Caution in Spending Stimulus Monies


recovery1The caution flags continue to fly when it comes to moving quickly to spend stimulus funds.  The Wall Street Journal last week noted that:


“States are raising alarm bells over hefty reporting demands they face to fulfill President Barack Obama’s promise that citizens will be able to track online how money from his economic recovery package is spent.


State stimulus czars and auditors aired concerns about the accountability demands during a daylong meeting Thursday at the White House. Among their issues: That the stimulus package’s transparency requirements will compel them to generate detailed spending data that some localities don’t now collect, assemble sweeping audits and parse their budgets to distinguish jobs created by stimulus projects from jobs created by other programs.”


In addition, according to an Associated Press story:


President Barack Obama wants governors to hurry up and begin building bridges and schools to revive the economy. His administration is learning that spending $787 billion as quickly and transparently as promised is no easy task.


States wanting desperately to tap into the new money are having trouble keeping track of the application deadlines and requirements in the 400-page stimulus bill. Governors must sign pledges saying they’ll spend the money appropriately, but the administration is still figuring out what the rules are.


“Well, that’s kind of scary,” said Richard Eckstrom, South Carolina’s comptroller general.


Hanging over all of this are two threats. The first was written into the law, saying that if states miss a deadline or don’t spend the money fast enough, they lose the cash. Vice President Joe Biden delivered the second threat last week, warning that if states misspend the money, “don’t look for any help from the federal government for a long while.”


And the emphasis seems to be on the latter threat.  Last week, the members of the Recovery Act Accountability Board were announced with some fanfare.


Also last week, President Obama released a memo to federal agencies, “Ensuring Responsible Spending of Recovery Act Funds,” which directs agencies to use “transparent, merit-based selection criteria” to distribute the funds, use their discretion to avoid funding “imprudent projects,” and ensure transparency in any communications with lobbyists about the use of Recovery Act funds.


The Administration seems to be sending clear signals that the old axiom, “It is easier to ask forgiveness than it is to get permission,” won’t apply to Stimulus spending:


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