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Combating tough economic times

01:00 AM EST on Thursday, December 4, 2008

By Steve Peoples

Journal State House Bureau

PROVIDENCE –– State officials hope to pump tens of millions of dollars into Rhode Island’s drowning economy in the coming months as part of a “mini stimulus package” that key lawmakers say would cost Ocean State taxpayers almost nothing.

The plan, disclosed yesterday in what was likely to be the last special meeting of the House Finance Committee, pushes the Carcieri administration to enroll more than 10,000 new food-stamp recipients in the next year, expedite unemployment insurance claims, and rush millions of dollars to stalled infrastructure projects across the state.

“Are we in difficult times? Do we have to do some things we normally wouldn’t do? Yes,” said committee Chairman Steven M. Costantino, after a State House hearing that he said offered some good news. “Today we heard there are some things Rhode Island can do to stimulate its economy.”

But those things will require the cooperation of Governor Carcieri’s department directors, the same directors the committee blasted earlier in the week for chronic overspending that has exacerbated a current-year budget hole of $357 million, believed to be the largest shortfall in the nation as a percentage of state-only spending.

Rhode Island is also tied with Michigan for having the highest unemployment rate, 9.3 percent, in the nation.

The state stimulus package essentially urges the Carcieri administration to spend millions in federal dollars and already earmarked state funds as soon as possible. While some state departments struggle to limit discretionary spending, they also struggle to spend a pool of money that could help create thousands of jobs, improve bridges and roads, and boost tax revenue.

More than $26 million earmarked for infrastructure projects went unspent last year, according to the governor’s budget office.

Costantino’s committee urged department heads to spend all of that money –– and at least $118 million set aside this year –– on state buildings, educational facilities, roads and bridges in the coming months.

“It’s frustrating because, right now, the state has an opportunity to help,” said Rep. Peter Lewiss, D-Westerly. “The legislature has made the appropriation. Why is the administration not spending the money?”

Under questioning from the committee, the governor’s budget officer, Rosemary Booth Gallogly, acknowledged that millions of dollars have been budgeted, and in some cases already borrowed, for projects that simply aren’t ready to move forward. Bureaucratic delays also threaten to dilute the impact of a federal stimulus package, which may include millions of dollars more for Rhode Island infrastructure projects.

At the end of the hearing, Gallogly promised to finalize a list “early next week” of projects ready for construction in the next 90 days. Construction at the state’s colleges and universities would probably come first, she said, based on their ability to proceed quickly.

Some committee members expressed frustration that other major projects were stalled.

“I love the word ‘can.’ And I haven’t heard you say that once today,” Rep. Eileen Naughton, D-Warwick, told Transportation Director Michael P. Lewis, who suggested construction of the new $75-million Pawtucket River Bridge wouldn’t begin until next summer.

“I know the desire to have immediate work done is important and we share that,” Lewis responded, adding that there would be a need for major spending on infrastructure for some time. “We’re afraid, and I think you would concur, that this recession is going to be somewhat long-lasting.”

Yesterday’s hearing also focused on another pool of money that could help Rhode Island in the short term.

Thousands more should be receiving federal food stamp and unemployment benefits, according to Costantino, who cited a Moody’s Economy.com study suggesting that each food stamp dollar distributed generates $1.73 for the economy, every dollar of unemployment insurance, $1.63.

Currently 90,000 Rhode Islanders receive food stamps, according to the Department of Human Services. At the same time last year, 81,400 residents received the benefit, which is paid for with federal dollars, but administered locally.

State officials plan to mount a marketing campaign in the coming weeks to enroll at least 10,000 more food stamp recipients by the end of the year, according to Adelita Orefice, deputy secretary of the Executive Office of Health & Human Services.

“It’s nothing you should be ashamed of,” she said, adding that countless “working poor” Rhode Islanders qualify but don’t take advantage of the benefit. “When you use these benefits, you’re helping the economy as well.”

The Department of Labor and Training also reported that it was struggling to handle unemployment insurance claims that have skyrocketed over the last year; 24,000 Rhode Islanders are currently enrolled, twice the number as the same time last year.

Director Sandra Powell said she would hire 20 employees in the coming weeks to expedite claims. Just 30 workers currently handle an average of 24,000 unemployment-related calls each week, she said.

Costantino said he didn’t know how much the “mini stimulus” plan would help ease the state’s current-year budget mess. But it certainly won’t hurt.

“We need to get money on the street as soon as possible,” he said.

speoples@projo.com

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