Economic stimulus: Is it working?

In a drought, even a squall of rain is appreciated. But it doesn't mean the drought is over.

Apply the metaphor to the Yuba-Sutter area's economy over the last year, and you'll sum up what leaders, economic development experts and others largely believe is the impact from the federal economic stimulus package that went into effect about a year ago.

Though the package resulted in some jobs and projects — some of them ongoing — it didn't, and perhaps couldn't, do enough to keep the local unemployment rate not only near the top of the state, but the nation.

"I'm not saying it's been ineffective, but we have to look at what parts have been effective," said Brynda Stranix, president and CEO of the Yuba-Sutter Economic Development Corporation.

When President Barack Obama signed the bill in February last year creating the package, formally known as the American Recovery and Reinvestment Act of 2009, Colusa County's unemployment rate was 24 percent, Yuba County's was 17.9 and Sutter County's was 18.4.

A year later, after the three counties received more than $244.7 million in stimulus spending, both in money sent directly to the area and in pass-through dollars filtered through the state, the unemployment rate has actually gotten worse: Colusa at 27.8 percent, Sutter at 22.4 and Yuba at 20.3.

But economists warn against reading too much into unemployment numbers, because job losses often don't abate until well into an economic recovery.

John Fleming, economic development coordinator for Yuba County, said a case could be made, as Obama has done, for the stimulus package keeping a bad economy from being even worse.

"If we compared this one to previous downturns, we're doing maybe slightly better than one could've expected," he said.

But he and Stranix said the stimulus package missed one key area: helping business development.

Of the money sent to the Yuba-Sutter area, the majority was in three areas:

• Transportation ($153.2 million)

• Education ($28.9 million)

• Water and environment ($25.3 million)

According to officials tracking stimulus spending in California, money sent directly to the area from the federal government created 300 jobs, with 258 in transportation. Pass-through money isn't tracked to specific areas, though it resulted in more than 71,000 jobs statewide, according to the officials. There is also difficulty in parsing the numbers geographically. The site tracking state stimulus spending, recovery.ca.gov, lists Yuba County as having received $107.73 million, largely because of $68 million sent to the Caltrans office in Marysville.

But the projects that Caltrans used the money for weren't all or even mostly in Yuba County, instead spread over an area encompassing several counties making up Caltrans' District 3.

Likewise, nonprofit groups based elsewhere have often spent stimulus money in the Yuba-Sutter area, but the money is counted toward wherever the group is based.

Training for what's next

Stranix and Fleming said an approach directly assisting small businesses, considered the backbone of the local economy, would have been more beneficial.

"The component that might be missing is going to businesses and asking, 'What do you need to grow?'" Fleming said.

If business development didn't get a lot of attention in stimulus spending, one aspect of it did: workforce training. The fourth-biggest amount of stimulus funds spending for the Yuba-Sutter area, $18.3 million, went to labor.

For the North Central Counties Consortium, which received $5 million last year for job training, that has meant programs to train out-of-work residents in skills more in demand, such as nursing, welding and "green" technology jobs.

Fran Kennedy, the consortium's executive director, said much of what her group received allowed it to expand the mission it already has under the Workforce Investment Act.

"We're in a very challenging geographic area, and we have to start thinking about where the advantages are," said Kennedy, whose Yuba City-based consortium also covers Glenn and Lake counties. "This forced us to use it quickly and wisely."

The consortium also used stimul-us money to provide more services at One Stop employment centers in every county, and for more modest programs like one last summer to give teens temporary jobs, as seen in the murals painted the walls around Appeal-Democrat Park in Marysville.

Because the training programs are still going, Kennedy said, it's hard to determine whether they have directly led to new jobs for trainees.

"I think it's fair enough to say there was an impact. How grand the impact is, is for us to get our arms around," she said.

But Stranix said if the stimulus funds are in any way going to be ultimately defined as at least partially successful, programs like the training by the consortium will have to be scrutinized.

Specifically, those programs' directors will have to demonstrate trainees got useful skills, and turned them into new careers, she said.

Plugging holes in economy

Most of the stimulus money didn't go to preparing people for a different job, but instead keeping them in the ones they had, or at least giving them temporary help to put food on the table.

About $224 billion of the overall $787 billion stimulus package was for education, health care and entitlement programs, such as extended unemployment benefits.

For school districts faced with cuts due to California's budget deficit, stimulus money meant the difference between layoffs and retaining some teachers.

Nancy Henshaw, director of accounting with the Marysville Joint Unified School District, said 37 teachers stayed on the payroll because of $2.5 million the district received in stimulus funding. With more funding shortfalls expected, she said, any stimulus money the district gets will be used for the same purpose.

"All districts up and down the state are in the same position," she said, of the need to make cuts. "I just couldn't imagine our community with the additional layoffs."

