Nearly $16 Million in Stimulus Funds have Gone Untouched
Wednesday, January 18, 2012
Nearly $16 million in Recovery Act funds awarded to projects in Rhode Island have gone untouched for at least the last year, creating few jobs and raising questions about the overall effectiveness of President Obama’s 2009 stimulus package.
The idle Rhode Island projects had funds awarded at least a year ago, but for one reason or another, the companies, municipalities or organizations expected to complete the projects have not been able to begin work and in most cases, have yet to claim even a dollar in federal funding.
“For projects in the other sectors of the economy, there were complaints about projects that could not start because they were not feasible when proposed,” Dr. Edward Mazze, Distinguished University Professor of Business Administration at the University of Rhode Island, told GoLocalProv. “There were also concerns over poor oversight, little accountability and less transparency because funds were administered by elected and appointed individuals with little or no knowledge of how to run the program. The need for urgency caused many of the problems. Too many decisions had to be made in a short period of time.”
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That sense of urgency came from an unemployment rate that skyrocketed in 2009. According to statistics from the Rhode Island Department of Labor and Training, unemployment rose to 11.8 percent in July 2009 and remained above 11 percent until March of 2011. The unemployment rate was consistently among the highest in the country.
And while the majority of projects in the state have now been completed and Rhode Island has received more than $700 million in Recovery funds, unemployment was still 10.5 percent in November, another statistic critics point to when questioning the President’s spending habits.
Some of the major projects yet to begin in Rhode Island include:
East Providence Fire Departments -> Over $6.4 million in funds were awarded to the city of East Providence to build a new fire department and renovate another building. But Lieutenant Michael Carey said it “has been a pretty drawn out process” and the city is still months away from beginning construction. A contract for the construction was supposed to be awarded last October, but the process has stalled. Carey said he expects work to begin “sometime in the spring” and the project will take six months.
Quest Montessori School -> A $2.4 million loan that was intended for the school was awarded by the Department of Agriculture in 2009 and has yet to been claimed. According to the Recovery Act’s website, the loan was meant for “Elementary and Secondary Schools,” but no other details were provided.
Narragansett Indian Tribe -> A $5.6 million project for the construction of a “replacement health facility” was awarded by the Department of Agriculture in 2010. According to the most recently updated report from recovery.gov, the project has not yet started.
Little to Show for It
Mazze said when evaluating the stimulus in terms of its effectiveness in Rhode Island and the rest of the country, one has to consider the economic events taking place at the time the legislation was enacted. He said it did help create jobs at a time when the state and the country were desperately in need.
“First you need to look at how the funds were allocated,” Mazze said. “Nationally, about forty percent of the funds were used for various tax cut provisions which allowed for consumer spending which led to job creation and job maintenance. Almost ten percent was spent for direct assistance to the unemployed. Eighteen percent of the funds were used to aid the states to avoid the layoffs of teachers, police and other municipal workers. The remainder of the funds were used for spending for highway construction projects, energy and green initiatives and other projects. Rhode Island and Rhode Islanders benefitted from these disbursements in one way or the other.”
But State Representative Joe Trillo still questions the program’s effectiveness. In an interview with GoLocalProv late last year, Trillo blamed the state for “wasting most of the money on one-time budget plugs and union jobs.”
“I don’t think we have a damn thing to show for it,” Trillo said. “I think the ship was sinking and all the money did was give us more time.”
Trillo said the state chose to use hundreds of millions of dollars to close budget holes while only creating jobs for unions. He said the majority of his constituents have not benefited from the funds.
“We’re good at wasting one-time money,” Trillo said. “I think a lot of the money was to help union jobs, that’s why DOT got so much. It didn’t go to the average man on the street.”
Not Perfect
Still, economists have said the Recovery Act did have a positive impact on the economy. The nonpartisan Congressional Budget Office has suggested the stimulus created more than 3 million jobs. In a statement to GoLocalProv during the fall, Congressman James Langevin said the results have been mixed, but that plenty of jobs were both saved and created.
“It was not perfect, but Rhode Island has experienced the benefits, including transportation and infrastructure related jobs saved through efforts like the Wickford Junction Station Project and private sector growth at companies like Alteris Renewables, which is responsible for wind turbine construction funded through the Recovery Act,” Langevin said. “Still, our current crisis wasn’t created by any one action and no one action can solve it. We need to provide greater support of innovation, infrastructure and small businesses, and close the skills gap by preparing our workforce for available jobs.”
Mazze agreed that the stimulus has been a mixed bag. He said you always to consider the money that misspent or unused when evaluating the overall picture.
“There were projects in Rhode Island and the other states proposed with little research which means other projects may have been more beneficial,” he said. “There may have been projects that after implementation were not cost-effective.”
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