Federal Cash for Infrastructure Slow to Flow
With an $862 billion federal stimulus package, why can it still seem like no one's spending money?
Because in many areas they aren't – not yet.
At the end of July – nearly 18 months after Congress voted for the injection of funds – only a quarter of the $275 billion allocated for infrastructure has been spent.
The full package was divided in unequal thirds between tax cuts, aid to states and the unemployed, and – the third that's come under fire -- funding for projects ranging from modernizing the electricity grid to healthcare. Some $182 billion of the projects money has been awarded, though the government has actually cut the check on only about $66 billion of the total.
As of June 30, Detroit – which has a 14 percent unemployment rate – has spent less than 1 percent of the $8.8 million it received for energy efficiency initiatives. Phoenix has spent even less of its $15.2 million, and Fort Lauderdale has spent just $66,000 of its $2 million award.
As of June, Montgomery County, Maryland -- a Washington, D.C. suburb -- has spent none of the $7.6 million the federal government gave it for energy efficiency. (For a breakdown of the stimulus, click here. For what's been spent, click here.)
"This is federal money we are stewards of, and we have to make sure we're spending it well," Eric Coffman, a senior energy planner for the county, told The Washington Post. "Spending fast is not the only thing in the world. We want to make sure we get results."
The deadline for spending the cash: 2012.
"More people believe that Elvis Presley is alive than [that] the stimulus created jobs," U.S. Representative Kevin McCarthy, a California Republican and member of the House Republican leadership, complained Sunday on CNN's State of the Union. "And that's because what have they spent the money on?"
The White House counters that the money always was meant to be spent in stages. In an Aug. 11 blog post, White House economist Jared Bernstein said that when Republicans call for an end to stimulus spending, "they're essentially talking about taking away middle-class tax cuts, leaving unemployed workers unexpectedly high and dry without an unemployment check, halting road and bridge projects and leaving them unfinished, leaving contractors unpaid for the work they've already done and more."
Why else is the spending moving so slowly? Budget woes have left local and state governments short of staff to get the projects moving. Some states, in turn, have used some of the money to hire staff to spearhead the projects. Louisiana, for example, is handing over $5.7 million to a company to handle the state's $85 million in energy efficiency spending.
Part of the slow use of funds can be attributed to bureaucracy. In the case of the energy efficiency projects, which are overseen by the Energy Department, federal and state officials had to wait for guidelines on funding, then decide how to spend the money, and then wait for the department's approval. In some cases, the department decided the plans needed environmental reviews. In other cases, it rejected the proposals, leaving cities and states to come up with a Plan B. (It's not just the energy efficiency projects that are lumbering along. Not a cent of the $17.5 billion for doctors and hospitals to start using electronic health records has been spent yet because the payment rules weren't finalized until last month.)
Even with the Energy Department's approval, local officials first have to call for bids – not a fast process. But Matt Rogers, who's overseeing the Energy Department's stimulus spending, told The Washington Post he hoped monthly spending by both the state and city programs would soon reach $100 million, up from $60 million in July.
Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.