Coronavirus Relief Funds Diverted to Pet Projects

Because of course it was.

AP (“Pandemic relief money spent on hotel, ballpark, ski slopes“):

Thanks to a sudden $140 million cash infusion, officials in Broward County, Florida, recently broke ground on a high-end hotel that will have views of the Atlantic Ocean and an 11,000-square-foot spa.

In New York, Dutchess County pledged $12 million for renovations of a minor league baseball stadium to meet requirements the New York Yankees set for their farm teams.

And in Massachusetts, lawmakers delivered $5 million to pay off debts of the Edward M. Kennedy Institute for the U.S. Senate in Boston, a nonprofit established to honor the late senator that has struggled financially.

The three distinctly different outlays have one thing in common: Each is among the scores of projects that state and local governments across the United States are funding with federal coronavirus relief money despite having little to do with combating the pandemic, a review by The Associated Press has found.

The expenditures amount to a fraction of the $350 billion made available through last year’s American Rescue Plan to help state and local governments weather the crisis. But they are examples of uses of the aid that are inconsistent with the rationale that Democrats offered for the record $1.9 trillion bill: The cash was desperately needed to save jobs, help those in distress, open schools and increase vaccinations.

Republicans are already balking at additional money for pandemic relief that President Joe Biden has requested, and programs that seem far removed from ones that directly combat the virus will probably add to the resistance in the GOP.

“They need to give us an accounting,” said Sen. Mitt Romney, R-Utah, who tried unsuccessfully to amend the Democrats’ bill last year to add more limits on how the money could be spent. “Show us how you’ve already spent the money Congress gave you,” he said, adding, “It’s hard to imagine how a four-star hotel is helping to solve the pain of COVID.”

Many of the projects identified by the AP echo pork-barrel spending disasters such as Alaska’s $398 million “Bridge to Nowhere,” which was canceled in 2007 after a public uproar.

But with permissive Treasury Department rules governing how the pandemic money can be spent, state and local governments face few limitations. New Jersey allocated $15 million for upgrades to sweeten the state’s bid to host the 2026 World Cup. In Woonsocket, Rhode Island, officials allocated $53,000 for a remodeling of City Hall.

“Outrageous” and “just nuts” is how Rep. Abigail Spanberger, D-Va., described some of the expenditures, which she said were an affront to responsible local governments.

“Our hospitals were overwhelmed because of the pandemic and somebody now has a hotel somewhere?” she added.

Included among the projects and expenditures identified by the AP:

—$400 million to build new prisons in Alabama, accounting for nearly one-quarter of the total aid the state will receive through the program.

—tens of millions of dollars for tourism marketing campaigns in Puerto Rico ($70 million), Washington, D.C. ($8 million) and Tucson, Arizona ($2 million). The city of Alexandria, Virginia, also announced it would spend $120,000 to give its tourism website a makeover.

—$6.6 million to replace irrigation systems at two golf courses in Colorado Springs.

—$5 million approved by Birmingham, Alabama, to support the 2022 World Games. The event features niche sporting contests such as DanceSport, korfball and flying disc.

—$2.5 million to hire new parking enforcement officers in Washington, D.C.

—$2 million to help Pottawattamie County, Iowa, purchase a privately owned ski area.

—$1 million to pay off overdue child support in St. Louis. A city memo states that owing child support stops some people from looking for work because the overdue payments are garnished from paychecks; the program would “empower individuals” by paying down a portion.

—$300,000 to establish a museum in Worcester, Massachusetts, honoring Major Taylor, a famed Black bicycle rider from the turn of the 20th century known as the “Worcester Whirlwind” who died in 1932.

Liz Bourgeois, a spokeswoman for the Treasury Department, called the program a success that allowed state and local governments to “recover from financial distress” and “achieve their own strategies for restoring jobs and industries hit by the pandemic.”

“Ultimately local governments are accountable to their communities on their decisions on how best to use their funds,” Bourgeois said in a statement.

In Broward County, officials defended their planned 29-story, 800-room hotel, which will be owned by the county but operated by a private management group.

They also contest whether federal money is technically being used for the project. Broward County initially routed $140 million in federal coronavirus aid to the project, which ran against Treasury Department rules that generally bar spending the money on large capital projects.

