- The Washington Times - Thursday, January 29, 2009

D.C. officials say any federal stimulus funds provided for schools and bridges in the District will enable them to drop their own funding plans for such projects and divert the money to help plug other gaps in their 2010 budget.

The officials argued at a meeting of the Federation of Citizens Associations of the District of Columbia on Tuesday evening that such action would not undermine the purpose of the stimulus package, which has been designed to move money quickly into projects where it will produce the most jobs.

But some economists see the plan as an example of a “bait-and-switch” tactic likely to be duplicated in cities and states across the country, effectively redirecting much of the $819 billion package to purposes for which it was not intended.

The District estimates that its share of the package could be in the neighborhood of $1 billion, said William Singer, chief of budget execution in the office of the city administrator, who appeared at Tuesday evening’s meeting with Eric Goulet, budget director for the D.C. Council.

Noting that the District’s projected budget shortfall for 2010 has grown by $450 million in the past six months, the officials said they were looking at ways to use the stimulus funds to help avoid steep cuts in public services.

Mr. Goulet cited planned repairs to the 11th Street Bridge over the Anacostia River as an example of the sort of project that might receive stimulus funds.

“If we take the money we have allocated for that and replace it with stimulus funds, then we have money for other purposes,” he said.

Ron Utt, an economist at the Heritage Foundation, derided the tactic as a misuse of the federal money that “will happen in most states and the District.”

“States and the District will shuffle their own money into their ‘priorities’ and use federal money to fund postponable infrastructure projects like bridges. … If the District shifts its bridge-repair money to prop up its pension system rather than renegotiate its unaffordable pensions, while using federal money to repair its bridges, then we are all the poorer for it.”

Some Capitol Hill aides told The Washington Times that it was understood that many jurisdictions would use the stimulus money in the same way that the District proposes, diverting their own money to other needs. But not everyone is happy about it.

“We have to ensure the money is going where its supposed to go rather than expanding government and providing a backdoor slush fund that we have no way to keep account of,” said Kurt Bardella, a spokesman for Rep. Darrell Issa, California Republican.

Mr. Goulet acknowledged that the city’s plans to reallocate spending could be perceived as undercutting the purposes of the stimulus package.

“Some may feel that if we get money for schools, we should put it on top of the money that is already allocated for schools,” he said. “Others may feel we should take the money already allocated for schools and put it to other uses.”

But, he said, “We have to maintain a balanced budget. At some point, you have to close the spending. This will allow us to keep spending at a higher level and go ahead with projects that we might otherwise have to put on the shelf.”

The District has identified food stamps and unemployment services among its top priorities for any new money, while Virginia hopes to free up money for things like Medicaid and transportation. Maryland Gov. Martin O’Malley also has said Medicaid spending is an area that could be bolstered by stimulus money.

Virginia officials anticipate getting roughly $4 billion from the stimulus package over two years, the Associated Press reported, which could help close a $3.2 billion hole in the state’s biennial budget.

Gov. Tim Kaine, a Democrat, already has proposed cutting a more than $800 from public education and health care, and the state has canceled plans to spend $2.8 billion on highway and transportation projects, including plans to widen Interstates 95 and 66 in fiscal 2009.

The plan approved in the House on Wednesday includes $30 billion for highway construction and $10 billion for transit and rail projects nationwide. Virginia would be in line for more than $997 million in infrastructure funding, according to a report by the House Committee on Transportation and Infrastructure.

In Maryland, Mr. O’Malley is delaying some budget cuts because Maryland could receive its own billions of dollars in stimulus money.

The governor said last month that Maryland officials have identified at least 50 transportation projects that are ready to go and worth more than $310 million.

The projects include $100 million in highway resurfacing and $50 million in bridge rehabilitation. The state would receive $782 million in infrastructure funding from the House bill, according to the committee estimate.

cTom LoBianco contributed to this report.

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