Monday, June 29, 2009

How Is Federal Stimulus Money Being Spent In CT?

Yankee Institute cites a report by PoleEcon Research that claims that less than half of the $3.5 billion of program funding in so-called "stimulus" money allocated to Connecticut will be spent on things that might actually stimulate the economy. Overall, CT will get $5.1 Billion in stimulus money ($3.5 Billion in program funding, $1.5 billion in individual tax breaks, and $111 million "net" corporate tax breaks). Here is a CT Stimulus Update.

The report states that most of the $3.5 billion in government stimulus money is actually just being spent to replace existing state money, which will perpetuate spending instead of forcing state government to curb wasteful spending practices, or encourage better prioritization of projects. In fact, over the next three years, nearly two-thirds of it merely replaces existing state funds, the bulk of which is comprised of $1.3 billion in extra federal funding for Medicaid services for the poor and $745 million for local education.

Healthcare and public education are two industries in Connecticut that are relatively strong and not in need of much help or stimulus, especially in this recession - yet they are poised to receive the lion's share of stimulus funding. So where are any new stimulative projects? Prior to any stimulus funds being received, these two sectors, along with government employment, have actually already added jobs and have been least affected by the recession. So where's the stimulus for everyone else? There really isn't any if you ask businesses across the state.

Even with all of the talk of funding "shovel ready projects" - that in itself is future spending and not being currently stimulated with government funds. The Congressional Budget Office analysis of the American Recovery and Reinvestment Act (ARRA) estimates that only 21 percent of spending will take place this fiscal year (when we supposedly needed it now the most!). That's hardly anything with regard to stimulating the economy in CT!

The report also says that we are also receiving less funding than other states (shall we thank our CT State Congressional representatives for working "so hard" for us?) Yankee's summary says:
Connecticut gets less than others: Federal tax policy is fundamentally redistributive, transferring money from wealthier states and individuals to poorer ones. This is true of stimulus spending as well. At $769 per capita, Connecticut receives less than its neighboring states and has the second lowest rate in New England.
What is really troubling about federal stimulus spending in this manner is that because most of it is just replacing state spending - what will happen when that stimulus money is no longer flowing to CT? What happens when the stimulus windfall is gone? We'll have to make up for it, or ax/curtail the programs that it is propping up. As they say: Free money warps priorities.
Spending postpones the day of reckoning: State government officials have struggled mightily to deal with the existing budget deficit while balancing the next one. Now imagine how difficult it will be to balance future budgets when the stimulus windfall is gone.

... The state is buying 106 new hybrid buses for $71 million and funding 4,500 summer jobs for young people for $11 million more. There's $3 million for lead abatement in Waterbury, $800,000 for a new roof on a building at Camp Rell in Niantic, and $585,000 to fight internet crime. It is doubtful whether a majority of stimulus-funded projects would earn funding if they had to compete for existing scarce resources.
Nevermind too, all of the strings attached to this stimulus money.

Spending for stupid programs like Obamas summer jobs program, is not even a worthy short term band-aid solution to really help recent college graduates across the country - because it doesn't help everyone.

A lot of our money is being spent.
I don't think it is being spent wisely - nor do I think it will help us all in the long run. I also agree that this kind of federal spending is UnConstitutional.
(hear more about that on FreedomWatch)

By all accounts this federal stimulus has so far been a dismal failure.
Perhaps it is a good thing that CT is not getting as much as other states after all.