Federal stimulus a hit-and-miss for Long Island

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New York Paving, Inc. employees work on the first of 15 highway stimulus projects on LI. Photo by John Dunn / July 13, 2009

By: ELIZABETH MOORE, The New York Times
July 26, 2012

When the heavy equipment started rolling recently on the first Long Island job funded by stimulus funds in the American Recovery and Reinvestment Act, the local construction industry responded not with cheers but with grumbling.

This project is no Hoover Dam - just $1.7 million worth of parkway concrete repairs that will create 12 to 15 jobs, in a year when Long Island has shed more than 40,000 of them.

Much bigger road projects promised by the stimulus months ago are bogged down in red tape as the construction season drags on, while some of the construction trades report 40 percent unemployment.

"We've got a lot of people taking their retirement to pay for their houses," said John Duffy, business manager of Operating Engineers Local 138. "It's not working." 

Where's the relief?

It has been a summer of discontent for the $787-billion stimulus plan that President Barack Obama hoped would jolt the economy out of its tailspin and trigger a speedy recovery.

Despite the rollout of stimulus money and an uptick in the stock market last week, the jobs picture has been bleaker than expected here and nationally.

Long Island's unemployment jumped from 4.7 percent in June 2008 to 7.5 percent last month, according to a report Thursday by the state Labor Department. Nationwide, the rate went from 5.5 percent to 9.5 percent in the same period.

It's a trend that has kept Obama on the defensive, pleading for more time for the stimulus to take hold even as some critics have already declared it a failure.

The money is flowing too slowly and creating too few jobs, some of them say. It's sustaining patronage instead of fixing economic problems, others say, criticizing the 40 percent share of the money devoted to tax breaks instead of public works projects.

But the federal stimulus needs to be judged against the disasters it may be averting, defenders insist. In New York, stimulus money closed 31 percent of the state's budget gap and headed off a proposed $1.1 billion cut in public school funding and other cuts in health, education and aid to the poor, noted Frank Mauro of the liberal Fiscal Policy Institute.

"There's absolutely frustration out there about the timing of the approval of some of the road projects," acknowledged NassauCounty Executive Thomas Suozzi. "But I know we would be devastated without the stimulus package." 

Small wonders

The key, for both Nassau and Suffolk, was a boost in the federal Medicaid reimbursement rate that has provided millions of dollars in budget relief in a grim year of plummeting sales tax revenues and rising property tax delinquencies.

Along with that have come community block grant funds, and grants large and small for seniors, police, transit, sewers, homelessness prevention and housing -- all told, 28 different funding streams, Suozzi said.

Meanwhile, stimulus money has been entering the local economy through increased food stamp and unemployment payments and health insurance subsidies for the newly unemployed.

Since March, Ken Dunne, president of Island Group Plans insurance, of Bohemia, said he has been busy helping small businesses contact their laid-off workers and offer them a 65-percent COBRA subsidy to cover most of the cost of health insurance coverage, courtesy of the stimulus.

That new requirement has been "helpful" to the workers but a strain on small businesses: Those with more than 20 employees must front the subsidy until their next quarterly tax filing, he said.

From Dunne's vantage point, the stimulus has had "almost no effect that I've seen. Most of my clients are just doing what they did and struggling to survive."

Meanwhile, energy and health technology grants funded by the stimulus for the most part have yet to flow, as federal agencies decide how to distribute them.

However, the largest single chunk of stimulus funds on Long Island -- $219 million -- is already at work at Brookhaven National Laboratory for its National Synchrotron Light Source, radioactive cleanup and other projects, said spokeswoman Mona Rowe. Officials have said the project would create 200 construction jobs.

"The money is flowing . . . we're spending it as fast as we can," Rowe said.

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