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Local governments' stimulus money may not stay local

March 21, 2009|Alexandra Zavis and Steve Hymon
  • Santa Monica officials plan to use about $7 million of the city?s share of the federal stimulus package to buy 10 hybrid buses from ElDorado National in Riverside. The city?s order could help the company avoid layoffs.
Santa Monica officials plan to use about $7 million of the city?s share of… (Christine Cotter / Los Angeles…)

Even as local officials scramble for federal stimulus dollars to help their communities -- with early word of hundreds of millions for road improvements and transportation projects -- they acknowledge that money spent by individual cities may end up generating jobs elsewhere.

Take Santa Monica's Big Blue Bus service, which plans to spend $7 million of its expected stimulus money on 10 new gasoline-electric hybrid buses.

The buses will give residents a quieter, more environmentally friendly ride than the old diesel-fueled fleet. But the purchase will not create new jobs in Santa Monica. The millions spent on the buses will instead help businesses in Riverside and Poway.

Santa Monica officials say they are taking a broader view as they make stimulus spending choices. "Essentially we are all in this together in the Los Angeles region and very much interconnected in terms of how we do economically," said Kate Vernez, an assistant to the Santa Monica city manager.

Crews coming into the city to work on road repairs and other projects will bring dollars to buy lunch, Vernez said. And jobs created in other cities could mean more visitors coming to Santa Monica to spend money in restaurants, shops and hotels.

At ElDorado National in Riverside, which makes the hybrid buses Santa Monica plans to buy, the city's order alone would provide work for about five existing employees. Those jobs, said Tony Wayne, who heads the operation there, could have been in jeopardy had the firm failed to drum up sufficient business between now and October.

His company, which builds heavy-duty buses in Riverside and smaller commercial vehicles in Kansas, is vying for federal stimulus orders nationwide. ElDorado has remade its website to highlight the stimulus package. "Important Information" flashes in red letters at the top of its homepage, and a link promotes the company's products as American-made, with local, state and federal contracts "available now."

Orders for ElDorado's buses and vans also mean money for its suppliers. ElDorado would buy the hybrid propulsion system used to make Santa Monica's buses from ISE Corp. in Poway, near San Diego. That order could create two or three new jobs at ISE as well as generate business for dozens of firms that supply parts to the company, said Carolyn Paynton, ISE's bids and contract manager.

Although some critics might not see that as a way to stimulate the economy in Santa Monica, city officials and independent analysts say that is not the point of the $787-billion national recovery plan.

"It doesn't matter much to Congress or the president which municipality has the job growth as long as it is happening in the country as a whole," said Mark Robbins, a state and local public finance expert with the Public Policy Institute of California.

In any case, city officials are not allowed to give preference to local firms when using federal dollars. The Los Angeles County Metropolitan Transportation Authority, for example, does business with firms in eight California counties and buys buses from as far away as Alabama.

"There are not that many companies that make buses," said MTA spokesman Rick Jager. "It's not like you can go to a dealership and pick them up off the showroom floor."

To stake claims to the federal payout, local governments have been lining up projects since late last year that can meet the tight deadlines for allocating funds, signing contracts and breaking ground.

In Los Angeles County, city officials say they have the clearest information about the transportation dollars that will be distributed through MTA. This includes more than $300 million for local transit agencies and $215 million to $315 million for improvements to city streets.

There will be more for job training, schools, parks and so-called green energy -- but exactly when, where and how much is still being hammered out in Washington and Sacramento.

Santa Monica expects to receive $12.8 million all for its Big Blue Bus Service, and plans to buy seven other alternative fuel buses from an undetermined vendor. It also expects $1.8 million to $2.7 million for road resurfacing on Santa Monica Boulevard and will compete for other funds that might become available, Vernez said.

This is work that would not otherwise get done, she said. Faced with a precipitous drop in sales tax and other revenue, Santa Monica has had to delay improvements to aging infrastructure in order to keep paying for police, fire and other critical services.

Although the larger Southland cities have their own public works crews, officials say they will still need to contract out most of the capital improvements paid for by the stimulus plan.

With work scarce all around, projects in Glendale have been generating interest from firms as far away as Riverside and San Bernardino counties, said Stephen Zurn, the city's public works director. Projects that might have attracted five to eight bidders in the past are now drawing 15 to 20. As the bids come in, Zurn said there has been one silver lining amid the dark economic news.

"We are coming in consistently 10% to 15% below our estimated budget," he said.


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