The U.S. Congress passed the $787 billion American Recovery and Reinvestment Act (ARRA) last February to jump start the economy and help create and retain jobs but only 35% or $17.6 billion of the estimated $85 billion that California is expected to receive has been spent to date.
California has received approximately $32.7 billion of the estimated $85 billion in ARRA benefits that will eventually be allocated to California, but only 54% of the money awarded has been spent. The chart below shows California’s estimated allocation, the amounts awarded and expended, and the percentage of the state’s award that has been expended by spending category. (Note: the remainder of California’s $85 billion in benefits will come in the form of tax benefits)
Nationwide, just over one quarter of the ARRA funds have been dispersed by federal agencies, including $92.8 billion of the $288 billion total for tax benefits, $73.3 billion of the $275 billion total for contracts, grants, and loans, and $102.8 billion of the $224 billion total for entitlements, according to the federal government.
The funds are dispersed among 28 federal agencies, with each agency determining how to allocate their funds to states and local agencies and directly to schools, hospitals, contractors, or other organizations. Recipients or sub-recipients are federally mandated by Section 1512 of the act to report jobs created or retained through a variety of different formulas.
The California Budget Project (CBP) has recently completed its own analysis of the impact and use of ARRA funds in California. The CBP analysis is available by clicking here.
Some California Departments Risk Losing ARRA Funds
The Joint Legislative Audit Committee held a hearing in January to examine the expenditure of stimulus dollars in California. The State Auditor’s office found that the California Energy Commission (CEC) has been alarmingly slow in spending stimulus money, with the CEC only having contracted out $40 million of the $226 million in stimulus dollars awarded. Furthermore, none of the money contracted to sub-recipients has been spent.
“The Energy Commission continues its slow pace in implementing the necessary processes to obligate the Recovery Act funds, the state is at risk of either having the funds redirected by the U.S. Department of Energy or awarding them in a compressed period of time without first establishing an adequate system of internal controls, which increases the risk that Recovery Act funds will be misused,” stated State Auditor Elaine Howle in a letter to the Governor.
State Auditor Howle has also noted that the California Department of Community Services and Development is at risk to lose $93 million in ARRA funding if important federal milestones are not met by September. California was awarded $186 million under the Department of Energy’s Weatherization Program.
Despite being awarded the first installment of $93 million in June 2009, as of January 2010, none of these funds had been dispersed. “Delays in program implementation make it unlikely that Community Services will attain the performance milestones,” states a report by the State Auditor’s Office, which notes that it seems unlikely that California will receive its remaining $93 million ARRA allocation.
One significant milestone for meeting federal guidelines is that the state must weatherize 30 percent of 50,080 (15,024) homes in the state’s approval plan by September, according to the report. To read the Audit by the Bureau of State Audits click here.
Summary of ARRA Spending in California
KC Fiscal Focus has compiled a summary of federal stimulus money allocated to California. The list of projects below is not intended to be comprehensive in nature and was produced from the best available information.
$2.3 Billion for High Speed Rail – In January the Governor announced that California had received $2.3 billion of the $8 billion in ARRA funding that Congress allocated for high-speed intercity rail.
California received more funding than any other state. The Governor credited the award to California being further along in planning than any other state receiving federal funding. California’s high-speed rail system will stretch over 800 miles, from Sacramento to San Diego, and will be capable of travelling 200 plus miles per hour. Construction of the project will likely start in 2011 and is estimated to create 160,000 jobs in construction and operations, according to the California High Speed Rail Authority. Once completed it is estimated that California’s high-speed rail will create 450,000 jobs.
California’s high-speed rail will operate without an operational subsidy. The project’s planning and engineering phases have been ongoing for over 13 years. In 2008, voters passed Proposition 1A, a $9.95 billion high-speed rail bond act. To learn more click here.
Governor Signs Race to the Top Application for $1 Billion in Potential Federal Education Funding – Last July, President Obama and Education Secretary Duncan announced the Race to the Top Initiative – a competitive national discretionary federal grant program for education. At the time California was ineligible for the program. Last August, Governor Schwarzenegger proposed reforms, which were introduced as SBX5 1, to make California eligible. By January, the Legislature had passed a number of reforms that made California eligible for Race to the Top funds.
In January, the Governor signed California’s Race to the Top application for $4.35 billion in total federal funding available under the race to the top initiative. A successful application could be worth as much as $1 billion for California, according to the Governor’s Office. For a list of chaptered legislation click here. Recent reports indicate that California’s application for Phase #1 of the Race to the Top funding was rejected by federal officials but the state is still eligible to apply for Phase#2 of the funding.
$2 Billion in Funding for Highways – Last September, the Governor announced that California has obligated $2 billion in federal funding to transportation projects in the state. To view a list of 620 projects that have been fully obligated in California click here.
$800 Million for Affordable Housing Projects – In January, State Treasurer Bill Lockyer announced the final distribution of $800 million in stimulus funds for affordable housing projects across the state. The funds are administered by the California Tax Credit Allocation Committee (CTCAC), chaired by Treasurer Lockyer. The funds have been used to help build 9,600 affordable units and to create 24,000 jobs in 34 counties, according to the Treasurer’s Office.
