Wyoming stimulus spending draws mixed reviews

2011-09-14T19:00:00Z 2011-09-14T23:56:00Z Wyoming stimulus spending draws mixed reviews

By RUFFIN PREVOST

WyoFile.com

The Billings Gazette
September 14, 2011 7:00 pm  • 

CODY, Wyo. — With the nation’s unemployment rate at 9.1 percent amid continuing signs of a faltering economy, President Barack Obama last week proposed a new round of up to $447 billion in tax cuts and federal public works spending aimed at putting millions of Americans back to work, as well as boosting his own future job prospects.

It is too soon to know what the proposal might mean to Wyoming. But everyone from contractors to program administrators say there are lessons to be learned — good and bad — from how federal stimulus dollars have been spent in the state since the February 2009 passage of the American Recovery and Reinvestment Act.

As of June 30, the most recent reporting period, the Recovery Act has pumped $710 billion into state and local economies. More than $664 million in stimulus funds have been awarded to Wyoming, producing a total 1,017 jobs from April 1 to June 30, according to the most recent records from the federal government. Most of that money must be spent by Sept. 30.

Proponents of the stimulus in Wyoming say the money has employed local workers and allowed cash-strapped government agencies, nonprofits and businesses to address serious needs that otherwise would not get funding, all while staving off an even worse economic downturn.

“The sense that ARRA didn’t work is just really not founded once a person takes a little time to look into what it did,” said Dan Neal, executive director of the Equality State Policy Center, a Casper-based government accountability group that advocates for working families.

Neal said stimulus spending “kept the wolves at bay” when the state was losing thousands of jobs, and that the program as it was carried out in Wyoming has been a model of how it was meant to operate.

Critics contend that too much of the money has gone to contractors in other states or been wasted on unnecessary projects, that reporting requirements are onerous, and the net result hasn’t produced enough jobs or other measurable economic benefits to justify the cost.

Sven Larson, research fellow for a libertarian Cheyenne think tank, Wyoming Liberty Group, said stimulus spending has been “an incredibly inefficient way of producing jobs,” with government figures for late 2010 showing more than $400,000 spent for each job created.

“There is a great deal of misunderstanding or under-reporting of what the stimulus package actually meant when it comes to wasting money,” he said.

Stimulus funds in Wyoming have paid for an array of projects, programs and capital improvements. Examples include obvious and expected expenses such as hiring more police, making low-income housing loans and completing miles of highway and road improvements. Funds have also been used in Wyoming for such needs as buying textbooks and office furniture, as well as projects like traveling to Antarctica for atmospheric research and field work in Argentina to collect volcanic ash samples.

In some cases, funds that would have been spent on existing federal programs were instead funneled through stimulus channels.

That was the case for nearly $1.4 million in stimulus awarded to Western Nuclear Inc. of Golden, Colo., for groundwater monitoring and environmental consulting performed at the site of a former uranium mine in Jeffrey City.

Spending records at Recovery.gov, the federal website used to track stimulus spending, show the U.S. Department of Energy awarded $1,393,252 in stimulus funding in 2010 to Western Nuclear.

“We’ve been awarded money like that every year since 1994. It just fell under stimulus money this time,” said Ann Thomas, an outside contractor handling accounting work for Western Nuclear.

Every year for the past 17 years, the government has reimbursed Western Nuclear for reclamation work and water testing as part of a standard federal program that will eventually see the former uranium mine site turned over to the Energy Department, Thomas said.

“No jobs were created and all our work for that period is done,” she said. “It hasn’t made any difference in anything we have done.”

Thomas said the company was not paid earlier than usual, and she did not know why the annual reimbursement for 2010 was routed through the Recovery Act.

Saving energy, money

Stimulus funding has been key to two energy-efficiency improvement projects in Cody, program managers say.

The Buffalo Bill Historical Center, a nonprofit museum and top tourist attraction in Cody, received $592,000 to upgrade and replace heating and cooling equipment, add insulation and install LED lighting.

“The timeliness of this grant was really fortuitous for us,” said Phil Anthony, operating engineer for the BBHC.

Steam boilers that were nearly 50 years old had rusted through, and the museum had been struggling for the past decade to develop a master plan for upgrading and improving its failing heating and cooling systems.

Working through the Wyoming State Energy Office, the museum pledged a 15 percent match and received stimulus funds allowing it to upgrade all of its heating and cooling systems at once.

“We were in desperate straits before we got the opportunity to get this money,” Anthony said. “This grant solved all that.”

Anthony said he expects the thousands of dollars in monthly energy savings already being realized to cover the museum’s matching pledge within two years, and to recoup the total system costs within 10 years.

Compliance and reporting requirements, while detailed, were not unreasonable, he said.

“One downside I saw to the concept of the ARRA program was that our contractors didn’t add jobs,” Anthony said.

