March 11, 2009 — Federal stimulus money will start helping soon, but things will get worse before they get better, Gov. John deJongh Jr. told the Mid-Isle Rotary Club on St. Croix Wednesday.
"The experts, whether on the left or the right, all say we won't see the recession flatten out until sometime in 2010," deJongh said at the 7 a.m. breakfast lecture at Gertrude's Restaurant.
The early morning talk was well attended, with about 30 Rotary Club members filling the room.
"By 2011 we may be back at full employment," deJongh said, adding the qualifier that full employment is not 100-percent employment, but a return to the longterm stable unemployment rate of about five percent. "It is only in 2012 or 2013 we are likely to see a real upswing."
Meanwhile, the economic downturn has reduced tourism and cut tax revenues.
"We were down in revenue by 20 percent by the end of the year," he said. With declining business, gross-receipts tax revenue are especially hard hit. But the news is not all bad, the governor said: There is growth in some areas, and infrastructure improvements already undertaken, as well as those in the stimulus package, will create longterm expansions in opportunities.
"Infrastructure investments like dredging in St. Thomas and St. Croix have opened up opportunities," deJongh said. "Even as St. Thomas cruise traffic has stabilized, we are now seeing an increase on St. Croix."
Though budgets may be tight, the territory has to proceed as best it can with development plans.
"The issue becomes, 'How do we intend to go forward?'" he said. "We have to make sure resort development on St. Croix becomes a reality, because that is what will bring in more airlift and more business over time."
The territory will get about $248 million from the federal stimulus package, deJongh said, repeating some of the numbers the administration released previously. (See "Economy May Sink or Swim Based on Stimulus Spending Choices, Officials Say.")
About $33 million will go to energy-efficiency and renewable-energy projects. Another $20 million will go to roads, some $50 million will come in the form of individual tax credits, $9 million will go to Medicaid providers and smaller sums are approved for a slew of information-technology and other projects, the governor said.
The $20 million in extra federal road money will be divided between work on Long Bay Road on St. Thomas, Queen Mary Highway on St. Croix and one of the major routes on St. John. While the money can't be spent on the many other partially funded or partially complete road projects in the territory, it still frees up local funds for those smaller projects because these longstanding major repairs won't have to be funded locally, he said.
Asked about money for crime prevention and law enforcement, deJongh said there was almost $7 million in stimulus money for law enforcement. But he emphasized early-childhood education over enforcement as the longterm solution to street crime.
"We need to make the investments so children don't drop out at the seventh grade," he said, noting funding for Head Start and other programs in the stimulus package.
A lot of the money is focused on direct aid programs such as Food Stamps, rather than on construction projects, because the experts have determined those programs provide more local stimulus faster, he said.
"Food stamps were determined to be more stimulative than large construction projects, partly because a portion of construction money can end up leaving the territory, while Food Stamps are spent only here," he said.
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