$700 Million for Water Quality Improvement Projects – Last October, the Governor announced that California had received $717 million for 160 water quality improvement projects across the state. For a full list of water projects county-by-county click here.
$535 Million Federal Loan for Construction of New Solar Energy Plant – Last September, the Department of Energy finalized a $535 million loan to Solyndra Inc, a solar panel manufacturing company based in Fremont, California. Construction of the new solar panel plant is estimated to create 3,000 jobs and eventually contribute to 1,000 employed directly or indirectly by the company.
$400 Million to Help Unemployed Californians – Last April, California received $415 million in federal ARRA funding to assist California’s unemployed. The amount doubles the amount of Workforce Investment Act funds the federal government allocates to California annually. The funds are distributed by the Employment Development Department.
$318 Million to Neighborhoods Hit by Foreclosures – In January, the Governor announced that $318 million had been awarded to California under the federal Neighborhood Stabilization Program (NSP). The funds can be used to acquire land and property, demolish or rehabilitate abandoned properties, and offer down payment and closing cost assistance to low or middle income homebuyers. For a list of non-profit and local government agency recipients click here.
$175 Million for Smart Grid Energy Projects - Last November, the Governor announced that California received $175 million from federal funds from the U.S. Department of Energy’s Smart Grid grant program. “I applaud President Obama for investing in a national smart energy grid that will help reduce electricity demand and increase accessibility to clean, renewable energy sources like wind and solar around the nation,” the Governor said. For a full list of recipients statewide click here.
$170 Million for Transit Operators – Last July, the U.S. Department of Transportation’s Federal Transit Administration approved $170 million in grant funding to 11 California transit operators. For a full list of operators and entities that received grants click here.
$150 Million To Prevent Homelessness – Last July, California received $150 million for 70 communities through the federal Housing and Urban Development Department. These funds must be used for short or medium term rental assistance, housing relocation, and stabilization services including housing services and credit repair, among other things, as designated by the federal government.
$75 Million for Clean Energy Training Program – Last July, the Governor announced the Clean Energy Workforce Program that would train or retrain 20,000 workers to build a capable workforce to meet California’s climate change goals, and to better prepare California’s workforce for the economy of the 21st century. The investment of $75 million marks the nation’s largest green training program.
$71.6 Million for Federal Education Technology – Last August, State Superintendent of Public Instruction Jack O’Connell announced the California received $71.6 million from the Department of Education to integrate technology into instructional development.
$68 Million for Weatherization of Homes for Low-Income Families – Last October, the Governor announced that California had been awarded $68 million through the U.S. Department of Energy for California’s low-income Recovery Act weatherization program. Families that are 75 percent below the state median income are eligible. The funds will help nearly 50,000 families decrease their energy bill annually on average by $350, according to the Governor’s office. For a full list of recipients click here.
$51 Million for Clean Water Projects – The State Water Resources Control Board has announced $83 million in funding for clean water projects of which $51 million came from ARRA funding. The funds are in the form of grants and zero interest and low-interest loans, according to the Board. For a list of recipients click here.
$50 Million for Emergency Preparedness – Last September, California received $50 million for emergency preparedness from the ARRA. Grants were made directly to local entities by the Department of Homeland Security, according to the Governor’s office. For a full list of local government recipients click here.
$34 Million for Transit Grants – Last September, California received $34 million in ARRA transit grants. These funds are federally designated to promote public transportation in rural areas. The grants are distributed through Caltrans to 77 rural transit agencies for 141 projects statewide.
$31.1 Million for Coastal Restoration Projects – Last June, the U.S. Department of Commerce Secretary Cynthia Bryant announced $167 million in restoration projects in 22 states and two territories. California received $31.1 million for nine projects. For a full list of projects statewide click here.
$26.5 Million in Clean-Air Grants for Southern California – Last October the Governor announced that Southern California had been awarded $26.5 million in clean air grants. These grants will be used to retrofit diesel engine vehicles, in the Southern California air basin, which includes Los Angeles, Orange, San Bernardino, and Riverside counties.
$25 Million to “Green” State Buildings – Last October, the Governor announced $25 million to retrofit state buildings to make them more energy efficient. The Department of General Services will administer the funding, which was awarded by the California Energy Commission. In 2004, Governor Schwarzenegger issued California’s Green Building Initiative. The initiative requires the state to reduce grid-based energy use by 20 percent by 2015, according to the Governor’s office.
$17.8 Million for Data Centers and Telecommunications Industry – In January the California Recovery Task Force announced that California companies were awarded 17.8 million to improve efficiency in data processing, data storage, and telecommunications, according to the Governor’s office. For a full list of ARRA recipients click here.
$15.5 Million to Clean Contaminated Tank Sites – Last July, the State Water Resources Control Board received $15.6 million for the Environmental Protection Agency to clean up petroleum contamination from leaking underground storage tanks at abandoned or orphaned properties. There are approximately 150 orphaned properties in California, most of which were former gas stations, according to the Board.
$11 Million for Jobs in Growing Industries – In January the California Recovery Task Force announced that California had received $10.7 million in federal economic stimulus to provide 2,100 Californians with training in skills in a wide variety of industries. Full a full list of recipients click here.