States and Localities Sitting on Over $100 Billion in Stimulus Money

There is a fair amount of disgruntled murmur among the progressive economic community that the American Recovery and Reinvestment Act of 2009 was not big enough, and did not do enough targeted spending.  To be clear, I share those concerns.  In times of economic desperation, consumers tighten their belts, and government must spend to make up that lost demand in the economy.  What we do know is that the stimulus package, costing roughly $800 billion, was about as big a package as was possible to get through in the face of near-uniform Republican filibusters in the Senate.

But a crucial detail is often missed in the debate to try to jockey to show that we were right, and that if only the stimulus package had been bigger and/or better targeted to spending rather than a third being spent on tax cuts, we would be a whole lot better off.  That crucial detail is whether the stimulus spending that was authorized is being spent as quickly as possible.  More precisely, whether states and local governments - through whom must of the stimulus spending is done - are spending the money already authorized for them fast enough.  It turns out that they are not.

The Washington Post's Alec MacGillis found out:
As Americans puzzle over why the economic stimulus package enacted more than a year ago has failed to restore vigorous job growth, one explanation has emerged from new reports: A lot of the money is not yet out the door.
As a matter of fact, well over half the money already awarded to state and local governments from the stimulus funds have not yet been spent - meaning that the states and municipalities are sitting on over $100 billion unspent stimulus money.  One important thing to do is to separate the money states got as state aid to keep public employees on the job and unemployment benefits from the money we are talking about here - which is the infrastructure and other direct spending authorized by the stimulus package and spent through states and localities.  The states have spent the money for those other purposes.  However, the grants, contracts and loans awarded for direct spending are being spent far more slowly.

To give you a glimpse of just how slowly the money is being spent, I have prepared a chart as well as a detailed, state-by-state table showing how much of the already awarded money has been spent as of second quarter (ending June 30) of 2010.  Data is taken from Recovery.gov, calculating money spent as a measure of how much recipients of contracts, loans, etc. report as received in stimulus money.

First, the big picture: of the total over $215 billion already awarded (the ARRA authorizes a total of $275 when all awarding is complete over time) to states and localities (including DC), only about $85 billion, or a little less than 40% has been spent.  Here's a chart to demonstrate:

Stimulus Funds Awarded and Spent through states

I have also prepared a detailed document showing this data state by state:



As you can see, even the most aggressive spenders of stimulus funds have spent around half the money that they have been awarded.  Many have spent less than a third.

So what type of spending is getting upheld?  Would those moneys being spent more quickly be beneficial to job creation?  For the answer to that, we go back to Alec MacGillis' excellent piece in the Washington Post.  State governments aren't the only ones spending the money, of course, so are localities within the state.  But even the most struggling communities don't seem to be spending the money fast enough.
Detroit is struggling with 14 percent unemployment, but as of June 30 the city had spent less than 1 percent of the $8.8 million in stimulus funds it received for energy-efficiency initiatives. In budget-strapped Arizona, Phoenix has spent even less of its $15.2 million, and in hard-hit South Florida, Fort Lauderdale has spent $66,000 of its $2 million.
The situation is just as bad in and around Washington, DC:
In the Washington area, Prince William County, with $3.2 million, had not spent any money by June 30, while Arlington County had spent only $4,000 of its $2 million. Fairfax County had spent $236,000 of its $9.6 million and Loudoun County $239,000 of its $2.2 million. Prince George's County passed much of its $6.6 million to towns, but many had yet to spend it.
The biggest chunks of unspent money lie in areas crucial for both job creation and building a 21st century infrastructure - investments that will pay off for decades to come.
Many of the unspent funds lie in programs portrayed from the outset as true long-term investments, such as $8 billion for high-speed rail, $17 billion for health information technology and $10 billion for the National Institutes of Health.
The investments that can be made even more quickly are also suffering, notes MacGillis.  Green energy investments have gotten off to a slow start, including home weatherization initiatives:
Take, for instance, three programs meant to improve energy efficiency and produce "green jobs." The $5 billion program for weatherizing low-income homes is recovering from a slow start as officials wrestled with rules on wages and historic preservation, and as providers struggled to expand capacity.

Only 3,000 homes were weatherized last summer, a sliver of the program's goal of 600,000 by March 2012. The pace has picked up, with 25,000 now being weatherized monthly. Still, barely a quarter of the funds were spent by the end of last month.

Moving more slowly are two other energy-efficiency initiatives, one for states and one for cities and counties. Of their combined $6.3 billion, $556 million had been spent by the end of July. Officials note that some of the remaining money is already at work but that states and cities will not pay out until projects are done.
Of course, there are plenty of legitimate reasons that slow down the spending of federal money.  Fulfilling all the requirements by contractors, ensuring that our tax dollars are protected from waste, fraud and abuse, and investing in the most efficient of projects.  Nonetheless, the performance by states and localities have been quite lackluster given the urgency under which the Recovery Act was passed.  Less than 40% of the money awarded being spent is simply not good enough from our state and local governments.  In some localities and states, the condition is far, far worse.  Whatever the excuses, we have got to do better.

Once again, while we debate how much bigger the size of the stimulus should have been, states and localities are sitting on over $100 billion of Recovery Act fund already awarded to them.  They need to start moving those funds faster than they have been.  I think everyone would agree that spending the money already allocated to create jobs and invest in infrastructure is crucial to give steam to an ailing economy.  As citizens, we need to become active and find out what our states and counties are doing.  Go to Recovery.gov and find out what's going on in your state and in your city.  Call your governor's office, and your mayor's office.  Let them know that you know exactly how much money they have been awarded but are not spending.  Ask them what's holding it up.  Our state and local politicians need to know that we are paying attention.