Plan would stimulate economy and address vital capital projects

A construction stimulus program that is framed around the capital needs of the state’s public universities could keep Arizona from the grips of recession by pumping more than a billion dollars into the state’s economy and creating about 31,000 jobs during this current downturn in Arizona’s construction industry.

The plan proposes to invest $1.4 billion in revitalizing decaying buildings at the state’s three universities and in constructing much-needed new facilities. At Northern Arizona University, it would mean $310 million in construction projects—$169 million to address critical building maintenance issues and $141 million to construct a new health professions facility and a high-tech classroom building.

The program calls for the universities to pay 20 percent of the debt service on the projects for the next 25 years. The state would phase in paying its share of the debt service beginning in 2010. NAU’s annual debt service payments on the capital projects at full build-out in 2012 would be about $6 million annually.

The details of the plan were developed by the Associated General Contractors and the universities, building on the framework for an economic stimulus proposal that was included in Gov. Janet Napolitano’s 2008-09 budget recommendation.

“Some economists suggest you cut your way out a recession by slashing budgets—and services,” said NAU President John Haeger. “Other economists propose you spend your way out of a recession. This plan takes the forward-looking approach of investing in economic recovery.”

Supporters of the proposal are meeting with local and state organizations about the construction stimulus program, and just this week the proposal was endorsed by the Flagstaff Forty, a group of business professionals who champion causes that improve the greater Flagstaff area and the state.

“We believe a strong infrastructure is critical to a strong educational system, a positive business climate, a strong economic structure and necessary for Arizona to climb out of this economic downturn expeditiously,” stated a resolution signed by Bruce Nordstrom, president, and Dean Pickett, vice president, of the Flagstaff Forty.

Flagstaff Mayor Joe Donaldson also expressed his support of the stimulus plan, citing the benefits it would bring to the city and northern Arizona through revenue generation and economic development.

The proposed solution to Arizona’s suffering economy ironically is tied to its cause.

“Arizona’s economy is too dependent on housing and construction, and the state does not have sufficient strength in other areas to offset the decline,” said Haeger, whose academic background is in the history of economic change. “The quickest way to jump-start Arizona’s economy is to reverse the sharp decline in the construction industry.”

However, the construction stimulus package is not the permanent solution to the state’s economic challenges, Haeger noted. The longer-term solution lies in diversifying the economy. By investing in capital needs of the universities, the universities can advance their efforts to produce more graduates in such diversified fields as the health sciences and health professions, science, engineering, business and agriculture.

The stimulus plan projects that more than 14,400 jobs would be created just in construction. Resulting increases in consumer spending are expected to generate another 16,600 jobs.

Haeger noted the construction stimulus package is in the initial stages of discussion with the Legislature as the state searches for a solution to a projected $1.2 billion budget deficit in 2008 and a $1.8 billion shortfall in 2009.