WASHINGTON — Municipal market participants applauded President Obama’s jobs bill proposals for increased funding for transportation and aid to state and local governments, but worried about their vagueness and whether they would actually spur job creation.
The proposals are to be included in the American Jobs Act, which is scheduled to be introduced in Congress this week.
The bill will have a $447 billion price tag, about one-third of which would be for initiatives that would directly or indirectly help states and localities.
They include $35 billion to keep teachers and first responders in their jobs, $30 billion for school modernization, $50 billion for highway and other surface transportation projects, and $10 billion to create a national infrastructure bank.
New York City Comptroller John Liu on Friday was quick to point out that the president’s proposed funding for transportation and teacher retention, if enacted, would arrive just as the city is planning to cut back spending in these areas. The city is expecting to reduce its teacher work force by 1,100 in fiscal 2013 to save money, he said.
New York City’s “investment in infrastructure has been on the decline” while its capital needs “have expanded,” Liu said.
But sources said it is unclear how the federal money will make its way to main streets across the country, and some doubt whether it will immediately juice up job growth.
Meanwhile, the president said he will soon send to the Joint Committee on Deficit Reduction a plan to pay for the bill and stabilize U.S. debt as a share of economy. That will push the committee to go more than $447 billion beyond the $1.2 trillion in savings it is already required to find.
“It would be cruelly ironic if [the committee’s] action to balance the cost of the jobs bill was to take anti-jobs action,” said Charles Samuels, a partner at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.
Sources worried the deficit commission’s legislative recommendations, which are due by Nov. 23, could constrain economic growth and hiring as the president’s proposals are under discussion.
“I think there’s a good chance Republicans and Democrats will come together on some of this stuff,” said Larry Jones, an assistant executive director for the U.S. Conference of Mayors. “I kind of doubt they will agree on everything.”
The House Committee on Oversight and Government Reform has already scheduled a hearing for Tuesday on the Obama plan, referring to it as “Take Two” and another stimulus plan.
House Ways and Means Committee Democrats sent chairman Dave Camp, R-Mich., a letter Friday urging him to hold hearings on the plan. They said the Congressional Budget Office found the American Recovery and Reinvestment Act resulted in up to four million additional jobs during the second quarter of 2011.
Michael Belarmino, associate legislative director for the National Association of Counties, said he is hoping the administration has learned how to better distribute funds after the ARRA.
There were “hurdles that our guys had to jump through” to get access to the stimulus funds, Belarmino said. “As appreciative as we were of ARRA I think anybody would admit that there were definitely some hitches along the way,” he said.
A White House outline of the plan released Thursday stated it would include more “resources” for transportation loan and guarantee programs, but did not elaborate.
“Clearly, there are huge infrastructure needs in the country,” said William Daly, senior vice president of government relations for the Bond Dealers of America.
But some market participants are not enthusiastic about the bank, saying it probably could not be established in time to do much good in the near-term even if Congress agrees to it.
“We’re a little skeptical about whether or not this is really a good use of money,” Daly said.
The idea for the bank was modeled after one that Sens. John Kerry, D-Mass., and Kay Bailey Hutchison, R-Texas, proposed in a bill introduced in March. Three proposals for a bank or investment fund are pending in the House and Senate but have languished.
The bank has already been denounced or questioned by House Republicans. Rep. John Mica, R-Fla., said it would get bloated with bureaucrats and red tape. His six-year transportation reauthorization plan calls for enhancing the powers of state infrastructure banks.
House Majority Leader Eric Cantor of Virginia said a national infrastructure bank would be like creating a Fannie Mae and Freddie Mac “for roads and bridges.”
