15 March 2009

Cities V States In Battle Over Stimulus Money

As Originally Posted to The Wall Street Journal

SEATTLE -- As the first money from the federal economic-stimulus package begins to flow, a showdown between Washington-state lawmakers and Seattle officials over road projects could augur a wave of battles around the country over how stimulus dollars are spent.

The fight started earlier this week, when Washington legislators unveiled a plan for spending the state government's $341 million share of the combined $492 million in federal highway aid that will go to state and local jurisdictions in Washington. The list -- long on smaller projects such as road repaving and replacement of traffic cameras -- didn't include funding for projects in the city of Seattle, the heart of the state's economy and population.

Seattle Mayor Greg Nickels blasted state lawmakers for omitting two major road projects in the city that he argues are "shovel ready" and that he said will create more construction jobs and continuing economic benefit to the state.

"This is not what the president intended," Mr. Nickels said Tuesday in a speech to a Seattle business group. "This is bad policy and bad economics. It disrespects the voters and taxpayers of this great city and is an insult to the companies that contribute so much to the state's economy."

Mr. Obama has repeatedly warned governors and mayors that they must spend money from the federal stimulus package quickly and efficiently, and not use it for questionable pet projects.

Most states already have a long list of projects eligible to receive federal stimulus money, which the Department of Transportation says it may start distributing as soon as Tuesday if governors certify that their states will use the funds properly. But the process of coming up with a final roster varies among the states; in some, a transportation commission makes the final decision, while in others, like Washington, state legislatures get more directly involved.

Tension has been rising -- especially between big-city mayors and state officials -- in locales such as New York, Florida, Missouri and Michigan over how to spend the roughly $200 billion of stimulus money that will flow through the states and over what role the legislatures will play in divvying up the funds. Across the country, local officials are disappointed that projects in their areas -- such as a new highway in Laredo, Texas -- haven't been included on the stimulus list.

"We want to make sure that the metropolitan areas are getting their fair share," Los Angeles Mayor Antonio Villaraigosa told reporters in Washington, D.C., last week. "What we don't want is states building roads that connect the ducks to the geese, and not people to goods, the way metropolitan areas do."

Nowhere does the fight so far seem as fierce as in Washington state, which ultimately will get about $492 million from the $26.8 billion of highway funds included in the stimulus package. Of that, $151 million will go to local jurisdictions, including roughly $70 million that is specifically set aside for the Seattle region under a provision that directs money to urban areas.

But Seattle was counting on roughly $75 million more to help fund two projects that the city argues will create 1,300 jobs, including the rebuilding of a congested road called Mercer Street into a major thoroughfare leading to the city's expanding South Lake Union neighborhood. The area is home to new facilities for the Bill & Melinda Gates Foundation, a University of Washington School of Medicine research facility and other employers.

In an interview in his Seattle office, Mr. Nickels said the state can get more-lasting economic value for federal dollars in the city than it can with the projects it announced elsewhere. "I'm not saying they're made-up projects, but resurfacing or chip-sealing streets that carry 7,000 cars a day just doesn't match up in terms of what value it's returning," he said.

Critics contend that many of the small projects on the legislature's list will be handled by government road crews, and so will not create much in the way of economic stimulus. "They'll be using existing resources, especially for the small ones," said Michael Ennis, director of the Center for Transportation at the Washington Policy Center in Olympia. "I question whether it will create any jobs."

Judy Clibborn, chairwoman of the state's House transportation committee, which put the list of transportation projects together, said the legislature has always intended to use its portion of federal aid for state projects. She questions whether Seattle's projects are close enough to being shovel-ready to meet requirements for such money. With its $341 million in federal funds, the state said it can create 3,300 jobs. Ms. Clibborn, a Democrat from Mercer Island, said "paving projects are not glitzy" but still essential. "This is a good, fast way to get money on the ground," she said.

David Postman, a spokesman for Vulcan Inc., a company owned by Microsoft Corp. co-founder Paul Allen that is a major landowner in the area around the proposed Mercer Street project, said state lawmakers have "essentially turned transportation planning on its head by declaring all these small repaving and pothole-filling projects as state projects." Meanwhile, Mr. Postman said state lawmakers are classifying as local proposals the two major Seattle road projects.

Washington Gov. Chris Gregoire said she is working with the legislature to put Seattle road projects on the list of funding from the state's share of the federal stimulus package, but lawmakers said they won't budge on the issue. "The list will not change," Ms. Clibborn said.

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