Elsewhere, workers left idle by the shrunken economy have gotten a small boost from other stimulus spending.

Mercy Housing, a nonprofit housing group based in West Sacramento, got $7.8 million to partner with Yuba County and other governments to buy foreclosed homes, fix them up, and sell them to low- and moderate-income buyers.

The idea was to hire local contractors to do the work whenever possible because of the near halt to construction activity.

"Clearly, contractors are excited to have any work out there," said Greg Sparks, vice president at Mercy Housing. Bidding for work on foreclosed homes has been fierce, he said.

As well, the county and Sparks' group are working with local real estate offices and title companies in the buying and selling of the homes, asking contractors to buy materials locally whenever possible, and doing more extensive work on the homes to both make a deeper investment in the neighborhoods and spread more work around.

Sparks said two houses facing each other at an Olivehurst intersection both got curbs and gutters, even though such improvements might not do much to boost the resale value.

But even as locally focused as it is, the program's impact is limited, Sparks conceded. The county set a goal of cycling 18 homes through the program, but the federal Department of Housing and Urban Development rejected Mercy Housing's application for money to expand it.

So far, the county and Mercy Housing have bought five homes and have two more in escrow. Both have spent about 87 percent of what was apportioned to the area, though sales proceeds are put back into the program.

"It will help some businesses to sustain themselves in these tough times," he said. "In terms of making a radical change, probably not."

An alternative prescription

That the stimulus package didn't flip the switch from recession to boom came as no surprise to an observer who opposed it from the beginning.

Rep. Wally Herger, whose Northern California district includes Colusa, Sutter and Yuba counties, said the package relies too much on government public works projects with little lasting job creation.

"Where we created jobs is in the government area," said Herger, R-Chico. "Most are just temporary projects."

He acknowledged he voted against the plan but has since lobbied to get money from it for his district, citing fuel reduction plans to combat forest fires and money for levee work around Marysville as two examples.

A far better stimulus package would resemble what then-President Ronald Reagan did during a severe recession in the early 1980s, Herger said: Cutting taxes and government spending.

But Fleming, of Yuba County, said public works projects shouldn't be undervalued, as good roads are a critical part of a strong infrastructure to attract business.

Still, he said, he believes governments often take the wrong approach to economic problems by just throwing money at the situation.

"If government is going to do anything, they should facilitate and assist local business growth," he said. "If they're not doing that, they should get out of the way."

CONTACT Ben van der Meer at 749-4709 or bvandermeer@appealdemocrat.com

TOP 10 STIMULUS RECIPIENTS IN THE MID-VALLEY

Major recipients

Sutter County (Caltrans): $12.1 million

Beale Air Force Base: $10.4 million

Linda County Water District: $10 million

Live Oak: $10 million

North Central Counties Consortium:$6 million

Marysville Joint Unified School District:$5.8 million

Yuba City Unified School District: $5.1 million

Sutter County Office of Education: $4.5 million

Yuba City: $2.6 million

Del Norte Health Centers Yuba City: $2.4 million

Sutter County (Caltrans)

TRANSPORTATION

TOTAL TO REGION: $153.298 million

Major recipients

Sutter County: $12.1 million

Yuba City: $2.653 million

Yuba County (Caltrans): $1.2 million

Yuba County: $2.095 million

Marysville: $1.3 million

Wheatland: $512,704

Yuba-Sutter Transit: $795,000

HEALTH AND HUMAN SERVICES

TOTAL TO REGION: $2.33 MILLION

Major recipients

Peach Tree Clinic: $1.606 million

Yuba County Community Services Commission: $193,285

Sutter County Community Action Agency: $191,046

Yuba City Unified School District: $79,190

Colusa County Office of Education: $16,667

WATER AND ENVIRONMENT

TOTAL TO REGION: $35.312 MILLION

Major recipients

Linda County Water District: $10 million

Live Oak: $10 million

Colusa Community Alliance of Family Farms: $519,780

Mathews Ready Mix: $5,550

EDUCATION

TOTAL TO REGION: $28.972 MILLION

Major recipients

Marysville Joint Unified School District: $5.875 million

Yuba County Office of Education: $2 million

Yuba City Unified School District: $5.1 million

Sutter County Office of Education: $4.5 million

Colusa County Office of Education: $848,275

Colusa Unified School District: $551,570

Pierce Joint Unified School District: $2 million

BEALE AIR FORCE BASE

$10.426 million

OTHER

TOTAL TO REGION: $14.916 million

Major recipients

North Central Counties Consortium: $6 million

Mercy Housing: $1.7 million

Sierra Nevada Forestry Service: $193,285

Sutter County Housing Authority: $677,743

Yuba City Senior Center: $148,487

Colusa Indian Community Council: $25,000

Del Norte Health Centers Yuba City: $2.4 million