Rather than hiring additional employees, contractors had existing crews work overtime, which caused minor inconveniences and delays in the project, Anthony said.

“The president has no control over how individual contractors manage their business,” he said. “I felt that our mechanical crews should have brought in new employees. This didn’t happen.”

The city of Cody is enjoying impressive savings from LED streetlights funded through the Recovery Act.

The light-emitting diodes use no filaments, burn cooler, last longer and use half the electricity of conventional streetlights, but are four times the price.

Lower maintenance and energy costs mean the city should save more than $110,000 per year, said Bert Pond, head of Cody’s Electric Division.

The last 40 lights out of more than 1,000 will be installed this month, he said.

The city applied for the $440,000 competitive grant, which included a 10 percent local in-kind match, because it wanted to fund a project that would provide long-term savings that would lower future budget obligations.

Pond said the annual savings will allow Cody to hold the line for a longer period on eventual electric rate hikes for residents who buy power from the city-owned utility.

The city has received only a couple of complaints from residents who say they don’t like the new lights, while compliance, reporting and reimbursement went smoothly, Pond said.

That was not the case for a Jackson well driller who said he waited nearly 100 days, far longer than usual, to get paid for a job on public land near Pinedale.

“It seemed like we got the runaround so much. We dealt with people in Casper, Denver, Washington (D.C.) and Portland. It was just unreal,” said Jack Weber, owner of Weber Well Drilling.

Weber said he was contacted by specialists from the U.S. Bureau of Land Management who asked him to bid on a project to drill water wells at the Scab Creek Trailhead, about 24 miles southeast of Pinedale.

Funded through the Recovery Act, the $109,000 project was completed in September 2010, and involved installing a drinking water well near a campground and another well with a solar pump near a parking area used by backcountry horse riders.

Though he has worked well with the BLM during his 43 years drilling wells, Weber said the stimulus reporting and payment requirements were needlessly complex and time-consuming.

“We called everybody we could. After 30 days, we expect to get some money. We never did till the end of the year, so we were hurting pretty good,” Weber said. “We had to rob from Peter to pay Paul.”

Weber said he was unaware when bidding on the job that it was funded through the Recovery Act, and that he thought the horse watering well was unnecessary.

Weber said he has had steady work since 2010, and that he would carefully consider working on future projects based on the Recover Act model.

University projects

The University of Wyoming received about $51 million in stimulus funds, with just over half going toward major maintenance, modernization and renovations, said Don Richards, UW director of governmental and community affairs.

Richards said the $27 million in maintenance funding was important for UW and the state’s community colleges because the Legislature did not appropriate maintenance funding as part of its most recent higher education budget.

But there were numerous federal restrictions on how those maintenance funds could be spent, making it difficult to put together qualifying projects, and causing the university to select ones that it otherwise would not have chosen, Richards said.

Funds could not be used for administrative or office buildings, he said, and compliance and reporting was time-consuming and difficult. UW also received $5.2 million for library expansions and enhancements and an estimated $2.5 million in additional Pell grants for students, Richards said

Federal funding helped UW meet its goal of maintaining a top-tier library system, he said, while Pell grant funding allowed the university to delay a tuition increase.

Another $16.4 million was allocated to various UW research projects, including: $458,171 to study the hydrology of the Greenland Ice Sheet; $273,064 to analyze carbohydrate structures in insect cells; $586,581 for the continuation of ozone and stratospheric cloud measurements in Antarctica begun in 1986; and $326,140 to study underground geologic processes in Argentina.

According to reports filed at Recovery.org for the most recent reporting period, about 13 jobs were created during that time by the $16.4 million in basic research funding, provided primarily by the National Institutes of Health, the National Science Foundation and the Department of Energy.

Richards defended the role of basic research and said more than $11 million, or roughly two-thirds of the funding for those programs, went to study carbon capture and sequestration, a process that could play a major role in the future of Wyoming’s energy economy.

Quarterly reports offer only a snapshot of the employment picture, he said, and UW benefits anytime it can show “its ability to compete nationally for prestigious awards.”

Larson, the libertarian research fellow, said it didn’t make sense to address unemployment by using stimulus funds for costly research.

“How many jobs does it create in Wyoming if we send some government bureaucrats or researchers to Antarctica to study ozone?” Larson said.

He said private markets could produce more jobs at less public cost if the federal government would cut corporate taxes and reduce regulations.

“You have to give the private sector everything it needs in terms of confidence in the future,” he said.

Public parks

But the private sector typically doesn’t fund improvements in public parks, including road maintenance, new buildings and other infrastructure in Yellowstone and Grand Teton national parks.

Yellowstone received $14.7 million in stimulus funding, while Grand Teton got $18.8 million. Both have extensive backlogs in deferred maintenance. Stimulus projects include road resurfacing, new maintenance buildings in Colter Bay and Moose, a wastewater treatment plant at Madison Junction and a hydroelectric power plant at Mammoth Hot Springs.

