The Economy Today: Governments at Work

Headlines from New Hampshire, California, Montana, Arizona, and elsewhere

This morning, economic news takes a distant backseat to the big news about North Korea. The Washington Post offers a speculative piece about the threat of inflation, given the massive cash injection into the nation’s economy. Fed chairman Ben Bernanke has said that he may raise interest rates before the recession is over, to forestall adverse effects leading to inflation. The New York Times reports that local governments are appealing to Congress for TARP funds that can be used to cover losses on municipal bonds. Barney Frank is leading the charge on muni bonds: he’s proposing legislation that will secure $400 billion in bonds, as well as a bill that will reinsure another $50 billion in local debt.

In local headlines, governments at every level are figuring out how to deal with stimulus dollars. On the most local level, residents in Exeter, New Hampshire, will vote on whether to accept federal funds for two projects; in California, critics say the state hasn’t been transparent about how the money has been or will be spent.

The Harford Courant provides the archetypal account of how the stimulus money is being handled on the state level. Connecticut is working to appropriate $3 billion, and while the state has determined how most of the money will be spent, a growing number of local lobbyists and special-interest groups are hoping to get a piece of the pie. So far, the state has received more than one hundred appeals for funds, such as this one, pulling legislators this way and that: “Veteran lobbyist Linda Kowalski made the log, of course. She was representing Mark Masselli, the CEO of Middletown-based Community Health Center, which is pressing for $6 million in stimulus money to round out the funding on a proposed $12 million health center headquarters building in Middletown’s north end.”

The San Fernando Valley Business Journal criticizes California’s government for not providing information about stimulus fund allocation. Despite promises of Web sites and databases that would offer transparency, no such resources are currently available. Reporters are also having a hard time understanding the different phases that funding goes through to go from D.C. to the local level:

That’s not to say some public-service projects and programs are “confirmed” to receive Recovery Act dollars – many have. However exactly what confirmed means varies from person to person. Generally confirmed signifies that a proposed project meets the requirements of a federal grant under the ARRA legislation, according to an official at the Bureau of Public works who declined to have their name published because, they said, all Stimulus-related questions must be referred to the mayor’s office.

Maryland’s Daily Times notes that stimulus funds have created additional friction between state and county governments wrestling over money. Worcester County legislators feel particularly gypped and see their priorities ignored. There’s clearly a disconnect between how municipalities think the money should be spent, and where the dollars will actually end up going: “We really did get shortchanged in this,” said Commissioner Judy Boggs. “And what we did get, we didn’t have any say over.” Bookkeeping issues are also a problem: the state database claims that the county received $7.2 million for road projects, but local officials says it’s only $5 million.

This story from the Arizona Daily Star is a good example of the hope and frustration embodied in the stimulus. On the one hand, a necessary project has been approved for the region: a $10 million improvement to the sewer system in Pima county. But, despite the headline suggesting an impending groundbreaking, the logistics are a little more complicated. The last sentence of the story tells us that “Most of the project will be funded by future sewer-revenue bonds, but first voters have to approve selling the bonds. An election likely won’t be held until 2010.” Flush carefully.

West Virginia’s Intelligencer and Wheeling News-Register offer a piece of political transcription, summing up the state treasurer’s remarks that West Virginia doesn’t need stimulus dollars. “‘In some places, the stimulus was definitely needed,’ said Perdue, who recently visited the Northern Panhandle. ‘But their problems are a lot different than the problems in West Virginia.’ He noted that West Virginia has ‘already lived through what they are going through now,’ with much of the financial problems in other states being attributed to pension debt.” But the piece doesn’t offer any national or local context for the treasurer’s remarks, so it’s hard to tell if this is an accurate description, or just an act of ideological posturing.

In Montana, The Billings Gazette says Montana State University Billings and community colleges in the state will receive stimulus dollars to repair failing infrastructure. New roofs, upgraded lighting, and an upgrade for the science building are on the list.

And, finally, the Exeter News-Letter provides a glimpse of how the stimulus functions on the smallest level of government. Tomorrow voters will decide whether to accept funds for two town projects during a special meeting. “The state has approved $144,000 for the replacement of the Industrial Drive culvert and $270,000 for improvements to the Water Street diversion structure, which will reconfigure piping to the Main Street pumping station. The stimulus funds would pay for 50 of the principal of the state loans for the projects. In order to receive the funding, the town needs to participate in the state revolving fund loan program.” Voters will decide if Exeter will provide additional money from the local capital reserve fund and a state borrowing program.

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Katia Bachko is on staff at The New Yorker.