Utah Benefits ‘Big Time’ From Stimulus Money, Tax Cuts
By TONY SEMERAD
The Salt Lake Tribune
August 14, 2010 10:26PM
The amount of federal stimulus cash pumped into Utah by the controversial American Recovery and Reinvestment Act has now surpassed the $3 billion mark in spending and as much as another $1.5 billion in tax cuts.
Spending alone — on education, business and student loans, road and infrastructure construction, energy projects, and expansion of existing social welfare programs like jobless assistance and food stamps — has pushed Utah’s benefit from the stimulus to $1,110 per resident, according to data newly compiled by the nonprofit investigative journalism website ProPublica.org.
That puts Utah slightly below the national per capita average of $1,170.
But the Utah stimulus figure is much higher than $3 billion. Almost $1.5 billion more in tax cuts — not part of spending data — has been reaching Utah pocketbooks since 2009, through the stimulus bill’s changes in payroll withholding brackets and relief from the alternative minimum tax for middle-class taxpayers.
So, with a financial boost that large — one likely to be more even than the $3.7 billion the bill originally targeted for Utah — what do taxpayers have to show for the money?
A lot, it turns out.
This is great news—but Republicans will twist it into bad news.Through the eyes of a Republican Obama can do nothing right. Whatever he is doing is wrong. If the stimulus is helping the economy then we are ruining the economy with deficit spending. If the stimulus isn’t working then blame Obama. Whatever the situation — the Party of No can turn it upside down.
“Whenever you get that amount of money infused into the state, it has to have a certain amount of benefit,’’ said John Nixon, budget director for Gov. Gary Herbert, who has helped shape two state budgets since stimulus cash starting flowing in February 2009.
Stimulus-funded transportation projects, in particular, have had a significant impact on the state, said one leading Republican — but not enough to assuage GOP criticism that the $780 billion-plus stimulus package was overspending that contributed to the national debt.
“The amount was too large,’’ said Utah Senate President Michael Waddoups, R-Taylorsville. “But I still believe some parts of the stimulus have been beneficial and achieved their goals.’’
The main effect of the hallmark spending bill may be the hardest to measure: the extent to which it kept the downturn from becoming worse. Officials can’t point to exactly how far the economy might have fallen otherwise, but most say they are sure the stimulus helped.
Coming as it did against a backdrop of seizing credit and collapsing markets, “you have to assume that it has had a major impact in keeping the overall economy going,’’ said Mark Knold, senior economist with the Utah Department of Workforce Services. “You can easily make the argument that the economy would have slid more without the stimulus.’’
The bill put at least $681 million into Utah for immediate help to residents hit by the recession, in the form of extended unemployment benefits, food stamps and increased funds for Medicaid, the state-managed health care program for low-income residents.
In addition to helping recipients, subsidizing their spending power has broader benefits in keeping the economy afloat, Knold said. “We’ve avoided the Hoovervilles that way,’’ the state economist said, referring to shantytowns built by the destitute during the Great Depression.
Payments from two major pieces of the stimulus — a so-called State Fiscal Stabilization Fund that targeted public schools and an infusion of cash for Medicaid — came soon after the controversial bill passed.
Utah officials used the money to plug state budget holes, and it freed up cash to bond for a series of road projects, invest in technology research and fund energy-development tax credits and incentives to new home buyers, Nixon said.
“We did do some real stimulative and creative stuff with our funds,’’ he said. “For one thing, we know that transportation projects are some of the most stimulative projects out there.’’
Between federal and state construction projects, stimulus dollars are behind major Interstate 15 and light-rail improvements; a new school in the Jordan School District; a 120-bed veterans home in Ogden; a refurbished chapel at Hill Air Force Base; a 10,000 square-foot, fully furnished Bureau of Land Management office building in Millard County; and a fire station in Cedar City.
The cash also has fueled a $70 million surge in work on the Central Utah Project, further exploiting Utah’s share of the Colorado River with a new pipeline through Spanish Fork Canyon. And stimulus money is paying to remove 2 million tons of Atlas uranium tailings from the banks of the Colorado near Moab — a project delayed for years before the stimulus passed.
The cash has paid for hundreds of smaller public-facility upgrades, from the resurfacing of roads, range maintenance, trail overhauls, updates to drinking and waste-water systems, and a wide array of energy efficiency and infrastructure work on city, county and state buildings.
Just how many jobs this may have generated, or job losses it prevented, is an open question.
The Obama administration estimated in 2009 that the stimulus bill would add 32,000 in Utah, part of 3.5 million jobs projected to be created by the package nationwide, focused on schools and construction.
Yet the construction sector in Utah has sustained one of the largest job losses in the state’s economy during the intervening 18 months, while at the same time, classic “bricks and mortar’’ examples of stimulus-funded construction have abounded across the state.
On the private sector side, the stimulus delivered loans totaling over $288 million to more than 2,000 Utah businesses, nearly all through the Small Business Administration. And this probably created jobs and boosted the economy more quickly than other stimulus spending, one federal official said.
“These are existing businesses looking to expand and build more jobs,’’ said Dan Hannaher, SBA regional administrator. The government-subsidized loans, he said, are “an extremely good return on investment for the taxpayers. There is no doubt of the impact this is having on the economy.’’
The average SBA stimulus loan in Utah has been about $171,000, according to data through June 2010.
Fifty-seven Utah businesses — ranging from medical clinics, technology groups, and legal and architectural firms to restaurants and retail and service companies — have gotten stimulus loans of more than $1 million, and nine companies got $2 million or more.
The stimulus helped Robert Adams, a registered nurse at Midtown Manor Care Center in Salt Lake City, to buy the facility from its previous owners last year. And since he took over the long-term care center, its occupancy rate has climbed and so have revenues.
By cutting in half the down payment Adams needed to buy the 82-bed nursing home, the SBA’s $2 million loan “was absolutely a deal-maker for me. It made it all happen.’’
Adams has added four positions to his staff of 76 nurses, physical therapists and support staff since taking over. And if revenues continue upward, he said he hopes to expand with purchases of other nursing homes.
In terms of retooling Utah’s labor force, the stimulus has helped thousands of Utahns seek new job skills, with more than $165 million going to PELL grants for disadvantaged students attending the state’s colleges, universities and a host of for-profit technical and trade schools.
Both state and federal policymakers are betting heavily on research and innovation in their quest to turn the economy around.
At least $91 million of Utah’s stimulus is going to research projects, with topics such as medical advances, information technology, clean fuels, the environment, material and structural engineering, and genetics. These grants, primarily through the National Institutes of Health and the Department of Energy, have gone to all of Utah’s major colleges and universities — with the University of Utah far in the lead — as well as a host of private companies.
However this may pay off with research breakthroughs, there are more immediate economic benefits as well.
“Faculty members are hiring staff and spending money on services and supplies, mostly from Utah,’’ Tom Parks, a neurobiologist and vice president of U. research, wrote recently in a glowing news release about the U. grant cash. “Most of the money is spent locally.’’
tsemerad@sltrib.com