Cities Are Selling Stimulus Funds to Each Other
| Tue Mar. 10, 2009 3:48 PM PDT
In Los Angeles County, cities are buying federal stimulus funds from each other at deep discounts, turning what was supposed to be a targeted infusion of cash into a huge auction.
It all started when the county's Metropolitan Transportation Agency decided to hand out $44 million from the federal stimulus package in the form of $500,000 transportation grants to each of the county's 88 cities. But some cities didn't have any shovel-ready transportation projects. So with MTA's blessing, they're selling the grants to the highest bidder:
La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash. Irwindale, population 1,500, also sold its $500,000 to Westlake Village, for $325,000 cash.
The city of Rolling Hills, population 1,900, sold its $500,000 share to the city of Rancho Palos Verdes for $305,000 cash. The city of Avalon has reached an agreement to swap its $500,000 with L.A. County.
This is Southern California that we're talking about--the land of eternal gridlock. MTA could have redirected the money to a nearly infinite list of other transportation projects. But chief planning officer Carol Inge told the Pasadena Star-News that the agency didn't want to do that because "our board wanted to give every city at least a chance to benefit from the stimulus package."
I'm sure many cities have higher priorities than transportation. And I would have liked to have seen more direct aid to ailing local governments in the stimulus bill. Still, MTA's approach strikes me as a bit too creative. What's next, stimuls money credit default swaps?
UPDATE: After this post appeared, MTA reversed course and invalidated these sales. It now says that the stimulus funds can only be swapped for other county money targeted for transit projects. But this probably won't end the controversy. MTA is still handing out a half million bucks to all 88 cities in the county, including the tiny Irwindale, population 1,446. That's $345 per Irwindalian, just for transportation. With that they could hire a worker to dig through the yellow pages and dial up free limos for everyone. H/T to TotalCapitol in the comments.
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Comments
If this is the kind of graft we can expect from the stimulus, we
Submitted by snowball (not verified) on Wed Mar. 11, 2009 11:47 AM PDT.
This is too ridiculously stupid to be believed.
Westlake Village (a trendy suburb populated with orthodontists, botox injectors, and other periphery to the stars) surely does not have 3 times the shovel-ready projects of any other city in SoCal.
This is larceny of the highest order and a plainly obvious funneling of stimulus cash into the hands of a few contractors who apparently donate well in LA county elections.
Dude, I'm with you. This
Submitted by Jay (not verified) on Wed Mar. 11, 2009 3:51 PM PDT.
Dude, I'm with you. This makes ABSOLUTELY NO SENSE! Why didn't the funds get dished out to the counties that needed it in the first place? My first question is about transparency and oversight. What will La Habra Heights do with that money? And how will the people running Westlake Village be held accountible for this money?
uh, this isn't graft.
Submitted by Chris (not verified) on Thu Mar. 12, 2009 7:32 AM PDT.
It's a market, spontaneously arising to re-allocate resources more efficiently.
In a way, it's the wet dream of conservative alleged-ideals. (It's not the actual wet dream because economic conservatism seems primarily concerned with socializing risk and privatizing profits.)
There are plenty of fine reasons to disallow this from happening, but we should recognize that this sort of thing is an inevitable human response in every situation--remember trading lunches in school as a kid? =)
Predictable
Submitted by Anonymous Bosh (not verified) on Wed Mar. 11, 2009 2:07 PM PDT.
What do you expect, when Congress can't be bothered to read and understand the details of the 1,000+ page spending bills they pass?
Were there stipulations in the bill on how the money was to be used?
Congress didn't know, because they didn't look.
Do we learn anything from this?
Did we learn anything from the last dozen or so bills that didn't do what the public was told to expect of them, because even the people voting on them didn't know what was actually in them?
Apparently not.
The issue is directing the
Submitted by Micheline (not verified) on Wed Mar. 11, 2009 2:28 PM PDT.
The issue is directing the money towards its intended use. The point you are making is not germane to the situation.
I've learned that grants can
Submitted by snowball (not verified) on Thu Mar. 12, 2009 2:15 AM PDT.
I've learned that grants can be just as, if not more, expensive than earmarks no matter how much John McCain jumps up and down about the 0.016% of the budget.
And don't get me started on the DoD and their abilities to lose or squander cash.
Whereas Republicans can avoid passing a single piece of useful legislation for an entire generation unless its a deeply unwise tax cut for people who don't need it or a suspension of regulation designed to create a liquidity trap and distribute income at the top so as to cause a financial collapse.
Why so upset?
Submitted by Adam (not verified) on Thu Mar. 12, 2009 7:32 AM PDT.
Why are the commenters above me so upset? This money isn't disappearing: it's going to the places that need it the most. It's becoming allocated BETTER than it was in the first place, and probably far better than the MTA could manage to allocate it with a bureaucratic process that only invites corruption and waste.
A secondary market in stimulus funds is actually a fantastic idea, if only you pause to think about it.
The Los Angeles MTA nixed these deals
Submitted by TotalCapitol.com (not verified) on Thu Mar. 12, 2009 7:16 PM PDT.
WHY SO UPSET.
Submitted by JERRY (not verified) on Fri Mar. 13, 2009 11:06 PM PDT.
GREAT IDEA, TO LET THE 88 CITIES FORM A MARKET.
Amerisa
Submitted by Cloudlift (not verified) on Sat Mar. 14, 2009 8:22 PM PDT.
So venal, so corrupt .....following a quiet slide into the ocean of the entire USA a beleaguered world would breath a collective sigh of relief...we are so tiered of you America..
Silly Children, Everyone
Submitted by Anonymous (not verified) on Sun Mar. 15, 2009 10:12 AM PDT.
Silly Children,
Everyone seems to be concused about the difference between "money" and "credit".
And this information about Local municipalites conducting their own poor-man's version of "credit default swaps" by trading "MONEY" for furture "CREDIT" is indicative of the type of shenanigans that got the World into this financial mess in the first place.
So local politicians have taken it upon themselves to make financial "Derivatives" out of the bailout funds? Yes. Derivatives. Why? Because if, for example, somebody hands me $500,000 cash then tell's me it's only worth $325,000 in "Bonds", then that is an example of a Derivative product. $325,000 in "Bonds" was DERIVED from the initial $500,000 cash.
This is "Change" in what way exactly?
Face it, the government has failed.
Californians better start thinking about becoming farmers.
8 Dollar Bill Stimulus Money
Submitted by Anonymous (not verified) on Fri Apr. 17, 2009 2:26 PM PDT.
Now that more money is being pumped into the economy, you will need to get more to keep up with the decreasing value of the dollar. The other way is to convert one dollars into 8 dollars, as that is the ratio that money would be valued. I came across it, http://www.8dollarbill.com
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