Marketplace Scratch Pad

Stimulus for sale (UPDATED)

Scott Jagow Mar 10, 2009

I read a story that says small cities in California are selling their federal stimulus funds to other cities in exchange for cash. The sellers are towns that aren’t ready to start digging and paving or don’t need to. The buyers have a list of transportation projects and a bunch of shiny new shovels. Well, now, LA County’s Transportation Authority is nixing this idea.

My original post yesterday cited a story in the Pasadena Star News. After the story ran, the MTA’s CEO came forth and said this was all a misunderstanding on the part of some MTA staffers. From today’s paper:

MTA board members, who had allocated a minimum of $500,000 in stimulus funds to every city in Los Angeles County, had never intended to let cities sell their shares of funding to other cities for cash, board member Richard Katz said.

“It is our intention that all of the stimulus money be for transportation purposes and transportation only.”

MTA CEO Roger Snoble said in a statement that “Metro is trying to allow some flexibility to the cities, but there is no provision to allow stimulus money to be swapped with general fund money.

So I guess that takes care of that. Apparently, some MTA staffers told the cities they could make these swaps. Here’s yesterday’s post for background:

LA County’s Metropolitan Transportation Authority received $215 million from the federal stimpak and gave each of the county’s 88 cities at least $500,000. But some cities are doing swaps. Examples from the article in the Pasadena Star News:

The city of Bradbury, with a population of roughly 1,000, is working on a deal to sell its $500,000 share of federal funding to the city of Torrance for $315,000 in cash for its general fund.
Torrance plans to use the extra federal funds for a variety of street improvement projects. Bradbury will use the $315,000 however it sees fit.

Irwindale, population 1,500, sold its $500,000 to Westlake Village, for $325,000 cash.
Westlake Village plans to use those federal funds for a multimillion dollar project improving an overpass and on-ramp for the 101 freeway.

Here’s how Chief Planning Officer, Carol Inge, explains why the MTA didn’t just reallocate the money where it was needed:

“Our board wanted to give every city at least a chance to benefit from the stimulus package. The intent of the stimulus funds is to get jobs quickly, and I think it’s a good thing to get them all over the county, and our cities have always been partnered with us in doing transportation improvements.”

Could be a case of creative thinking, if and only if the MTA accounts for every penny to make sure the swapped funds are still being spent on needed job-creating projects and not boondoggles. It’s true, a town of 1,000 people may not require half a million dollars worth of road improvements. But the way they did this still gives one pause. The article quotes Doug Johnson of the Rose Institute of State and Local Government. He doesn’t like it one bit:

The MTA’s authorization of such swaps amounts to a “cash giveaway out the back door. The
MTA pleads they have no money for transportation projects, and now they’re just giving cash away and letting the cities auction it off to each other regardless of priority or project or what. I’m just stunned and appalled.”

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