bigger.
In Obama’s first month as president, roughly 1 in 20 working-age New Mexicans was out of a job.

One year and one stimulus package later, the number was closer to 1 in 10.

The New Mexico Department of Workforce Solutions calls recent job losses “the worst the state has seen in modern times.” In 2008—before New Mexico felt the consequences of the financial crisis and ensuing recession—the state had 51,500 more private-sector jobs than exist today, with roughly the same number of government jobs. An optimistic blip in the latest state jobs release was evidently a departmental math error; the department cautions that a slight unemployment decrease in Santa Fe was a “temporary occurrence that will soon be reversed.”

In the past, “government jobs, along with private health services, could be relied upon when jobs in other industries were failing,” a recent state employment statistics release notes. Yet government jobs are “flat”—even with the stimulus—and would be down were it not for the 2010 census.

Anaya believes the Recovery Act prevented disaster.

“Had it not been for ARRA, in New Mexico, I can tell you our unemployment rate would be far, far worse than it is today. School budgets would’ve been cut, law enforcement would’ve been cut, health benefits would’ve been cut, teachers would’ve been laid off,” he says.

At the same time, Anaya’s job is partly to lower public expectations—expectations that Democratic politicians spent the better part of two years inflating.

“To think that ARRA could’ve turned everything around in one year is just totally, totally unrealistic,” Anaya says.

US Rep. Ben Ray Luján, D-NM, takes a similar line. “Without the Recovery Act, the unemployment rate would likely be much higher and families and businesses would be facing even greater struggles—but make no mistake, these are difficult times and much work remains to be done,” Luján spokesman Mark Nicastre writes SFR in an emailed response to questions.


View American Recovery and Reinvestment Project Map in a larger map

 

Likewise, US Sen. Jeff Bingaman, D-NM, says in an April 2 press release that the stimulus “stopped the freefall.”

The state Recovery Office claims 10,221 people were employed last year thanks to stimulus funding. By any practical standard, that wildly exaggerates its effect.

What the stimulus does, at best, is buy time. “Recovery” and “reinvestment” are better described as temporary patches for budget holes in state and local governments all over the country. (The feds, in turn, are borrowing against future growth, which is by no means guaranteed.)

According to the federal recovery office database, there were 163 stimulus-funded projects in Santa Fe, representing an influx of $620 million into the economy. Again, though: It’s mostly budgetary backfill for state agencies—preventing further cuts rather than creating new jobs.

In any event, the astronomical numbers thrown around by the federal recovery office only serve to obscure a more important question: What has the stimulus done for you lately?

3    Now hiring (someone else)!
Even in this government-heavy state, the private sector still employs 3 out of 4 New Mexicans. And most private-sector jobs the stimulus has paid for require a highly specialized skill or certification. Here are some sample job descriptions:

• A computational physicist and two software developers, whose duties “include plasma simulation”

• Pediatrician (half-time)

• A “postdoctoral scholar responsible for development and coding Monte Carlo based time series analysis tools” (whatever that means)

• An “experienced researcher with specific

expertise in the evolution of information processing systems”

• A chemical engineer and a technician “responsible for processing thin-film microcircuits on silicon wafers”

• A statistician

• A mechanical engineer

• Nine visiting artists, one “community artist,” and one “education and outreach artist” at the Santa Fe Art Institute

• Four singer coaches, three career advancement coaches and two theatrical coaches at the Santa Fe Opera

• Two laborers for a building renovation by the Native American Services Corp.
 

STIMULUS MATH: (1-0) = (1 1)

There’s an important difference between the way the state Workforce Solutions Department counts jobs and the way the Recovery Office counts jobs. Workforce Solutions, much like the US Department of Labor, counts jobs based on unemployment claims, quarterly tax reports and surveys. The state Recovery Office estimates jobs “created or retained” based on arcane and controversial formulas dictated by the feds.
“We just follow their instructions and do what they tell us to do,” Recovery Office Executive Director Toney Anaya says, asked about the jobs formulas.

By the feds’ dubious math, hiring a new person is the same as not laying someone off.

Do the rules provide any way to tell the difference between a new job and a “retained” job?

“No,” Anaya tells SFR. “My guess—and it’s strictly an educated guess—is that [the total jobs figure for New Mexico is] mainly jobs saved rather than jobs created. But it accomplishes the same effect.”
 

So far as SFR can tell, only $1.7 million in stimulus money has actually been awarded and released to private sector organizations in Santa Fe. On paper, that money funded 94.82 jobs. (Never mind that Santa Fe County lost at least 1,100 jobs over the last year.)
The job figures are even less impressive when broken down.

