SAN FRANCISCO (KCBS) – A component to the federal stimulus bill that expires Thursday has left local governments scrambling to find the millions of dollars needed to preserve jobs for working parents.

San Francisco Mayor Gavin Newsom said the city would spend $9 million to maintain the cash incentives offered under the “Jobs Now” initiative meant to encourage companies to hire low-income workers hit hardest by unemployment.

“Everyone’s preaching jobs, jobs, jobs. and here we are. We’re about to lose a quarter of a million jobs in this country and businesses are going to lose out more than anybody else,” he said.

Federal officials estimate the $5 billion fund created by the American Recovery and Reinvestment Act created 250,000 jobs in 38 states.

The fund, administered at the state level, subsidizes companies that hire unemployed parents who qualify for welfare. It’s led to about 35,000 hires statewide, with 2,500 in Santa Clara County and 4,100 in San Francisco.

The Obama administration had hoped employers would find their new employees to valuable to lose. Newsom fears that without the incentive, a wave of layoffs reluctant to expand their payrolls will swell the unemployment rolls.

“There’s not one stimulus program that creates more jobs direct for private sector employers than this. And for a lot of folks, it’s less money than they receive on unemployment,” he said.

A one-year extension of “Jobs Now” passed the House but remains stalled in the Senate.

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