Wednesday, May 04, 2011

Status Of Stimulus Infrastructure Funding Two Years Later

May 4: The House Transportation & Infrastructure Committee, Chaired by Representative John Mica (R-FL), with Ranking Member Nick Rahall (D-WV), held a hearing to examine the status of the "stimulus" (ARRA, Recovery Act funding) two years later, including audit work performed by the General Accountability Office (GAO), the Department of Transportation Inspector General (DOT IG), and the U.S. EPA Inspector General (EPA OIG) uncovering lapses in oversight by the implementing agencies, mismanagement of grants and funds, and a lack of transparency. Witnesses testifying at the hearing included the: Department of Transportation Inspector General; U.S. EPA Inspector General; Government Accountability Office; and Department of Transportation Undersecretary for Policy.
    The American Recovery and Reinvestment Act (ARRA) was signed into law in February 2009, its supporters claiming it would boost the struggling U.S. economy by creating jobs, stabilizing state and local government budgets, and investing in infrastructure. Chairman Mica indicated that two years later, the nation's unemployment rate remains high, unemployment in the construction industry continues at a staggering 20 percent, and a significant portion of infrastructure stimulus funds remains unspent. Wednesday's hearing will examine implementation of the stimulus and the status of the $64.1 billion in infrastructure funds for programs within the Committee's jurisdiction.
    The EPA reported that ARRA provided U.S. EPA with $7.2 billion, roughly equal to its fiscal year 2009 appropriation, for the following six EPA programs: $4 billion for the Clean Water State Revolving Fund (CWSRF) to provide funds to upgrade wastewater treatment systems; $2 billion for the Drinking Water State Revolving Fund (DWSRF) to provide funds to upgrade drinking water infrastructure; $600 million for the Superfund Program to initiate and accelerate clean-up at National Priorities List sites; $300 million for the Diesel Emissions Reduction Act Program to accelerate emission reductions from diesel engines; $200 million for the Leaking Underground Storage Tank Program to clean up contamination from underground storage tank petroleum leaks; $100 million for the Brownfields Program to carry out revitalization projects at brownfields sites. EPA retained $71.5 million for management and oversight activities.
    EPA's OIG reported that, "As of April 2011, EPA reported that it has obligated over 99 percent of its Recovery Act funds. For the State Revolving Fund (SRF) programs, which account for $6 billion of its $7.2 billion Recovery Act funds, EPA stated that all of its SRF funds awarded to states were under contract or construction by the February 17, 2010, statutory deadline. We expressed concerns about EPA being able to meet this deadline, and to their credit, they accomplished this task. Additionally, EPA reported that all of its funds for Superfund projects have been obligated."
    EPA's OIG indicated, "Despite the billions EPA received under the Recovery Act, the OIG has detected limited fraud of EPA funds expended so far. The OIG has received fewer Recovery Act-related hotline complaints than anticipated. Recipient reporting requirements and greater transparency seem to have made a positive impact."
    The GAO issued a separate report entitled, Recovery Act: Preliminary Observations on the Use of Funds for Clean and Drinking Water Projects (GAO-11-642T May 4, 2011). GAO indicated that nationwide, the 50 states have awarded and obligated the almost $6 billion in Clean Water and Drinking Water SRF program funds provided under the Recovery Act and reported using the majority of these funds for sewage treatment infrastructure and drinking water treatment and distribution systems. The funds supported more than 3,000 water quality infrastructure projects nationwide. Since the Recovery Act was passed, states have drawn down $3.1 billion (79 percent) of the Clean Water SRF program funds and $1.7 billion (83 percent) of the Drinking Water SRF program funds provided under the Recovery Act.
    GAO said the states also met the act's requirements that at least: (1) 20 percent of the funds provided be used to support "green" projects, such as those that promote energy or water efficiency; and, (2) 50 percent of the funds provide additional subsidies in the form of loans for which the principal is forgiven, loans for which the repayment is less than the principal (negative interest loans), or grants. In the nine states GAO reviewed, Recovery Act funds have paid for 419 infrastructure projects that help to address major water quality problems, although state officials said that in some cases, Recovery Act requirements changed their priorities for ranking projects or the projects selected.
   In the nine states 24 percent of the funds they received to pay for projects in economically disadvantaged communities, the majority of which was provided as additional subsidies. States reported that the Recovery Act SRF programs funded an increasing amount of full-time equivalent (FTE) positions from the quarter ending December 2009 through the quarter ending June 2010, from 6,000 FTEs to 15,000 FTEs, declining to 6,000 FTEs for the quarter ending in March 2011 as projects were completed. EPA and the states are overseeing Recovery Act projects and funds using EPA's oversight plan, updated in June 2010 in response to recommendations GAO made to specify procedures for oversight.

     The Department of Transportation's (DOT) indicated that ARRA designated $48 billion for new and existing DOT programs to create and save jobs, invest in long-term growth, and improve the Nation's transportation system. Almost 95 percent of DOT's ARRA funds are distributed to FHWA, the Federal Railroad Administration (FRA), and the Federal Transit Administration (FTA) for the construction and maintenance of highway, road, bridge, rail, and transit projects. DOT said the funding had allowed 15,000 projects in all 50 states; providing 82,000 direct job-years of work and over 280,000 job-years in the overall economy considering indirect jobs.

    GAO issued a separate report on DOT funding entitled, Recovery Act: Use of Transportation Funds, Outcomes, and Lessons Learned (GAO-11-610T,  May 04, 2011). GAO indicated that it has previously reported on numerous challenges DOT and states faced in implementing the transportation maintenance-of-effort requirement, which required states to maintain their planned levels of spending over approximately 18 months or be ineligible to participate in the August 2011 redistribution of obligation authority under the Federal-Aid Highway Program. A January 2011 preliminary DOT report found that 29 states met the requirement while 21 states did not. In this report, DOT also discussed how the maintenance-of-effort provision could be improved. With regard to the high speed intercity passenger rail and TIGER programs, GAO found that while DOT generally followed recommended grant-making practices, DOT could have better documented its award decisions.

    Access the Republican website for the hearing including links to testimony and reports, background information and a video (click here). Access the Democrats website for the hearing which includes an opening statement video (click here). [*Water, *Drink, *Transportation]

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