Of those 95-odd jobs, 24 came through the AmeriCorps VISTA public service program, which offers enlistees a one-year contract and a stipend. In short, it’s more government backfill. (“Some of the VISTAs have helped low income community members find inexpensive locally grown produce,” a project description says. “Others have helped youth by contributing to the development of afterschool programs for young people.”)

Another 27 jobs—all but one of them in construction—were attributed to a $2.2 million award to Presbyterian Medical Services in Santa Fe. A closer look shows this “capital improvement” award actually paid for multiple projects at PMS-owned facilities around the state. Two sub-projects focus on roofing and interior remodeling at the Santa Fe Community Guidance Center on Rodeo Park Drive. It’s unclear how many local jobs they created.

The remaining 43 jobs include some of those technical positions, listed above.

What about state jobs? After all, the state bureaucracy claims two-thirds of New Mexico’s overall stimulus haul.

Even in the state capital, however, government work remains hard to find.

Under its link for “stimulus jobs,” the State Personnel Office website lists five positions funded specifically by ARRA. All those jobs were evidently filled before the deadline because their online applications had vanished from the SPO’s system when SFR checked.

However, some digging in the SPO system turns up approximately a dozen more stimulus-funded jobs. Most of the new openings are for child-support clerks around the state; the applications note that their funding expires in September.

Whereas most agencies are simply trying to avoid further cuts, Anaya says, both the Human Services Department and Workforce Solutions have taken on new employees. They need the extra hands to cope with the increased demand for food stamps and the spike in unemployment claims.

4    In Recoveryland, everyone’s a temp.
Obviously, temporary work is better than no work at all. But what happens to these stimulus jobs when their awards run out? Odds are, they disappear, displacing workers once again.

Only three local stimulus-funded projects are recorded as “completed.” Those projects created a grand total of 15.44 “jobs,” by the feds’ definition. That tally includes 11 temps who were hired last summer to help people with the transition to digital television broadcasts.

“They were mostly college students,” Andrew Bartlett, co-owner of Retriever Technology, the company that won the DTV transition contract, tells SFR. “I liked them. I wish we could’ve kept some of them on.”

(For what it’s worth, Bartlett has been unable to get Channel 13 at his house since the digital transition.)

The second completed project was more backfill: a $26,000 grant to St. John’s College to fund its work study program. The money provided 1.6 temporary student jobs. (A college spokeswoman did not return SFR’s message. The College of Santa Fe also got stimulus money for work study, though that project is not recorded as “complete.”)

The third completed local project was a $750,000 award to DWG & Associates to design and install a solar power array for the Army section of the US National Guard base south of Santa Fe. According to the feds, this created 2.84 jobs.

“One guy was missing a leg, so we only counted a portion,” DWG’s Albuquerque-based project manager, Tim Anthony, jokes. (The real explanation: Since reports are filed quarterly, employees who work on part of a long-term project get accounted for as fractions.)

Anthony tells SFR his company retained two workers from the project—which happens to be one of the few local stimulus awardees that seems at all related to Obama’s “comprehensive plan to create a green economy” and add “millions of new, good-paying jobs,” announced during his presidential campaign.

So: Not counting government jobs “retained” and not counting temporary work, it seems Santa Fe’s share of the stimulus has successfully created only two new permanent, private-sector jobs—jobs reporting to a company headquartered in Colorado Springs.

5    There’s not much change in the stimulus.
The stimulus was sold as a grassroots endeavor. Announcing the Recovery Office website, Richardson pledged that smart, “shovel-ready” ideas from the public could receive government support. Thousands of proposals came flooding in, overwhelming Anaya’s shoestring operation.

Guess which of the following three proposals the government wound up paying for:

• A cat shelter

• A whiskey distillery

• A Star Trek-type fusion engine

The answer comes later. But first, Anaya wants to clear up “a lot of misunderstanding” regarding the purpose of the Recovery Office.

His job is not to hand out money. Rather, Anaya likens the Recovery Office role to that of a “traffic cop” for money flowing through other agencies.

There was a lot of “hype” last year—“a lot of ‘shovel-ready-type rhetoric,’ and ‘we’ve got to stimulate the economy,’ and so on,” Anaya says. “What was not clearly explained…was that the money really came down through state agencies to fund existing programs.”

Anaya takes partial responsibility for the resulting confusion. And he says he’s read pretty much every proposal submitted by the public—including SFR’s tongue-in-cheek pitch for a $50 million “newspaper bailout.” (Beyond a couple of boilerplate emails, SFR heard nothing particularly encouraging about its blatantly self-interested proposal.)

