Michigan gets screwed with federal stimulus spending

According to USA Today, Michigan, arguably the worst off of the 50 states, is getting just a fraction of what some other, more well-off states are getting when it comes to federal stimulus spending. Here’s a clip:

States hit hardest by the recession received only a few of the government’s first stimulus contracts, even though the glut of new federal spending was meant to target places where the economic pain has been particularly severe.

Nationwide, federal agencies have awarded nearly $4 billion in contracts to help jump-start the economy since President Obama signed the massive stimulus package in February. But, with few exceptions, that money has not reached states where the unemployment rate is highest, according to a USA TODAY review of contracts disclosed through the Federal Procurement Data System.

In Michigan, for example — where years of economic tumult and a collapsing domestic auto industry have produced the nation’s worst unemployment rate — federal agencies have spent about $2 million on stimulus contracts, or 21 cents per person. In Oregon, where unemployment is almost as high, they have spent $2.12 per capita, far less than the nationwide average of nearly $13…

This analysis, it should be noted, is based only on the first $4 billion in alloted federal stimulus funds, out of the some $700 billion to be expended, but it’s something to keep an eye on. Hopefully, now that USA Today is taking notice, the White House will too.

[This post was brought to you by the Detroit band The Hard Lessons, who would no doubt appreciate a little stimulus spending on their new record, Arms Forest.]

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7 Comments

  1. Ypsilanti Comfort
    Posted May 30, 2009 at 7:54 am | Permalink

    From the title I thought busloads of hooker were coming.

  2. Posted May 30, 2009 at 8:00 am | Permalink

    My skeptical comment: I think it’s important to keep tabs on where the money’s going and what impact it’s having, but this seems like a study where the n is too small to provide any statistical significance – It’s like surveying 20 people on the streets of Ypsilanti, and determining that 90% of the nation’s population lives in Ypsi.

    Nationwide, federal agencies have awarded nearly $4 billion in contracts…about $3 billion of the government’s first contracts were to speed cleanup of some of the nation’s worst nuclear waste sites, scattered over a handful of states.

    So 3/4 of the stimulus money contracted so far is for one particular project, and USA Today thinks it’s a big deal that this project is concentrated in just a few places? I think it’s too early to make that determination. I’d say maybe $100b would be a reasonable breakpoint at which to check in on the distribution – enough to have seen a large number of projects, but not so far in that no adjustments can be made.

  3. Posted May 30, 2009 at 8:19 am | Permalink

    Seriously though, why would anybody in their right might put a dime into Michigan? It’s a sinking ship. I hate to hate on my state, but this place is a disaster.

  4. kjc
    Posted May 30, 2009 at 8:23 am | Permalink

    dude,
    if you find yourself unable to stop hating on your state, i think that instead of imagining it as a sinking ship, you should imagine it as a place filled with people trying to survive (and battle back) during hard times.

    p.s. i know it was a typo, but i like “right might”.

  5. Posted May 30, 2009 at 8:28 am | Permalink

    My concerned comment: I think there’s a very real possibility that the worst off states end up with the least money, unless the Feds start increasing the amount of stimulus funding that can be used for administrative purposes. Nobody likes to think of economic stimulus money being used to pay “lazy, overfed, unmotivated bureaucrats”, but those are the people, Reagan-esque knee-jerk reactions aside, who make stimulus money flow.

    Michigan and its local governments have been strapped for cash for years, and have been laying off employees, deferring or canceling projects, and otherwise hamstringing their ability to use free money – all in the name of blind efficiency

    Why’s that?

    * In order to spend most stimulus money, we have to be able to react in a timely fashion. Let’s say we want to get stimulus money to repave East and West Cross, for example – that means Ypsi City staff time, Washtenaw Area Transportation Study staff time, Southeast Michigan Council of Government staff time, and MDOT staff time, all before any money can flow. And we can’t pay any of those people with stimulus money; we have to pay those people ourselves.

    * In order to spend most stimulus money, we have to have “shovel-ready” projects, and we have to spend our own money to get there. We have to pay the engineers to analyze and design the roads and bridges. We have to do that out of our pockets before we can get the money to actually do the work – and these “soft costs” can run about 10% of the total project cost.

    Best-case, we’ve already got projects in hand that we’ve done the background work for, have construction costs for, and have those plans, well, “sitting on a shelf somewhere” (the ultimate damnation of government effort?) that we can pull out and dip into the funding stream. Otherwise, we have to scrape together the money to do that work, and do it fast, so we can get the “free money” from the Feds. (Fortunately, Ypsi does have some projects that have been partially or fully designed that can be reactivated quickly.)

    * Matching funds. A lot of the stimulus funding that’s out there requires a 10-20% local match – it’s not “free money”. We have to come up with that money somehow, either locally or at the County or State level, depending on the project. Look at MDOT’s November 2008 Transportation Funding Task Force Report (pdf), particularly the section on “Hard Truths”:

    Michigan is moving from underinvesting in transportation, to disinvesting in transportation. . . .Michigan is not in a position to take advantage of new federal funding. This is the last year Michigan will have enough state and local matching funds to claim all federal transportation funding available to the state. Some local agencies are already unable to make use of all federal transportation funding. By 2010, this will be true across all modes and across all jurisdictions.

    This was written pre-stimulus – even then, we didn’t have enough local and State funding to use all the Federal money available. How can we expect to leverage $700B in additional money?

    Summary: “you gotta spend money to make money”. Especially when the stimulus money comes in the form of “Hey, there’s this money available, but we need a project today.” (No exaggerating – this is what’s happening in some cases.) If we (local, County, State) haven’t done our homework, can we get the staff at all the needed levels lined up, the background studies done, and the match committed on a timeline of “today”? Heck no.

    And this is why Michigan is going to get less stimulus money than “our share”, while States that are doing not-quite-so-bad are going to rake in some fat loot – they’re ready for it, and we’re not.

  6. Curt Waugh
    Posted May 30, 2009 at 9:24 am | Permalink

    Michigan has ALWAYS been at the low end of returns vs. federal tax revenues. The link below tells the whole story. Click through to page 22 of the embedded document. In other words, same old same old. Why is this news? Check Ohio, Indiana & Illinois. All the same story.

    The midwest built the damn country and we get to keep paying for it after the fact, too. Hope you all love subsidizing life in Idaho, Hawaii, New Mexico and Mississippi.

    http://www.taxfoundation.org/research/show/22685.html

  7. Posted May 30, 2009 at 4:39 pm | Permalink

    Thanks for that, Murph. I agree with you that with only 4 out of 700 billion spent, there’s not enough data to make a real claim one way or the other, but I think it’s important that our attention is being drawn to it now. The feds need to think about where this money is going.

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