Slow-moving stimulus: Obama's program has given over $1 billion to Philly, but only 3,500 new jobs have resulted

Carl Greene, Executive Director of Philadelphia Housing Authority (left) tours the rehabilitation of rowhouses on the 1500 block of North Gratz St in Philadelphia on Wednesday, December 16, 2009. He is accompanied by Daniel Dirscherl, Serior Vice President / General Manager of Hunter Roberts the company handling this project. This redevelopment is being done with federal stimulus money. (ALEJANDRO A. ALVAREZ / PHILADELPHIA DAILY NEWS)
Carl Greene, Executive Director of Philadelphia Housing Authority (left) tours the rehabilitation of rowhouses on the 1500 block of North Gratz St in Philadelphia on Wednesday, December 16, 2009. He is accompanied by Daniel Dirscherl, Serior Vice President / General Manager of Hunter Roberts the company handling this project. This redevelopment is being done with federal stimulus money. (ALEJANDRO A. ALVAREZ / PHILADELPHIA DAILY NEWS) (Jamie Lynch)
Posted: January 06, 2010

This story was reported by Daily News staffer Catherine Lucey and Ben Waxman, who writes for "It's Our Money," a joint project between the Daily News and WHYY, funded by the William Penn Foundation.

It was written by Lucey.


Federal records show that more than a billion dollars from President Obama's $787 billion economic-stimulus program has been targeted for Philadelphia. But the typical job created here is just as likely to require a lab coat as a hard hat, as much of the money has gone for university research projects.

Meanwhile, city government, which has been financially ravaged by the recession, has gotten relatively little help from the stimulus program, and then mostly in indirect ways, like payments to citizens that bump tax revenues, or money to accelerate already-planned capital projects. In the main, Mayor Nutter and his team have been left struggling to maintain basic city services on their own.

But perhaps the biggest disappointment is one that afflicts the stimulus program everywhere: It takes so long for federal money to get where it's intended that much of the impact hasn't been felt.

So far, roughly 3,500 jobs are credited locally to the stimulus as of Sept. 30, based on data provided to the government by local agencies and Daily News reporting. Not exactly a giant number in a city with an estimated labor force of 659,000.

"As always, when the national government does something, there's a [mistaken] sense that it will play out in real time," said Bruce Katz, vice president of the Metropolitan Policy Program at the Brookings Institution in Washington.

The stimulus act was Obama's attempt to kick-start the failing economy through tax cuts, expanded social services and substantial grant funding for infrastructure projects, education and scientific research. Federal agencies awarded those grants through a number of mechanisms. Some money went to state governments, which then distributed it. Some money was awarded directly to agencies that traditionally get federal funds, and other funds were handed out through a competitive bidding process.

All those who have received stimulus dollars are required to provide detailed reports on how they have spent the money and how many jobs were created.

Job creation was listed by Obama as his No. 1 goal for the program. And locally some jobs-rich construction projects have begun at agencies like the Philadelphia Housing Authority (PHA), SEPTA and PennDOT. But a big chunk of the local stimulus money is taking longer to hit the street - or it has gone to preserving existing jobs or to medical-research projects that require highly trained academics.

"There was the expectation there would be lots of bricks-and-mortar jobs. That has not been our experience," said city Budget Director Steve Agostini, who is overseeing the city stimulus efforts.

City wage-tax collections - a key gauge of how the city is doing jobwise - are lagging well behind the already conservative estimates for the current fiscal year. Finance Director Rob Dubow said that the city expects to bring in $50 million less than expected this fiscal year.

Obama acknowledged last month that job recovery was moving slowly when he announced plans to provide more tax cuts, hiring incentives and infrastructure investment in an effort to get Americans back to work.

Currently in Philly, PHA is rehabbing scattered homes around the city with energy-efficient appliances and new roofs, SEPTA is refurbishing stations and PennDOT is shoring up roads and bridges. Those projects are moving quickly because the agencies received formula money - funds designed for shovel-ready projects that didn't require competitive bidding.

"These are all projects that I had planned," said Carl Greene, PHA executive director. "But when the money came along, I was able to move the projects along. To have a chunk of funding where we can go out and do 340 units at one time is amazing."

The Philadelphia School District has also started spending funds. It received $226 million, although some of those dollars replace slashed state funding.

According to Michael Masch, chief business officer for the district, the district is using much of the money to pay for initiatives under its Imagine 2014 reform plan, such as reducing class sizes, expanding summer school and improving course options at high schools. The district has hired 1,000 staffers - including 600 teachers - with the money.

The city government has been awarded money for substantial improvements at the airport, for green-jobs training and for the hiring of 50 police officers. But the city's projects have moved more slowly, in part due to the budget constraints that the city faced last summer, and also because it had to get City Council approval to spend, said Agostini.

Among the biggest local recipients are academic institutions. Medical-research projects at the University of Pennsylvania, at Children's Hospital of Philadelphia and Thomas Jefferson University Hospital - funded by grants they won through a competitive process - are just getting up and running. Those projects will analyze diseases like cancer and Alzheimer's, and will study issues such as brain development.

"It's funding new and exciting programs that wouldn't have existed," said Stephen Fluharty, vice provost for research at Penn. "This is the single largest infusion of money in the research and development budget in decades."

Fluharty said that money for research will boost the Philly economy.

"I can tell you at Penn when a job is created by a research grant, the average salary and education level is greater than someone in the city of Philadelphia," he said. "So it raises the tax base."

A key question remains about what will happen to the stimulus-funded work when the money runs out. This money largely has to be spent within two years.

"When the stimulus funding stops, what happens?" asked Philip Johnson, chief scientific officer and executive vice president at Children's Hospital. "My concern is two years from October, what are you going to do with all the good projects?"

Meanwhile, a key failing of the stimulus locally was that the money could not go to prop up the flailing city government over the past year as Nutter slashed services and jobs to deal with vanishing tax revenues.

The program was not designed to provide direct aid to municipal governments. So, while the city has received millions for street paving and airport improvements, it hasn't gotten a dime to prevent reductions to library hours or cuts to the Fire Department budget.

"From the financial position of the city, it's been pretty immaterial," said Agostini, noting that the money has largely gone to new projects that don't help maintain basic services.

"Most of what we're spending money on are things that would not have happened without these funds."

Nutter has repeatedly lobbied lawmakers in Washington for more direct aid to municipal governments. Katz, of the Brookings Institution, agreed that the lack of direct funding for municipal governments has been a problem.

"I think the fiscal stabilization that was provided through the Recovery Act was not provided to cities sufficiently," Katz said. "I think one of the major issues going forward is that the municipal-finance shoe is going to drop, because of the decline in property-tax revenue."

Still, stimulus funds have bolstered the city in several key ways. The program has extended unemployment benefits and a tax credit for first-time homebuyers has boosted revenues from the real-estate transfer tax higher than expected.

"For cities like Philadelphia, or for the metropolitan area, just imagine your worst nightmares; they would have occurred if these interventions hadn't taken place," Katz said.

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