Neel Mehta
While recent news suggests more than ever before that state economies are still suffering and additional recovery efforts likely won’t lead to quick recovery, the road ahead presents opportunities for companies in the government marketplace.
The president has proposed what I like to call a Stimulus Expansion Plan. Business and government alike should understand this estimated $200 billion stimulus injection, outlined in an address last week at the Brookings Institution, targets key areas of the economy that have not experienced recovery. The Administration’s effort focuses on driving job creation via assistance for small businesses, investment in infrastructure, clean technology and energy efficiency, fiscal stewardship and maintaining our social safety net.
While many economists have identified signs that the economy is on a path to rebound, that’s not seen in the light of state budgets. Recent unemployment rates may have shown a slight decrease, but states are still facing a harsh budget reality for fiscal year 2010. A National Conference of State Legislatures (NCSL) report released on the heels of the president’s speech last week forecasts a state budget recovery that could be two years off.
It’s a well-known adage in government budget circles that states are usually the first to show signs of a recession and the last to pull out. That pattern is holding true. But the Administration’s stimulus efforts offer reason for optimism.
Consider this: Even without the President’s proposed expansion of stimulus funding, there are opportunities with the earlier American Recovery and Reinvestment Act targeted for spending in 2010 and 2011 around weatherization, clean technology, broadband implementation and health care modernization and reform. As an example, weatherization and state energy program accounts have risen substantially.
The proposed stimulus expansion would offer even more opportunities for companies and organizations to pursue business. Although it’s important to remember the most recent proposal may change as it moves through Congress, it sends an overall message that the Administration is keenly aware of concerns about the growing federal deficit and focused on redistributing funds from the Troubled Asset Relief Program (TARP), yet committed to deficit spending to accelerate the economy and overall job growth.
As businesses look to these programs for opportunities, it is important to understand where funds and incentives are targeted, how they’re managed, and how the companies’ solutions aligned to take advantage of specific programs as well as having a detailed capture strategy. NSI helps companies understand these issues in the government marketplace. States are largely the driver for recovery act implementation. Each state is currently managing roughly 40 separate streams of ARRA funding that translate into state and local projects. A recent presentation by the Council of State Governments estimated that 60 percent of the ARRA spending will flow through or be handled by state governments. Less than 10 percent goes directly to local governments. It’s no mistake that additional stimulus is being proposed for the areas state officials see as critical with regard to estimated budget shortfalls. Investments in infrastructure are the source of immediate jobs, clean technology is the investment into the future job growth and preservation of the social safety net (unemployment, education, public safety) all play a big role in the drive to further assist and stimulate the economy.
Last week’s proposal for stimulus expansion focuses largely on state governments. And, as the New America Foundation points out, it’s a strong beginning.
