Federal Stimulus and Metro Council

The American Recovery and Reinvestment Act (ARRA) has already been described on this blog as a vast resource for intergovernmental grants. Some of the key initiatives of ARRA are to rebuild infrastructure, create jobs, and invest in transit. In Minnesota, these goals are partially being addressed through new transportation projects. 

Minnesota has  $1.5 billion planned in transportation spending, not including stimulus projects, and Minnesota has received $600 million in stimulus funds for new road and transit projects. You can see the allocation of stimulus transportation spending and oversight below:

Metro Council is acting as an adviser to MNDOT for metro area roads projects, and is overseeing the selection process for transit  investment (p.172-8) in Minneapolis and St. Paul. While the Transit Advisory Board has set forth criteria for transportation spending, Metro Council has identified three key factors that will determine how projects are chosen:

1) Use stimulus dollars to offset operating cost or leverage operating fund

2) Make capital investments that improve operating efficiencies

3) Make capital investments with no or minimal operating tails

One of the key differences between the TAB and Met Council ideals is item number one of the Met Council criteria- to offset the operating costs. This is due to a $61 million operating deficit. While $69 million is expected for urban transit spending in Minnesota, Metro Council is limited in what they can spend on, and cannot  At this point it is too early to determine how the deficit will be offset, but the following projects have been identified as possibilities:

-Replacement buses for Metro Transit and Metro Mobility

-Additional vehicles for the Hiawatha Line to increase capacity

-Additional vehicles for Northstar Commuter Rail

-New Bus garages for bus storage and maintenance

-Park-and-ride expansions

-A bus-only ram on TH169 and Stagecoach Road

While none of these directly address the deficit, it is likely that these were projects that were already planned, and that planned funding for these projects will now be available for other expenses. However, this presents a good case of how the stimulus bill will help the state, but still come short of completely solving some budget issues.

Charter School Reports

The Minnesota Office of the Legislative Auditor has published three different reports on charter schools. The first report from 2003 evaluated charter schools' financial status, the adequacy of financial oversight, and the effectiveness of the state's lease aid program.

The second report from 2008 evaluated the performance, oversight, and accountability of charter schools. Finally, there is an update to the 2008 report. Enjoy...

Federal Stimulus package = Intergovernmental Grants

The stated purposes of the Federal Recovery Act as signed into law on February 17, 2009 are: to preserve and create jobs and promote economic recovery; to assist those most impacted by the recession; to provide investments needed to increase economic efficiency by spurring technological advances in science and health; to invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and to stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases (US Dept of Justice).

Due to the high proportional cost of law enforcement in local government budgets, it is a real possibility that these essential services could be cut as other revenue sources (local government aid, etc) decrease. In order to maintain current levels of service with less revenue many state and local governments may look to increase other more stable revenue sources, such as property taxes. Increasing local taxes obviously counteracts any initiatives that the federal government enacts in order to stimulate the economy, so it must be with this purpose in mind that $2 billion in funding was allocated to the Edward Byrne Memorial Justice Assistance Grant (JAG). The program is designed to provide direct funding to state and local governments to support the following activities:

• Law enforcement programs.
• Prosecution and court programs.
  
• Prevention and education programs.
• Corrections and community corrections programs.
• Drug treatment and enforcement programs.
• Planning, evaluation, and technology improvement programs.
• Crime victim and witness programs (other than compensation)

According to the US Department of Justice, Minnesota is eligible to receive $29,157,427 through this program. This dollar amount is calculated via a formula that determines a minimum base allocation which, based on the statutory JAG formula, can be enhanced by (1) the state’s share of the national population, and (2) the state’s share of the country’s Part 1 violent crime statistics. Once the state funding is calculated, 60 percent of the allocation is awarded to the state, and 40 percent to eligible units of local government. I was not able to find the actual formula that calculates the base, but the information from the federal government indicates that Minneapolis alone is eligible for $4.7 million in funding through this program.
After accepting these funds, recipients are required to provide quarterly financial reports and quarterly updates on the jobs created by the funds received.

Considering the drain that the criminal justice system can be on local government budgets this federal support may be a huge help as states drastically cut local government aid, due to their own budget shortfalls. However, these increased funding levels will only last for four years. Local governments would be wise to make any new programs created with these funds self-sustainable or utilize the next four years to stabilize their own budgets, so the new programs can continue after federal funds end.