Stimulus funds in Ohio

Stimulus funds in Ohio haven't translated into lots of work yet, partly because projects must follow government rules, such as bidding
Mazzolini, Joan. Cleveland Plain Dealer, May 18, 2009.

It has been nearly three months since Ohio learned it would be getting $8 billion in stimulus money to boost the state's economy. But the steady stream of announcements that followed with details have not turned into construction or work.

Yet.

Ohio, which has seen its unemployment rate spike and its tax revenue fall off a cliff this year, desperately needs a job-creation jolt. But it appears the stimulus effect locally will start as a trickle of jobs and won't really kick in until the fourth quarter of this year, budget experts said.

Northeast Ohio's first significant project -- a $12 million townhouse development for the Cuyahoga Metropolitan Housing Authority -- is only just starting.

And the $1.2 billion that Ohio is slated to get for roads, sewers, weatherization and other projects still sits in the federal government's coffers.

That is mostly because the government isn't fronting the money but is instead reimbursing agencies as actual work begins. So even so-called shovel-ready projects that were planned and engineered still need to go through a bidding process, which can take months.

For example, the state has said it would spend $340 million on road and bridge work this year, but just a small number of contracts will be awarded this month. The number will increase in the months after, according to an Ohio Department of Transportation spokesman.

That's not to say the stimulus hasn't had an effect.

While the public is focused on seeing jobs created by the stimulus money, economic experts say it has already saved many -- particularly state and local government employees -- from the unemployment lines.

"Ohio's [budget] hole would have been a whole lot worse if there hadn't been the stimulus funds," said Mark Schwietzer, vice president and director of research at the Federal Reserve Bank of Cleveland. "Ohio's [budget deficit] gets particularly large once the stimulus goes away."

The state is looking at a deficit that could be nearly $900 million when the current fiscal year ends in June and could go to $8 billion after the stimulus money is gone and rainy-day funds are exhausted.

The aim of the American Recovery and Reinvestment Act was to get money into the economy quickly to save or create American jobs. But a large portion of the $787 billion stimulus package is going directly to state governments for social services such as Medicaid, expanded unemployment benefits and food stamps.

Ohio has drawn down only $550 million out of the more than $900 million in social service money available to it, with more than $500 million of it going to the Medicaid program.

Nearly one-third of the funds is going directly into Americans' pockets with a tax cut for workers that began this spring, and every senior on Social Security is receiving a $250 rebate check.

Jobs are expected to follow.