Stimulus Aid Being Doled Out, Slowly

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By Alec MacGillis
Washington Post Staff Writer
Friday, April 10, 2009

Building repairs are underway on public housing in Imboden, Ark., and Cumberland, Ill., states across the country are receiving money to weatherize the homes of low-income residents, and the Silver Star Construction Co. is about to start work on two road-resurfacing projects in south-central Oklahoma with a total cost of $12 million.

"We were thrilled to get some work," said Steve Shawn, president of the company. "Some of the work had started slowing down from the economy. The new work came in just around the right time."

Slowly but surely, the $787 billion American Recovery and Reinvestment Act -- better known as the economic stimulus package -- is beginning to percolate nationwide, six weeks after President Obama signed the legislation.

Some of the money is arriving quickly, and in big chunks. The country's 1,100 community health clinics have received $337 million to help them handle the surge of newly unemployed and uninsured people needing care. An additional $155 million went to a more select group of 126 of the clinics, including $1.3 million for the Loudoun Community Health Center, which, after opening in 2007, has been seeing an increase in demand even though it is in an affluent area of Northern Virginia.

In most cases, though, the money is working its way into the system far more gradually as officials strive to meet not only existing guidelines for programs receiving aid but also reporting requirements that have been added to make sure that stimulus funding is spent as intended and to account for the jobs it creates.

As a result, White House officials say the bulk of the money will start hitting the streets later this year and early next, with the goal of spending 70 percent of it by the summer of 2010. As of Tuesday, $54 billion from the package had been "obligated," meaning that states, cities or other recipients could begin drawing from it, and $11.7 billion of that had been disbursed.

The $11.7 billion is not the full extent of the money in circulation, however. The Transportation Department, for instance, has distributed very little, but states have started on some highway work in anticipation of money they are slated to receive. Also, those figures do not include the boost that employees started seeing in their paychecks at the start of this month from the package's Making Work Pay tax credit.

"We've been pretty pleased" by the pace of spending so far, said Robert Nabors, deputy director of the Office of Management and Budget. "I know people are anxious to get started, and the money has started to flow out the door. But we're spending a lot of time planning . . . and trying to make sure we've put processes and a structure in place to be sure we're spending on the right priorities."

The balance between taking enough time to plan for the money and not unduly delaying actual spending goes to the central tension in the legislation, which sought to jump-start the economy and also to make progress on Obama's long-term agenda. The package included $201 billion in tax cuts, $87 billion in Medicaid funding, $79 billion in education funding, $28 billion for highways, $21 billion for food stamps, $17 billion to computerize health records, $11 billion to modernize the electric grid, $17 billion for rail and public transit, and $20 billion to increase the energy efficiency of homes and public buildings.

With more than 100 funding streams contained in the package, many officials find themselves having to file applications for several programs at a time, helping explain why much of the money is still months away from being spent.

Take, for instance, what Oregon's Housing and Community Services Department needs to do to secure its $82 million. It has already applied for $38 million to weatherize low-income residents' homes, and just received the first 10 percent of that, but still needs approval from the state legislature to spend it. It is awaiting guidelines for applying for $27 million in tax credits for affordable housing development. It just received the guidelines for applying for $8 million to help prevent homelessness, and expects that it will not spend that money before July.

And Oregon will not apply until July for "neighborhood stabilization" funding that will be

distributed on a competitive basis for states to renovate or demolish abandoned homes. In fact, it is still getting ready to spend $19.6 million that it received for a similar purpose from a housing recovery bill President George W. Bush signed in late July.

It is a lot of hoops to jump through, but officials say it is worth it. "This is a huge investment for us," said Rick Crager, Oregon's deputy housing director. The process "is not an issue for us. It's important that we're accountable."

Peter Grace, a special assistant to the secretary of Housing and Urban Development, said it takes time to develop rules for new programs. "We want to get this money out, we are committed to doing that, but we want to do it in a thoughtful way," he said.

Likewise, the Energy Department is releasing only a fraction of the $6 billion that states and cities are receiving to increase energy efficiency, and is requiring that they submit detailed plans for using the money before they get the bulk of it.

There is little immediate spending going on even in departments that are using money on their own, instead of parceling it out to states. The Interior Department is still deciding how to spend its $3 billion, as its Bureau and Land Management and its National Park Service scour the hundreds of possible renovation projects for those that are far enough along in the permit process to merit receiving money. It hopes to have a list ready by May 1.

"What you've got is an unprecedented operational process combined with an unprecedented -- and appropriate -- level of review, and that's taking time," said Chris Henderson, the department's stimulus expert.

Among those getting money out relatively fast is the Transportation Department, which was able to rely on its existing formulas to divvy up $48 billion among states. Lana Hurdle, a deputy assistant transportation secretary, said the department has so far obligated $6.3 billion, with more to come soon -- states must obligate half their money within 120 days or risk having to return some of it. Leading the pack was Oklahoma, which obligated half its $460 million in 28 days.

Still, much of the actual road work will take time to ramp up. Missouri was fast out of the gate, saying that a bridge rebuilding contract awarded in February was the country's first stimulus project. But some of the 37 contracts it has awarded will not break ground anytime soon. The overhaul of the Interstate 70 and 435 interchange in Kansas City still needs environmental and public approvals, and probably will wait until early next year for the gap between the football and baseball seasons, because the interchange is near the sports stadium.

The delays extend even to one of the smallest stimulus projects in Missouri, $167,000 for sidewalks on the main road through Cleveland, a town of 650 on the Kansas line south of Kansas City. The town may not have the paperwork in place for work to begin until late this year, said its volunteer mayor, Patricia Masterson.

Still, the project has boosted spirits.

"We were very surprised and very pleased. It will connect our city a little bit more. Right now, we mostly walk around in our own neighborhood rather than getting out," she said. "It helps to show that everyone is going to get something. It shows, yes, this will get down to the grass roots and it is not all going to stay in the big cities."


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