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Stimulus measure a relief but no windfall for Arizona

The compromise stimulus package is likely to leave Arizonans grateful for the help but sharply aware of its limits.

Most people will still get tax cuts, but one of the state’s biggest industries, housing, will find that tax breaks included in earlier versions were scaled back.

Statewide construction work mostly on roadways could nearly double this year, which should generate and preserve jobs. But such projects will still leave specialized trade workers with dim prospects.

On education, the federal aid will help but is unlikely to reverse long-term troubles.

Many details of the $790 billion package remained unclear late Wednesday, but early glimpses suggested the result would mean trade-offs.

For example, it appears that Arizona remains in line for at least a half-billion dollars in infrastructure funding. That would cover roughly half the work that state officials said is ready to go. But at least half the school-construction funds were eliminated after the House bill originally had set aside about $277 million for the state.

“While we’re happy with additional infrastructure money – and we’re positive it will help the state – there’s more projects that could be done,” said David Martin, president of the Arizona chapter of the Associated General Contractors of America. “(Still), we don’t want to look a gift horse in the mouth.”

David Jones, president of the Arizona Contractors Association, said, “It’s a brutal time, and a lot of these contractors are hoping the stimulus can breathe life into them.”

K-12 education will come away with the same mixed feelings about the plan.

The stimulus helps avert harsh budget cuts but only for the remainder of this school year, said Tom Horne, superintendent of the state’s schools.

“All we do is absorb some of the shock. There’s no gravy in there,” he said. “The stimulus is taking a bad situation and ameliorating it somewhat. At the state level, we’re looking at unthinkable cuts for next year.”

Horne expects at least $300 million in federal funds to help schools in low-income districts and for special education everywhere.

He said education took about a 2 percent overall state funding cut this year, a level that didn’t require widespread layoffs of teachers. Even with federal aid, the outlook for the next school year remains grim, he said.

Horne noted that the state has largely deferred school maintenance for years, so any funding for modernizing facilities is badly needed. He said the bulk of any construction funds would likely be concentrated in the Phoenix area, where about 60 percent of the state’s students are located.

Taxpayers draw much of the largesse in the proposed plan: about 35 percent.

An estimated 95 percent of taxpayers would receive a tax cut, $400 per individual and $800 per couple. That’s less than the $500 and $1,000 the White House originally sought.

Several other tax plans were modified to bring down the overall cost of the legislation. A $15,000 home-buyer tax credit added in the Senate gave way to the House plan, which offers a $7,500 credit to first-time buyers who purchase before July.

The conference bill retains a $70 billion patch on the alternative minimum tax added in the Senate. This spares millions of people from paying the AMT, a higher-than-usual tax rate intended for the wealthy that increasingly hits middle-class taxpayers because it isn’t adjusted for inflation.

Arizona has relatively few affected by the AMT. Less than 2 percent of Arizona taxpayers paid the AMT in 2004, according to an analysis of Internal Revenue Service data by the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.

But the bill remains largely focused on jobs.

President Obama has said the stimulus plan will “save or create” as many as 4 million jobs nationwide. In Arizona, the stimulus could preserve or create about 74,000 jobs, according to an analysis supported by the White House.

Even so, it would fall well short of what the state has already lost.

Last year, the state shed more than 115,000 jobs, a total worse than larger states such as Illinois and Ohio, according to U.S. Labor Department records.

In fact, that 4.3 percent drop in Arizona’s workforce in 2008 was worse than every state but Rhode Island’s 4.5 percent.

The virtual collapse of the housing industry has led Arizona’s march to the bottom.

Taxable sales for home construction were down 36 percent in 2008 from their 2006 peak, when contractors averaged about $790,000 in monthly sales, according to Arizona Department of Revenue records.

Not surprisingly, it cost workers their jobs.

By December, Arizona had 38,000 net fewer construction jobs than it had at the start of the year, according to the state’s Commerce Department.

Jones said he hopes a surge in road-building jobs will help those in the home-building industry, but he is unsure that it will. Some workers have specialized skills not really used in roadwork, he said, while others “have a strong back and a willingness to work hard.”

For now, the state’s immediate job outlook isn’t bright. In 2008, employers warned the state that they were dumping more than 7,200 jobs in mass layoffs.

So far this year, employers have warned of at least 1,800 more jobs lost. Nearly 1,600 of them involve the Phoenix-based mining company Freeport McMoRan, which advised the state’s Department of Economic Security that it anticipates layoffs in Morenci by mid-March.

Meanwhile, programs designed to help those in economic trouble are in greater demand.

The state’s food-stamp caseload grew 15 percent in 2008, double the national average, according to federal records.

The number of people seeking unemployment benefits monthly averaged 35,000 in the first three months of 2008. By the last three months of the year, it averaged nearly 57,000. The stimulus plan would increase unemployment benefits $25 a week. In Arizona, the average weekly benefit was $222 in December, according to the DES.

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