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April 19, 2009

How Projects Get Selected for Stimulus Funding

There's almost a trillion dollars of stimulus money available nationally under the American Reconstruction and Reinvestment Act (ARRA). There will be somewhere between $800 million to one billion available in Vermont. Despite these staggering numbers, only a fraction of the projects which people would like to use stimulus money for will actually get ARRA Funds.

What's eligible for funding?

Only certain categories of project are eligible for funding and only so much money is available within each category. Famously, swimming pools and casinos are NOT eligible. Less well-known is the fact that there is no money aimed specifically at school construction, although a small amount of Government Services Fund money could theoretically be allocated for this purpose (see previous post) as can some community development block grants and rural development grants. Likewise there is no money aimed at libraries, museums, and other cultural institutions. Some projects at schools and cultural institutions may, however, qualify as energy-saving. There is money for energy saving projects.

As you may already know, candidates for ARRA funding must be nearly "shovel-ready". The idea is to create jobs now so a project which still needs to get environmental permits may well not qualify no matter how desirable. What you may not know is how long it can take to go through various environmental reviews; twenty years for a major road project is not uncommon. The Vermont Legislature is considering various ways to speed up permitting under Vermont law without sacrificing our environmental values. If these bills become law, Vermont will better be able to use ARRA funding for its highest priority projects. However, no federal environmental laws have been waived nor have their processes been streamlined. For this reason alone most highway projects, for example, have to come from an existing list of projects already well-along in the permitting process.

Even given categorical restrictions and the requirement that projects be shovel-ready, there are still many more projects than dollars in almost every category.

Who decides which projects get funded?

The answer is "it depends".

In some cases various federal agencies will make the funding decisions, usually according to more-or-less objective criteria which they will publish or are in the process of publishing. The Obama Administration has been adamant that "politics as usual" will not play a role in determining how this money is allocated. However, Vermont's congressional delegation as well as the delegation from every other state will try to assure that the rules are written in ways that are most helpful to the states they represent and that their states get at least fair consideration under the rules. The agencies will almost surely try to spread the money across states – in some cases because this is what the law requires; in others because it's customary to do so. Early indications are, however, that merit and not politics will be most important when competitive grants are awarded directly from Washington.

It is already clear that in certain cases like broadband infrastructure, Smart Grid, and E-health, regional cooperative applications will be considered to have greater merit than uncoordinated, stand-alone grant requests. It's part of the job of the Office of Economic Stimulus and Recovery in Vermont to provide coordination in these areas.

In other cases money comes directly to a state and it is up to the state through its own procedures to decide how the money gets allocated. The Douglas Administration, like the Obama Administration, would like to see funds allocated on merit rather than politics. How funds actually get allocated in Vermont depends, however, on what the Governor and the Legislature are able to agree on during the budget process. For example, Governor Douglas has recommended that $10 million dollars be put into a revolving loan fund for zero interest loans to public institutions to use for energy-saving projects. If this is approved by the Legislature, then the Pubic Service Department will draw up objective rules to determine which projects actually get access to these funds (we already know that there will be more projects than funds in this category).

There are some bills in the Vermont legislature which favor specific projects. If these bills become law and the projects are eligible under federal law and regulations, these projects will get priority for scarce dollars.

What doesn't happen is the Vermont Office of Economic Stimulus and Recovery making arbitrary allocations of ARRA funds although, as mentioned above, we are coordinating some competitive grant requests to help the State as a whole. Put bluntly, even if we were convinced that you had the most worthy request or important project in the whole state, the money is not ours to give. We're glad to hear about what you want to do. It's our job to help direct you to the state or federal agency which is making the decision – if any. We may be able to help with advice on how best to make a grant request. If you don't see the answers you need at recovery.vermont.gov, you'll find various ways to reach us at http://recovery.vermont.gov/contact_us.

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