BY ETHAN WILENSKY-LANFORD
Staff Writer 02/17/2010

Staff Writer

One year ago, President Barack Obama signed the $787 billion American Recovery and Reinvestment Act into law.

Since then, federal stimulus has had a drastic effect on the health of the Maine economy, according to officials and observers.

"The Recovery Act has made a significant, positive impact in Maine," said David Farmer, Gov. John Baldacci's deputy chief of staff. "There's no question that, without the Recovery Act, Maine's current economic situation would be considerably worse."

Michael Franz, an assistant professor of political science at Bowdoin College, agreed and cited the employment benefits of funding "shovel-ready" building projects as particularly useful.

"That undoubtedly had an impact on Maine's economy," he said. "Absent federal involvement, Maine is in a precarious economic position right now, and would probably be in a worse one."

Maine is expected to benefit directly from about $2 billion from the act commonly referred to as "the stimulus."

The state says it spent more than $617 million in stimulus money through the end of 2009. In total, Maine was awarded $1.2 billion in direct payments, the remainder of which has yet to be disbursed.

The other $800 million includes about $650 million in estimated tax benefits to individuals and small businesses, said Ryan Low, commissioner of the Department of Administrative and Financial Services. Another $150 million in competitive grant applications to benefit Maine are also being sought, he said.

The majority of the approximately $617 million already spent has supported Medicaid, extended and increased unemployment benefits, and entitlement programs the state was having difficulty financing such as food benefits for poor families.

The stimulus money is being credited with keeping social service programs afloat during a period when Maine -- like many other states -- is experiencing a drastic decline in revenue from taxes and other sources.

Lawmakers in Augusta are currently filling a $438 million shortfall, stemming from an startling revenue drop of $1.1 billion over the past 13 months.

"You're talking (about) hundreds of millions of dollars for increased Medicaid expenditures coming into the state to avoid what really could have been a catastrophe," Farmer said.

The state Web site documenting stimulus projects -- www.maine.gov/recovery -- claims 1,225 full-time jobs were "created or saved" in Maine during the fourth quarter of last year thanks to stimulus funds. A cumulative jobs figure was not available for the year since the stimulus bill was signed, according to Low.

Stimulus money was used for many infrastructure projects, such as $35 million to rehabilitate Interstate 295 between Brunswick and Gardiner.

In December 2009, U.S. Department of Commerce Secretary Gary Locke came to Orono to unveil a nationwide program to use stimulus funds to promote broadband investments in rural areas, including $25 million for a project in Maine.

An additional $35 million awarded to extend Amtrak Downeaster service from Portland to Brunswick was the result of a competitive application process for stimulus money, as would be a $75 million grant state officials are hoping to win to help fund the new Efficiency Maine trust.

Dana Connors, president of the Maine Chamber of Commerce and a former transportation commissioner, said using stimulus money for infrastructure investments was a "winning formula."

"You employ a lot of people; you are generating those dollars that get circulated six or seven times," he said. "When it's all said and done, you have the added value of a project that better serves the economy."

Other money was distributed in the form of small grants, such as the approximately $134,000 that Augusta-based Spectrum Generations used to provide 18,000 meals seniors and disabled citizens between August 2009 and January 2010.

The group, which typically relies on local donations for support, has about half of the grant left to provide more services to people it did not reach before.

"It's a great help," nutrition administrator Denver Brown said.

Youth Building Alternatives, an alternative high school in Portland run by LearningWorks, was planning to scale back its services to high school dropouts -- some homeless, others adjudicated.

After receiving a $1.1 million grant, it is employing staff to help more than 100 teens study for GEDs, get job skills, and hopefully pursue higher education.

"We have the resources now to serve them much better. One of the essential components of this program is that we provide stipends to these students," said former state Sen. Ethan Strimling, the CEO of LearningWorks.

He added that many of the students had to support families.

"Indirectly, we are putting a lot of money back in the economy," he said, "just as the stimulus money was intended."

Ethan Wilensky-Lanford -- 620-7016

ewlanford@mainetoday.com

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