The Economy Today: Stimulus Naughts

News from Ohio, Maryland, Michigan and elsewhere

In national headlines, state revenues are being buffeted by the economic downturn. The information comes from a new report by the National Conference of State Legislatures, which, The New York Times states, “also provided a scorecard for how well drafters of state budgets read the recession’s economic tea-leaves — and the short answer is, not very well.” Thirty-one states admitted that their estimates of personal income taxes had been too rosy (among them Arizona, one of the states that lost revenue in all the main—personal income, sales, and corporate—tax categories). The Wall Street Journal examines the other side of this report: North Dakota, for one, expects to have a budget surplus in 2011, in large part because of high prices for commodities like oil and crops.

The Washington Post runs a story about how “being cheap has become socially acceptable,” and how “instead of feeling self-conscious about spending less, people are flaunting their frugality.” It sets up this recessionary effect next to declining numbers from Saks, Nordstrom and Abercrombie and Fitch, a seemingly too-facile comparison. Perhaps more poignant: “Coupons has become a more popular search term than Britney Spears on Google.”

The Los Angeles Times, meanwhile, runs an Associated Press report citing May’s unemployment numbers. The unemployment rate rose again to 9.4 percent (up from 8.9 percent in April), but the layoff rate is slowing, with employers cutting 345,000 jobs (compared with January’s 741,000 cuts), the lowest number since September.

Locally, tussles about how or when stimulus money should (or should not) be used: In Ohio, lawmakers are concerned that federal stimulus money may be awarded to the state of Georgia to build a manufacturing plant for ATM-maker NCR Corp., which is moving its headquarters from Dayton to Columbus, Ga. The legitimate gripe, as reported in The Columbus Dispatch, is that federal stimulus funds shouldn’t be used for a project that takes jobs away from one state and moves them to another (job shifting, as opposed to job creation), or, as the administration has agreed, for “corporate relocation.”

The Baltimore Sun reports that Baltimore could lose $8.2 million in stimulus money because of poor record-keeping of prior awarded federal grants. “Until the city can account fully for how those federal funds were spent, it could be blocked from receiving money that Mayor Sheila Dixon is counting on to hire police and pay for other crime-fighting measures.” The city has twice before had to return grants because of incomplete paperwork filed with the Justice Department.

In California, Gov. Schwarzenegger’s efforts to cut costs are at odds with stimulus money awarded for temporary job creation. A county-administered program announced earlier this year is “slated to use $200 million in stimulus funds and eventually create 10,000 temporary jobs.” But the governor has proposed to eliminate state welfare-to-work programs; if the state legislature makes it happen, then, writes the LAT, “the stimulus money—and the 10,000 jobs—would evaporate.”

Similarly, in Michigan, Gov. Jennifer Granholm is receiving flak for warning of more cuts to come, despite federal aid that the state has been awarded, according to the Petoskey News-Review. The spotlight issue (an example of the kinked disbursal process for stimulus funds, at odds with long-standing local deadlines): Michigan received money from the State Fiscal Stabilization Fund, which is meant to “help stabilize local government budgets,” with the goal of minimizing cuts in the education sector and keeping teachers in the classroom. But local school boards, struggling with their budgets, due July 1, are planning layoffs—which some lawmakers say could be prevented if the money were quickly disbursed. Meanwhile, the money can’t be released to schools until the state has submitted a complete application to the Stabilization Fund and assessed its own needs, which is likely to happen in time for its June 30 budget deadline. All of which doesn’t give local school boards much time to figure out how many teachers they can or should retain.

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Jane Kim is a writer in New York.