Slow stimulus funding may delay projects

Posted May 28, 2009, at 8:34 p.m.

AUGUSTA, Maine — President Obama says he is pleased but not satisfied with the first 100 days of the economic stimulus effort.

Maine officials agree. With only about 7 percent of the $787 billion of the American Recovery and Reinvestment Act distributed as of last week there are concerns that some anticipated projects may be delayed.

“The Recovery Act has been very important to Maine,” said Finance Commissioner Ryan Low, but it also “has been frustrating. We still have not received guidance on even how to apply for some of the programs.”

Low said Maine was quick to apply for and receive about $86.8 million in stimulus funds for highway and bridge projects. For instance, he said Maine DOT had completed the southbound reconstruction of I-295 from Topsham to Gardiner last summer and was ready to do the northbound lanes now.

But millions more are still available to Maine for other infrastructure projects such as for municipal water and sewer programs and including more funds for roads.

And other state programs looking to spark economic development with stimulus money — programs such as those run through the Maine Housing Authority — are also awaiting funding, Low said.

“We are still waiting for guidance on where it is we apply for those funds,” he said.

On Thursday, State Controller Ed Karass told the Legislature’s Appropriations Committee that the state has had to front some cash for stimulus projects to get them started because of the delays in getting federal dollars.

“We have been spending money in advance of drawing ARRA funds on the Human Services side which has contributed to a large negative balance in the federal funds,” Karass said. “We have been using general fund cash to supplement what should have been ARRA funds.”

What has been flowing from the federal treasury to the state is money for several safety net programs, such as additional unemployment benefits and expanded food programs for the poor.

“What we have mostly been seeing is programs that are stabilizing the economy,” said Charles Colgan, an economist at the University of Southern Maine and chairman of the state economic forecasting commission. “When we worked on our updated forecast, we took into account that it would take a while to get the money out that would stimulate the economy.”

He said it appears programs such as the enhanced Medicaid matching rates for the state have helped in stabilizing state revenues and avoiding additional budget cuts or layoffs. That program is expected to bring $330 million to the state over two years.

But, Colgan said, if there are ongoing delays getting the stimulus funds for projects such as road repairs, building construction and other infrastructure needs, it could slow the pace of the recovery from the recession.

“All of that food stamp money and the increased unemployment payments have helped people buy groceries and pay their bills,” he said. “I think it is doing what was intended.”

The need can be measured by the size of the increase in the supplemental nutrition assistance program, the name given the food stamp program in the last year of the Bush administration.

In May 2008, the state provided food assistance for 178,243 Mainers that cost $16.7 million. This month, 206,841 individuals are getting aid that totals $26.6 million.

“That is certainly helping people that need it,” said University of Maine economics professor Jim Breece, who also serves on the economic forecasting commission. “I have to admit I am a little bit disappointed in the slowness that these funds are coming out. The recession is now. People are feeling the pain now.”

He agreed with Colgan that the initial cash from the Recovery Act was to help stabilize the economy, but said the federal government needs to get more of the stimulus funds moving for the programs that give people jobs.

The nonpartisan Congressional Budget Office reported last week that through April only about $19 billion of the $787 billion in stimulus funds had been spent.

“We need those construction jobs and the ripple effect they have on the economy,” Colgan said. “There is a lot of money in the package to invest in the infrastructure and that will have a long-term benefit to the economy, not just the short-term stimulus.”

Low agreed and said Maine has a relatively short construction season and that every week of delay means that a road, housing or other infrastructure project could be delayed until next year.

“We need to get these projects going as soon as we can,” he said. “We are doing all we can at the state level, but there are some grants we don’t know about until we read a press release on them.”

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