Thursday, February 19, 2009

Prepare for the stimulus

By Bethany Jaeger, with Jamey Dunn contributing
Jack Lavin prefers not to be called this state’s “stimulus czar,” but his first two days on the job as Gov. Pat Quinn’s chief operating officer (corrected) have been dominated by projections of the amount of money Illinois will capture from the $787 billion federal stimulus package.

But Lavin also responded to concerns that his appointment could be clouded by his past ties to former Gov. Rod Blagojevich and convicted felon Tony Rezko. Rezko was one of the people who recommended Lavin for his previous job as director of the Illinois Department of Commerce and Economic Opportunity during Blagojevich’s administration. Lavin and Quinn reportedly have been friends. Lavin pointed to his record. Here’s what he had to say:

I worked for those two men. They made some bad decisions. I had no part in any of those decisions, and I think my track record at DCEO speaks for itself. And it was a track record of working with business leaders, labor leaders, local governments, local mayors, legislators on both sides of the aisle, the congressional delegation. If you ask them, they will all say that we treated people with respect and integrity. We returned their calls, and that’s just the kind of thing and the kind of collaboration and partnership that we had at DCEO that we need now across all agencies, and working with the legislature, to be on the road to economic recovery.

Lavin testified to a special Senate committee this evening that Illinois could receive about $7 billion for programs and state operations, as well as about $2 billion for transportation-related and capital projects.

While the National Governor’s Association and the National Conference of State Legislatures ranks Illinois 6th in the nation for the amount of money it's estimated to receive in stimulus funds (projected to be about $8.8 billion), it’s clear that the incoming money won’t stretch far enough to cure the state’s $9 billion budget deficit next fiscal year. Estimates also are very fluid and vary.

The anticipation of the federal funds sparks a few concerns among legislators. 1) Lawmakers fear that the essentially one-time stimulus funds will build expectations and a false sense of hope that the state could maintain the increased funding levels once the federal money runs run out. 2) It’s widely acknowledged that the stimulus money could help, but it’s not even close to the amount of money that the state and service providers need to completely heal from the recession and consecutive years of deficits. 3) State agencies, particularly the Illinois Department of Transportation and the Illinois Environmental Protection Agency, are concerned about having enough staff on hand to handle stimulus-funded projects. Both said they could hire temporary workers or consultants to get through increased work load.

Lavin said while those concerns are valid, the stimulus package is designed to plug budgetary holes and avert layoffs, particularly in education. And then, in theory, as the state’s economy begins to recover, the state would be able to pay for some of these ongoing costs and new programs. (Some of the stimulus money will help expand or fund existing programs by using existing funding formulas, while other portions will create new programs.)

Higher education officials also expressed the concern that the $2 billion in stimulus funds could lead to a game of shuffle. Judy Irwin, executive director of the Illinois State Board of Higher Education, said there’s a possibility that money could be cut from education in the state budget to make up for shortfalls in other state operations, and then the federal stimulus money would be used to fill in the cuts to education. If that happened, schools would end up not getting much more money than they do now, she said.

Republicans and Democrats voiced concerns that schools in their home districts are expecting large funding increases that they may never see. “The frustration is that there really isn’t going to be a lot of money. …While it looks like there’s a lot of money going to schools, it’s really not going to be there,” said Sen. Dave Syverson, a Rockford Republican.

We’ll have much more about the details of the stimulus funds and how the state decides to divvy up the money. In the meantime, here’s a quick list of highlights, provided by Lavin’s testimony. Also, the state on Friday will launch a stimulus-specific Web site:

General stimulus highlights for Illinois
About $7 billion for programs and state operations, according to Lavin’s estimates.
That includes funding for existing programs, using existing funding formulas:
  • $2.9 billion for Medicaid
  • $2 billion for school aid
  • $110 million for workforce investment programs (to help people get trained to take on another job)
  • $276 million for “green” jobs and weatherization programs
The stimulus also could bring in about $2 billion for infrastructure and capital, including:
  • $935 million for rebuilding highways and bridges
  • $371 million for transit assistance
  • $260 million for wastewater and clean drinking water
  • $222 million for public housing
  • $24 for education technology
  • $110 million energy programs, some of which can be used for operations and some of which can be used for capital
The state also will have a chance to compete for grants, including through the Department on Energy. That’s where Mattoon could compete for funding to rekindle the FutureGen project that got scrapped under President George Bush last year. Other projects of homeland security, broadband infrastructure and Army Corps of Engineers also could be eligible for grants.

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