Senate Democrats ready to send more stimulus funds to states

McClatchy NewspapersJanuary 24, 2010 

WASHINGTON — Linda Nguyen, the chief executive of WorkForce Central, has a message for Congress: "Main Street still has some problems. It's not over yet."

Nguyen's organization, which helps unemployed in Tacoma and Pierce County looking for jobs, has seen a 40 percent increase in the number of people seeking assistance since the recession began.

The $6 million in federal stimulus funding it received last year runs out this summer.

"We call it the cliff," she said.

Stung by a Republican win in a special Senate election in Massachusetts and the loss of their critical 60-seat majority, Democrats are putting a new stimulus and jobs bill on the legislative front burner, temporarily bumping health care reform aside. Senate Democrats are expected to unveil their $170 billion or so package this week.

"There is still a lot of desperation and hurt out there," said Nguyen. "There just aren't jobs out there."

Among those on Capitol Hill who are listening is Sen. Patty Murray, D-Wash. With one in 10 people relying on unemployment benefits, food stamps and health insurance subsidies, Murray said the economic crisis is taking its toll.

"I know people are worried, I know their economic security has been undermined," said Murray. "This is a critical time."

The Senate proposal is expected to mostly mirror a $174 billion stimulus and jobs bill approved, with little notice, by the House in December. That bill provides more than $48 billion for road, bridge, transit, school, housing, airport and clean water construction projects. It includes nearly $27 billion to help avoid layoffs of teachers, firefighters and police officers as state and local governments grapple with their own budget deficits.

The House bill also extends unemployment benefits and health insurance subsidies for another six months and continues several loan guarantee programs for small businesses.

The House package is paid for, in part, using $75 billion in unspent money from a bank bailout program, the Troubled Asset Relief Program.

Murray acknowledges a new stimulus-jobs bill will likely increase the federal deficit. But she said the only way to start reducing the deficit is by getting people back to work.

Congress approved a $787 billion stimulus bill last year, aimed at saving or creating 1 million to 2 million jobs. Those funds run out this summer.

Though it is hard to prove, the initial stimulus bill created or saved an estimated 75,000 jobs in Washington state.

"Without, it would have been worse," said Arun Raha, who heads Washington state's economic forecast office.

Despite some inklings of a recovery, Raha said the state's unemployment rate likely will get worse before it starts to decline. Unemployment should peak at 9.8 percent this spring. It's currently at 9.5 percent.

Pierce County's unemployment rate exactly mirrored the state's in December. The situation is uneven across the state. Thurston County was at 7.6 percent, Whatcom at 8.3 percent, Grant at 12.4 percent, Benton at 7.3 percent, Franklin at 10 percent and King at 8.5 percent.

The highest unemployment rates in the state, 14 percent or higher, were in Clark, Ferry, Whakiakum and Pend Oreille counties.

However, after months of job losses, the state's aerospace and software publishing sectors appear to be stabilizing, though jobs losses continue to mount in construction. Firms also have started hiring temporary workers.

"That's the first sign of hiring to come," Raha said.

Since the beginning of the recession, Washington state has lost roughly 180,000 jobs, he said.

The state's economic recovery is expected to gain traction by the middle of the year and gain momentum by the end of the year, Raha said. He cautioned, though, that credit remains tight for small businesses because community banks are overextended in commercial real estate loans and the federal tax credit for first-time home buyers expires in the coming months.

"There are uncertainties driving the economy," he said.

Until a recovery starts in earnest, everyone from Washington Gov. Chris Gregoire to Nguyen in Pierce County believes additional federal stimulus funds are needed.

Gregoire was one of 23 governors who recently wrote Democratic leaders urging Congress to extend programs designed to take some of the sting out of state budget deficits. The governors called for extensions of the State Fiscal Stabilization Fund, which has helped avoid mass layoffs of public employees and teachers, and a program designed to help states deal with the growing number of low-income people applying for Medicaid.

"While some states are struggling more than others, economists continue to warn that, absent federal assistance, virtually all states will have to take additional steps to eliminate deficits in fiscal year 2011," the governors said. Without federal aid, the governors said, more than 900,000 state and local employees could lose their jobs.

Nguyen is focused on the nearly 6,300 job seekers who sought help last year. The organization's roughly $16 million budget is used to help prepare people for job interviews, help them find businesses and companies that may be hiring, and provide money to help retrain them at local community colleges and through other programs.

WorkForce Central also works with the business community to ensure the training programs match up with actual jobs. Currently there is a demand for health care workers, including medical secretaries and medical billing specialists, and long- and short-haul truck drivers, Nguyen said.

More than half the people seeking assistance are professionals who were laid off after working at the same job for years, she said.

"When a person loses a job, they have to go through a grieving process," Nguyen said. "They feel like their life is out of control. They have to get through that. Eventually they have to get out of that funk."

McClatchy Newspapers 2010

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