The $9 million wastewater treatment plant replaces a facility that has been operating far beyond its original design life, said Yellowstone spokesman Al Nash.

“We have had that project on the books and had been unable to come up with funding to date,” Nash said.

During a July 2010 speech near the base of National Park Mountain in Yellowstone, Vice President Joe Biden said the wastewater project was an example of the unglamorous but important role of stimulus spending in Yellowstone and other national parks.

“The single greatest jewel we had was always the last item on the agenda,” Biden said, and repairs were “kicked down the road” to be addressed in future budgets.

But the project remains unfinished. It is slated for completion in July 2012, Nash said, while the Mammoth hydroelectric project — the only other uncompleted Recovery Act project in Yellowstone — should wrap up in the spring.

Nash said Yellowstone’s short construction season and difficult operating environment make it a tougher place to build.

Federal contracts in Yellowstone and Grand Teton do not allow for a 5 percent Wyoming contractor preference, as is mandated by state law with state-funded work. Much of the work in the parks has been done by contractors in Montana, Idaho and Utah, as well as Wyoming.

Bob Moberly, president of Think Wyoming First, a local business advocacy group, said “it obviously would have helped Wyoming contractors” if stimulus spending in the state could have included a 5 percent local preference.

“If you want the profits from these jobs to stay in Wyoming, that resident preference is important,” he said.

Richards, from UW, said stimulus rules also prevented UW from extending the 5 percent preference to Wyoming contractors.

He said the detailed reporting required produced lots of information, but not necessarily in a form that is meaningful for the public.

Richards said the methodology for tracking “jobs created” did not offer the best insight on how stimulus funds were putting people to work. Federal stimulus reporting standards have eventually changed to more closely match UW preferences for showing “hours worked,” Richards said.

Federal research grants outside the stimulus program are beginning to adopt similar reporting requirements, but without making the proper context and background information available to the public, such data often “raises more questions than it answers,” he said.

Larson, of the Wyoming Liberty Group, said concerns about transparency and financial reporting were “not limited to the stimulus, but cut across almost everything the government does.”

Both Larson and Richards said they had potential concerns about any new federal spending that may result from Obama’s jobs bill.

“One area of public policy worth reviewing is that the original stimulus bill gave incentives to — and in fact required states to — cut portions of their (education) budgets to be eligible,” Richards said.

If future federal spending follows similar “perverse incentives,” Richards said, it’s likely that Wyoming and other states with fiscally conservative budget practices would receive a proportionally smaller share of available funds compared to states that have spent more freely in recent years.

Larson said that if the country enters another recession “and the federal government decides it wants to repeat this, we could be in for quite a ride if there is more heavy-handed and inefficient spending.”

Focus on infrastructure

Jerimiah Rieman, a policy adviser to Gov. Matt Mead who has continued to oversee the state’s stimulus spending since he began that role during former Gov. Dave Freudenthal’s tenure, said infrastructure spending has yielded the best results.

Spending on roads, bridges, water projects and other public works “had the most direct and quickest impact on unemployment in Wyoming,” Rieman said.

Though most stimulus spending will wind down by the end of the month, the team of state agency workers who helped shape spending remains in place, and could resume work to allocate more federal funds.

But that depends on the extent to which the governor wants to participate in any federal spending programs, Rieman said.

During a press conference Thursday before Obama’s jobs speech, Mead said relatively low labor and material costs make it an attractive time for the state to focus on improving roads, landfills, high-speed telecommunications and other infrastructure and maintenance projects.

“If we don’t spend the dollar today to take care of some of those maintenance costs, they don’t get any less expensive,” he said.

As for his priorities for any potential new federal spending, Mead said road and highway projects remain high on the list.

“I think we need a good plan for funding highways, not just in Wyoming, but across the country,” he said.

Federal transportation spending under the Recovery Act includes billions allocated for high-speed rail projects, but that doesn’t do much to help rural states like Wyoming, Mead said.

Wyoming’s all-Republican congressional delegation voted against the Recovery Act, but funds allocated to the state have been spent with relatively little fanfare or controversy.

Despite regular and staunch opposition from many in Wyoming to federal spending, the state has long received more in federal benefits than it pays in taxes.

From 1990-2009, Wyoming received an average of $1.19 in federal spending for every dollar it paid in federal taxes, according to U.S. Census figures.

For some in state government, closer federal cooperation and coordination through stimulus spending efforts has been an unanticipated but beneficial side effect of the Recovery Act.

“There were some glitches here and there,” Rieman said, “but if anything good happened out of the Recovery Act, it did increase communication between federal and state agencies.”

WyoFile is a Wyoming-based, nonprofit news service.

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