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How Stimulus Money Is Really Spent

New America Media, Q&A, Aaron Glantz, Interview with R. Sean Randolph Posted: Jun 25, 2009

Editors Note: The state of California is receiving an estimated $50.7 billion under the terms of President Barack Obamas stimulus package. To decide how to spend the money, the state has contracted with 12 regional business and government groups. In the San Francisco Bay Area, that group is the Bay Area Council Economic Institute, a business-backed, public-private think tank. On June 3, the institute issued a 47-page report with a list of transportation, housing and energy projects it believes should be prioritized with stimulus funding.

NAM stimulus editor Aaron Glantz sat down with R. Sean Randolph, president and CEO of the Bay Area Council Economic Institute, to talk about the next steps in spending recovery dollars.

Bay Area Council
Randolph: The Bay Area Council Economic Institute, which is a public-private body that engages labor, elected officials, business, and universities, was asked in March by the states Business, Transportation, and Housing Agency to prepare what theyre calling an 'Economic Recovery Work Plan' to do two things: help guide the state in its allocation of federal stimulus money, and also help align state resources along regional priorities and with stimulus money.

NAM: Basically, the way the stimulus plan works is that the federal government has a big pot of money, and they give it to the different federal agencies which then give it to the appropriate state agency, which is then responsible for spending it here in California. Is that right?

That is part of the story. It is so confusing. I talk to cities all around the country about this and most of them are in as much of a quandary as we are about whats really going on. There is a huge amount of money out there. Youre right. Its being distributed to many, many different federal agencies. Some of that money is being distributed to states for their allocation at their discretion. So what we have in the end is sort of a patchwork.

"It is so confusing. I talk to cities all around the country about this and most of them are in as much of a quandary as we are about whats really going on." -R. Sean Randolph [At the Bay Area Council], we are looking at the funding that will pass through the state. The Business, Transpiration and Housing Agency (B.T. and H.) is our principal point of contact and they are undertaking with the other agencies in Sacramento that also have some control over the spending to make a coordinated, regional response with the state. In other words, B.T. and H. will control some funds - for example for transportation - but also the Energy Commission will have some funds, the Resources Agency will have some funds, the Labor and Workforce Agency will have some funds. Its many agencies who have some piece of the pie.

And your report addresses how each of those funds, in your opinion, ought to be spent here in the Bay Area.

Exactly. What B.T. and H. did, on behalf of the state administration, was ask each of the 12 regions in California to come up with one of these work plans. So theres one for L.A., one for San Diego, for Sacramento, and others throughout the state. The plans are designed to show the priorities for each region.

From the states perspective, there are thousands of proposals washing around the landscape. Its hard if youre not local to understand the merits of each one. So our exercise has been designed to help focus on the most beneficial proposals coming out of the Bay Area.

Now that youve done this exercise, what happens to your recommendations? Are they getting recommendations from other people also? Does it go through some kind of official notice and comment process? Does the legislature have to approve it?

As far as we know, this is not a formal process. Theres not a notice and comment process, theres not a separate legislative process. Our understanding is that this document is getting circulated among agencies in Sacramento and that it will be used for decision-making on their part both regarding how funds are spent in Sacramento and also which projects might be supported in Washington.

Every project that has been identified as a priority for the region through our process has in effect a seal of approval, an endorsement from a broad section of Bay Area leaders that this could be a very productive investment. But following up from here, were also waiting to see whats going to come back from Sacramento.

Youre the only people they asked to do this comprehensive work, but there really isnt a deliberative process thats been set up [to choose which projects are funded]?

This is where it gets even more complicated. The Bay Area Council Economic Institute doesnt control any funds, but what weve done at the request of the state is a value-added overlay to say, 'Of all of these projects, this should be their priority in terms of their impact and benefit.'

But anybody who is actually applying for stimulus funding will have to submit a formal application to the state or federal agency thats responsible. What our process does is help those agencies understand that certain of those projects have been evaluated and should be looked at first.

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