Towns’ Authority to Follow Stimulus Money also Directs its Flow

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He says: It’s to “stimulate local economies, not just big boys’ pockets.”

Brooklyn’s U.S. Representative Edolphus “Ed” Towns (D-NY) is Chairman of the powerful Committee on Oversight and Government Reform and as such, he held his first bipartisan stimulus oversight field hearing on Tuesday, April 21, 2009 in Brooklyn’s Borough Hall.

Congressman Towns said the hearing was part of the Committee’s plan to provide constructive oversight of the American Recovery and Reinvestment Act (ARRA), also known as the Stimulus Program or Recovery Act. The hearing titled, “The American Recovery and Reinvestment Act of 2009: The Role of State and Local Governments”, was described as examining “the challenges facing New York State and local officials who are tasked with allocating stimulus funds.”

Towns said he had helped draft the accountability and oversight language included in the stimulus package and that the language guaranteed the Committee the ability to conduct oversight on how funds are being spent by all levels of government. This authority to follow the money is also the authority to help direct its flow into the areas most in need. “Money should be used for the purpose intended,” said Towns. “To stimulate local economies, not just stimulate the big boys pockets.”

Congressman Dennis Kucinich asked Timothy Gilchrist, Senior Advisor for Infrastructure and Transportation, Office of the Governor of New York and Edward Skyler, Deputy Mayor for Operations of New York City, about the role of the banks in the “chain of custody” of the hundreds of billions of dollars that is coming from Washington. Because some of the programs and targets they had spoken about were not in place yet or multiyear, the congressman was concerned that parking the money in accounts “waiting around for a program,” would be a backdoor way for major banks to again profit from stimulus dollars. He wanted to be certain that as the money came in, it went to the end point as quickly as possible. The congressman asked of the money, “Where does it physically go?” Gilchrist and Skyler responded that most of the program money was for reimbursement of funds already spent, but when the funds are initially transferred from Treasury to the State accounts, they are subject to being held in an overnight interest bearing account before being forwarded to the local governing authority.

The Ranking Member of the Committee (the senior member of the party not chairing the committee) Darrell Issa, (R-CA), said he was concerned that the federal guidelines “only have to follow the money they dole out as far as the state and local municipal level, after that the money trail runs cold.”

The trail may be cold for Congressman Issa, but it is fresh and hot for Gilchrist and Skyler, as well as witness New York City Comptroller William Thompson. All spoke at length about the auditing and oversight they performed on the state and city levels to insure the integrity of the programs are maintained.

Colvin Grannum, President and CEO of Bedford-Stuyvesant Restoration Corporation said he was asked to speak on behalf of local communities and that it was not just the efficiency of the program and accounting that mattered but that the purposes of the stimulus be achieved. “It’s clear the stimulus will have some concrete benefits for a community like Bedford-Stuyvesant,” which despite its wide range of incomes and robust areas, has very high rates of unemployment, foreclosures and health concerns.

“The act will clearly have benefits in the area of infrastructure development, energy efficiency, education, job training and the social safety net. I think what is less clear, despite the significant benefits, is whether residents of communities like Bedford-Stuyvesant, residents that are low-skilled or chronically unemployed, will directly receive employment opportunities as a result of the act.”

Expanding on his testimony in response to question from Congressman Issa on whether he had concerns that the money will get to the people who really need it, Grannum responded, “There are two categories, one is the social safety net, and I have little concern about that. But for money that can stimulate business in communities like Bedford-Stuyvesant, there I have greater concern. Because unless there is some intentional mechanism to open up avenues that have been previously closed, then money is going to flow as it has in the past. We want to break away from having funds for subsistence, and have a greater proportion of those funds coming in be funds that generate enterprise and work.”

Another concern was with the shovel-ready timetables that the agencies are working with. “As agency heads think about how to spend the money within two years, they are inclined to use existing contractual relationships which frequently don’t include small minority-owned businesses. The difficulty is in figuring processes that will incorporate them more quickly.”

Responding to a Towns inquiry regarding ability of local organizations to have acceptable systems in place to account for the money, Grannum said in instances where there are non-profit-run programs such as weatherization work that go back decades, “the processes are longstanding and well-monitored by the State. One of the concerns is how much of an administrative burden do you put on not-for-profits in the process. Obviously there is a need to account for funds, but at the same time, some of the administrative burdens imposed by government make it very difficult for organizations to participate, not just not-for-profits, but small businesses as well.”

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Congressman Todd Platts (R-PA.) commented that he was glad to hear Mr. Grannum’s previous comments on the prevailing wage requirement, that it looks good on the face of it but it also has the unintended consequences of limiting the incorporation of low-skilled workers and it is sometimes an obstacle to achieving the ends of the legislation. Platt said that agreed with the his own feelings that sometimes small business owners are hurt by the regulations that go with the requirement, stifling their ability to grow. Grannum acknowledged he was uncomfortable with the position, “I am from a union family as well” but he says “There are many jobs getting done in communities like Bedford-Stuyvesant that would not get done if the minimum wage was required on all of them. It just would not be feasible to do the projects.”

A favorite word at the hearing was “transparency.” David Robinson Associate Director of the Center for Information Technology Policy at Princeton University, said that information technology has the ability to make the stimulus program more transparent than any government program has ever been.

Comptroller Thompson said “We should look at the distribution of these funds as an opportunity to put in place a blueprint for much needed transparency and accountability. We need to insure that job creation and salary criteria are clearly laid out before funds are dispersed. The funds have to be accounted for and the desired outcomes clear and monitored.” The Comptroller believes that “with the current level of technology, there is an ability to track the money more transparently than ever before.” And that “Every dollar is accounted for.”

Congressman Kucinich acknowledged that technology has changed completely how information can go to the public but he had another thought.

“According to the CIA Fact Book, there are about 223 million users of the Internet,” said the congressman. For those familiar with populations statistics, the population of America is over 300 million. This mean that one out of every three don’t use the Internet. Now in talking about the information gap, it’s most likely that people who don’t use the Internet happen to be in neighborhoods where there is poverty and social disorganization.” He asked Mr. Robinson, “How do we make sure that people still know about these programs?”

Robinson contended that in making information available to the Internet-savvy, including “Mr. Grannum and his colleagues,” they in turn will use the methods best suited to convey the information to members of their communities, “even to those without an internet connection.” The Congressman said his point was that with $750 billion at stake, a more analog-based system of door-to-door information distribution could be a part of that process.

In adjourning the session, Congressman Towns said that “America demands that all stakeholders under the Recovery Act work in good faith. This committee will be watching and working to insure accountability and transparency.”

The Web site www.recovery.gov answers more questions than you can ask about the recovery plan. When the agencies begin reporting on money use, those reports will be there also. Non-profits can find grant opportunities, etc. If you have any interest at all in the stimulus funds, then you must check out this site.

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