State sizes up Obama plan

  • Article by: BAIRD HELGESON , Star Tribune
  • Updated: September 10, 2011 - 12:05 AM

Many embrace proposed spending and tax breaks. Some say it's wrong focus.

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President Barack Obama gestures during a speech on his jobs bill at the University of Richmond in Richmond, Va., Friday, Sept. 9, 2011. Obama is urging voters to get behind his new jobs bill and pressure lawmakers to pass it, delivering the message on the home turf of one of his chief GOP antagonists.

Photo: Steve Helber, Associated Press - Ap

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With Minnesota's economy teetering, President Obama's jobs plan could throw a lifeline to the state's strapped school districts and jump-start upgrades to aging roads and bridges.

A proposal to make it easier for homeowners to take advantage of historically low interest rates could also breathe life into the state's moribund housing industry. A plan to offer tax breaks to employers could rejuvenate hiring of Minnesota veterans and the long-term unemployed. But passage of Obama's newest stimulus plan is far from certain, and some Republicans already see it as just another Band-Aid.

"We've seen short-term attempts to fix the problem and there was a lot of rehash in the president's speech," said U.S. Rep. Erik Paulsen, R-Minn. "We need more than that. The best way to promote growth is to promote entrepreneurship and innovation."

Minnesota's share of the president's $447 billion package of tax cuts and new government spending could begin pouring into the state's economy next year, propping up the state's recent Depression-level unemployment in the construction trades and give working Minnesotans more money in their pockets.

A proposed expansion of a payroll tax reduction could give middle-class Minnesotans an average of $1,500 more a year in their paychecks. "The extension of the payroll tax cut would remove a significant drag on the U.S. economy in 2012," state economist Tom Stinson said Friday.

That could help jolt the state's lackluster economy, giving Minnesotans more money for taxable goods and services. Analysts might fret less about the state's listless recovery and the growing concerns over a double-dip recession.

"So it's good for us," Stinson said.

But if Congress does not act by January, a previously approved temporary payroll tax cut would go away and workers would see their paychecks get smaller, potentially sending the state's finances into disarray again.

Minnesota's lagging construction industry was encouraged by the president's proposed $105 billion in new spending for road and bridge repairs, school remodeling and other infrastructure projects.

"We're happy to hear that the president, and hopefully the Congress, are going to get Americans back to work again," said Harry Melander, president of the Minnesota Building and Construction Trades Council.

Unemployment among Minnesota construction workers is higher than in many other states, with joblessness in some construction trades topping 50 percent, Melander said.

In July, 96,097 Minnesotans worked in construction -- a stark drop from 145,522 the same month in 2005, according to the state Department of Employment and Economic Development.

Not a cure-all

Don Demers, president of Minnesota chapter of the American Society of Civil Engineers, cautioned Minnesotans that the money, should it get approved, would not suddenly transform the state's battered highways and bridges. Federal and state funding streams have not kept pace for years, leaving the state tens of billions of dollars behind in repairs and upgrades. "It's a drop in the bucket," Demers said of the president's proposal. "But we are always glad when infrastructure funding is part of the dialogue."

Obama's plan includes spending $25 billion to overhaul and upgrade at least 35,000 public schools, which the president says will create jobs and improve classrooms.

"This is a very positive step, because education is going to drive the economy," said Tom Dooher, president of Education Minnesota, a union that represents 70,000 educators. "Many of our schools have been putting off maintenance and upgrading computers, so this is going help close those gaps."

Don Kohlenberger urged Minnesotans to temper their expectations. Kohlenberger is president of Hightower Initiatives, a private construction consulting organization in Minnetonka. He said Minnesota typically gets less than 2 percent of federal construction money, which means the state could expect to take in about $450 million for school improvements. Subtract administrative fees and the total gets closer to $300 million -- enough to retool just a handful of schools. When divided between construction supplies and labor costs, the number of potential jobs is roughly 1,500.

"Now I am yawning," Kohlenberger said. "After all that ballyhoo, it gets you a less than 2 percent increase in the construction area."

Minneapolis Mayor R.T. Rybak and St. Paul Mayor Chris Colemen held a conference call with reporters Friday to tout the president's plan. "We need to make sure we do everything we can to take advantage of this situation to get people back to work," Coleman said.

Coleman said he was encouraged by the plan to renovate schools. "Clearly, there are a number of schools in St. Paul that could benefit from this kind of investment," he said.

Rybak cautioned that political leaders are just one ingredient needed for a robust economic recovery. "All the action on jobs isn't going to happen out of Washington," he said. "Government isn't supposed to run the economy, but it can help."

A leader with the Minnesota Chamber of Commerce said Obama offered the wrong recipe to get Minnesota's economy chugging again.

Bill Blazar, a senior vice president, said the president needed to pledge with unwavering clarity to fix the budget, the deficit and the debt limit. "That would make businesses more confident in the economy and more likely to hire," Blazar said.

"It's not that the other things that he's proposing are unimportant, but there's this lingering uncertainty that casts a real shadow on entire economy."

Baird Helgeson • 651-222-1288

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