But SFR’s review shows stimulus awards have largely gone to people who already know how to work the existing labyrinth of bid notices and grant applications—not to nafs who submitted ideas through the Recovery Office website.

That said, many proposals from the public were perhaps less worthy than projects developed within the bureaucracy—or at least, more self-serving. For instance:

• Railyard Company principal Allen Branch requested $5 million in “new funding” for the Market Station development, estimating that it would create 275 jobs, though he didn’t say how.

• State Sen. Phil Griego, D-Los Alamos, signed his name to a $1 million funding request by the nonprofit Santa Fe 400th Anniversary Committee, which has since burned through $1.3 million in state and local grants to produce what it generously estimates as a $700,000 “impact” on the local economy. “I have seen the extensive plans for the 400th Anniversary events…and feel certain they are ‘shovel-ready’ in every way,” Griego wrote.

• Kevin DuPriest, president of a Rio Rancho company called VTOLE, requested $750,000 to build “personal air vehicles” for up to two people—flying cars that would require “no pilot license” and sell for $50,000 each.

• Whitney Colby of Santa Fe requested $20 million to design, build and operate a “solar battery-powered unmanned aerial vehicle for Border Patrol surveillance.” (The government is already patrolling the borderland skies with Predators.)

• An Eastern New Mexico University administrator requested $5.5 million to have students build “a five story high alien spaceship attraction” to be “shown in a crash-like orientation” in Roswell, with “working lights and visual effects using state of the art solar power cells.” Students would also build “alien statues on several downtown street corners.” Together, the extraterrestrial art projects would create 1,050 jobs. Supposedly.

Amid the dubious pitches for government largess, there were some clever ideas—often pitched with more specificity and clarity than proposals written by government officials, who knew a certain amount of stimulus money would be coming their way no matter what.

Some of the unfunded proposals underscore the single most important difference between the New Deal programs of Franklin Delano Roosevelt and Obama’s stimulus: direct employment.

For example, G Benito Córdova of Española, author of a 2006 novel set in Chimayó, proposed resurrecting the Great Depression-era programs that employed his father and grandfather, the Works Progress Administration and the Civilian Conservation Corps.

Members of Congress, too, are increasingly asking their policy staff how they might reinstate the Depression-era job programs, according to a Jan. 14 report by Congressional Research Service Labor Economics Specialist Linda Levine.

Some 40 percent of unemployed Americans—3.3 million people—worked on WPA projects in 1936, the tail end of the Depression. Another 500,000, mostly “young single men,” joined the CCC, which put them to work clearing trails, stocking fish and digging ditches in national parks and forests.
In many ways, the WPA outperformed a similarly named program called the Public Works Administration, which was organized much like today’s stimulus.

“The PWA operated almost completely by awarding grants to states, municipalities, and other public agencies, which in turn entered into contracts with private employers; this resembles the dissemination of much federal infrastructure spending today,” Levine writes. “In contrast, the WPA, by hiring participants onto the federal payroll, was able to ensure that jobs went to the needy unemployed.”

By cutting out the middlemen, the WPA also made more efficient use of taxpayer dollars than its stimulus-like counterpart, creating jobs at one-quarter of the cost.

So maybe those Roswell alien statues aren’t such a bad idea after all.

Paying college students to sculpt would certainly creates more jobs than the City of Santa Fe’s decision to spend approximately $100,000 in stimulus funds installing security cameras on transit buses. (The largest provider of transit surveillance systems is GE Security, a company that steadily laid off workers at US manufacturing plants prior to its sale this year to UTC, a multinational conglomerate with operations in 35 countries.)

Likewise, growing fruits and vegetables, as proposed by several organizations, would create more jobs than the Santa Fe County Sheriff’s Office decision to drop $76,000 in stimulus money on a “Rapid Deployment Vehicle” for its SWAT team, plus 22 new Tasers for its deputies—zero local jobs there, too.

6    But there is a little bit of hope.
A few small local programs seem to deliver on something like the green-tinged future Obama promised during his campaign.
 

SCORE!

The following 54 private organizations in Santa Fe got stimulus awards.

