Impact of stimulus vexes D.C.

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By Michael Drost

On a day when President Obama urged swift passage of the $790 billion economic-stimulus bill, D.C. lawmakers worried that much of the funds earmarked for the District will end up in the pockets of workers in Maryland and Virginia.

"We are helping subsidize and stimulate the people of Virginia and the people of Maryland, not the people of the District of Columbia," said D.C. Council member Kwame R. Brown, at-large Democrat, during a public round-table discussion Wednesday on how the city should spend its share of the money.

Visiting a highway construction site in Northern Virginia with Gov. Tim Kaine, who is also chairman of the Democratic National Committee, Mr. Obama said, "You don't need to travel very far from that debate [in Congress] to see why enacting this plan is both urgent and essential to our recovery."

The Fairfax County Parkway site is about 20 miles south of Washington, near Fort Belvoir's Engineer Proving Ground, which will gain nearly 20,000 defense jobs as a result of base realignments and closures.

Meanwhile, Maryland Gov. Martin O'Malley, a Democrat, outlined the state's need for more than half a billion dollars of the stimulus money in a meeting with the state's congressional delegation.

"It is important to create jobs with this investment," said Mr. O'Malley. "It is also important to make sure we don't lose any more jobs."

Maryland would put most of its stimulus dollars in transportation infrastructure, including a new rail tunnel in Baltimore and bridge rehabilitation and replacement, worth some $328 million of federal funds.

A portion of the stimulus package is aimed at creating jobs through infrastructure projects, such as building roads, renovating schools and rebuilding the nation's electrical grid.

But D.C. Council members are worried that the stimulus won't create jobs in the District because of the city's lack of skilled workers and notoriously high corporate tax rates.

"Most of the workers for these projects don't live in the District, and most of the businesses don't operate in the District," said Mr. Brown.

Unemployment in the region is currently 4.7 percent, relatively low compared with the national average of 7.2 percent. But unemployment in the District is 8.9 percent, an increase of three percentage points from last year.

Council member Jack Evans, Ward 2 Democrat, criticized the District's 9.75 percent tax on corporate income and said that if the tax remains, few businesses in the city will benefit from the stimulus package.

"We are about as uncompetitive as you can get in this arena," he said. "When times are good, that tax rate is fine. When times are bad, a 9.75 percent corporate tax presents a problem for us."

Council member David A. Catania, at-large independent, noted that a large portion of the stimulus money is geared to help small and medium-sized businesses, and said that the District isn't poised to benefit because of the tax code.

"Our commercial-property sector is what runs our treasury. We cannot continue to endure this obnoxiously high corporate income-tax rate," he said.

At the construction site with Mr. Kaine, Mr. Obama said, "We've got to get a final version on my desk so I can sign it, and so the people here in Northern Virginia can use it."

Mr. Kaine said completing the final portion of the parkway would put $70 million into the local economy, add hundreds of construction jobs and up to 2,000 indirect jobs.

"We've been trying to complete the Fairfax County Parkway for years, but because of declining state and federal transportation revenues ... there are two phases that haven't been funded," he said.