Energy/Matter Conversion Corporation: $7,855,504
Presbyterian Medical Services: $5,780,653
Los Amigos Educational Resource Center: $3,766,933
La Familia Medical Center: $2,345,924
Life-Link: $2,027,942
Native American Services Corp: $711,963
Vista Photonics: $600,000
Santa Fe Institute of Science: $496,067
New Mexico Own: $400,000
Mesa Photonics: $335,000
New Mexico Community Foundation: $332,000
Southwest Sciences: $300,000
Star Cryoelectronics: $300,000
Turquoise Trail Charter School: $211,854
Deerfield Corporation: $207,998
Monte del Sol Charter School: $203,058
DWG & Associates: $189,470
ATC Foundation: $187,249
Retriever Technology: $161,166
Conservation Solutions: $153,443
New Vistas: $148,830
Mechanical And Electrical Engineering: $143,237
Wildflower International: $142,532
NM Coalition To End Homelessness: $135,573
Southwestern College: $106,050
NDM Labs: $100,000
Santa Fe Art Institute: $100,000
Homewise: $95,961
Mesa Tech International: $82,460
Mesa Photonics: $75,000
Santa Fe Community College: $60,123
Santa Fe Community Housing Trust: $60,000
New Vistas: $57,500
Coop Consulting: $51,340
Georgia O’Keeffe Museum: $50,000
Santa Fe Opera: $50,000
Silver Bullet Productions: $50,000
Southwestern Association For Indian Arts: $44,000
Soulful Presence: $43,016
Santa Fe Boys And Girls Club: $42,500
College Of The Christian Brothers Of New Mexico: $38,895
St John’s College: $25,705
Fine Arts For Children And Teens: $25,000
Gerard’s House: $25,000
Santa Fe New Music: $25,000
Santa Fe Rape Crisis & Trauma Treatment Center: $25,000
El Museo Cultural: $20,000
Esperanza Shelter For Battered Families Inc: $20,000
Music At Angel Fire: $20,000
Santa Fe Pro Musica: $20,000
CASA program, 1st Judicial District: $19,779
Earth Works Institute: $19,300
New Mexico School for the Deaf: $12,587
Little Globe: $7,500

The stimulus kicked $32,000 toward Santa Fe County’s new Renewable Energy Financing District. This clever program leverages the local government’s borrowing power to cover the large up-front costs of installing solar, wind or geothermal energy systems for private property owners. The idea was first enacted in 2008 in Berkeley, Calif., thanks to academics there, some of whom have gone on to work in the Obama administration.

Per the Recovery Office accounting, the project directly created no jobs. Nevertheless, the benefits are evident.

Stimulus money has also provided temporary work and training to a handful of so-called “at-risk” youth in a residential energy-efficiency program organized by YouthWorks! and the Santa Fe Community Housing Trust. Housing Trust Resource Development Manager Daniel Werwath submitted that proposal through the state Recovery Office website; eventually, it received $60,000 through the city’s portion of the stimulus.

In that case, at least, the system worked as promised.

Another local energy project is far bigger in scale—in fact, it is the largest private-sector stimulus project in Santa Fe. This project is also the answer to the question posed in item No. 5.

The US Navy awarded $7.9 million in stimulus funds to the Energy/Matter Conversion Corporation, which has an office on E. Alameda Street. The award subsidizes eight jobs (including that computational physicist mentioned earlier), funding phase two of the corporation’s three-phase endeavor.

This phase will conclude with the design and building of the “WB-8 Polywell device,” a nuclear fusion reactor envisioned by the corporation’s founder, Robert W Bussard, who died at his home in Santa Fe in 2007. Bussard’s wife, Dolly Gray, co-founded his company and carries on his work. The late scientist’s rocket designs earned him immortality as the namesake of a fictional propulsion system for the Starship Enterprise—hence the Star Trek reference.

The Navy contract calls for the corporation to not only build and test a new fusion device, but also write a report on “the conceptual requirements for a Polywell fusion reactor capable of generating approximately 100mW.” That would provide roughly the output of a large coal-fired power plant, minus the air pollution (and without the dangerous type of radioactive waste produced by existing fission technology).

Success in phase three, the corporation’s website flatly states, “marks the end of fossil fuels.” That would make this local stimulus project, if successful, the most cost-efficient government program of all time.

There’s no consolation prize for the Edgewood Animal Shelter Task Force, which requested $500,000 to help build an enormous animal control facility to include “48 outside dog runs and an indoor cattery.” (It was maybe a hard sell, considering that St. Elizabeth Shelter in Santa Fe—a shelter for homeless humans—requested a relatively modest $356,000 for rooftop solar panels.)

And sorry, whiskey aficionado: Josefo Martinez tells SFR he never got a response to his $600,000 stimulus proposal for a distillery.

“I guess they turned me down,” Martinez, owner of Summit Builders in Santa Fe, says. He knows some people might object to public funding for hard liquor, given New Mexico’s drunk driving problem, but argues that local leaders must “think out of the box” to develop a manufacturing base.

Perhaps it was a missed opportunity. Martinez promises that his father’s whiskey recipe will “knock you out of your pants.”  SFR

 

ARRA Projects in Santa Fe

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