To get around the prohibition, the county adopted a common workaround.

The agenda from a Feb. 22 county board meeting details how: In a back-to-back series of unopposed votes, commissioners clawed back the federal money they had given to the hotel. They then transferred it to the county’s general fund, describing it as a federal payment to cover lost tax revenue, which is an acceptable use. Then the cash was transferred from the general fund right back to the project.

County Administrator Monica Cepero insisted “no federal funds will be used to pay any of the cost of developing the Hotel Project.”

“The County has reviewed the Treasury guidance and modified its use of (the) funds,” she said in a statement.

Some lawmakers in Congress, however, are nonplussed.

“They are basically money laundering funding that is meant to help communities that are suffering,” said Spanberger, who called for more oversight.

Local officials in New York’s Dutchess County, home to the $12 million minor league stadium project, said in a statement that the expenditure was “completely and absolutely consistent” with Congress’ intent for the money.

“It’s ironic that this criticism emanates from the same congressional members who have brought back pork barrel earmarks,” said Dutchess County Executive Marcus Molinaro.

[…]

Even in cases where local and state officials may have violated the spending rules, the sheer volume of money pumped out presents a challenge for government oversight offices that are often understaffed and poorly funded.

“The amount of money that went out was so massive and so far beyond anything that has ever been spent in our country before, that our capacity to audit every dollar spent is clearly stretched,” Romney said.

But groups that lobby on behalf of local governments in Washington say the spending rules were written permissively in order to give as much flexibility as possible.

[…]

The new findings track closely with AP’s previous reporting, which found in October that states and large cities had spent just a tiny fraction of their relief funding six months after it was approved. That was despite their pleas for the emergency cash when Congress was still debating it.

Some school districts also had so much extra federal pandemic cash that they spent it on new sports stadiums, arenas and football turf. In other instances, states used discretionary funding to further school choice initiatives that they had failed to get through their legislatures.

Offhand, all of these expenditures seem incredibly dubious. The report says that these projects amount to a small percentage of the overall funds allocated but doesn’t give us concrete numbers.

Regardless, this is a consistent problem when the federal government hands out massive amounts of money in crises: “shovel-ready” projects to absorb those funds in short order are hard to come by. So, quite often, the money either sits there, doing no good at all in getting us out of the crisis, or it gets essentially wasted on seemingly silly projects that are ongoing.

The kicker is amusing:

Biden, meanwhile, has said his administration urgently needs more money to pay for things that are directly related to the pandemic.

Without it, the White House says, the administration won’t be able to replenish depleted stockpiles of vaccines and therapeutics. Republican say winning their support will hinge on it being paid for with money that was already appropriated.

A deal that leaders struck this month would have been paid for by recouping some aid intended for states. But the agreement fell apart after several governors objected and rank-and-file House Democrats rebelled.

At least one Democrat sought to raise campaign cash off her opposition to clawing local money back.

“We had a bit of a fight when they tried to take money away from Michigan,” reads a fundraising email from Michigan Rep. Debbie Dingell. “I was not going to let the Midwest get harmed. We won.”

The economic crisis that sparked this mad rush of spending is over. If anything, we have a new crisis of runaway inflation partially caused by said spending. But, quite naturally, politicians want the money that they think they had coming to them.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. SC_Birdflyte says:

    There’s a contributing cause to these rolling fiascos: most state and local governments don’t do an adequate job of assessing their ongoing needs and the resources needed to meet those needs. When the heavens suddenly rain cash, the money is likely to go to those who are quickest to grab it, not to the most urgent needs. My wife wrestled with this issue for over a quarter-century in local government.

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  2. James Joyner says:

    @SC_Birdflyte: That makes sense. My general takeaway from the story is that, while there’s clearly some corruption in all of this, it’s mostly a function of throughput and the inability to quickly execute. Honestly, if we want to inject cash into the economy quickly, it probably makes more sense just to give it to people.

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  3. DK says:

    @James Joyner:

    Honestly, if we want to inject cash into the economy quickly, it probably makes more sense just to give it to people.

    Big facts.

    We are all socialists now.

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  4. Jen says:

    @James Joyner: Well, regarding the “just give cash to people,” my husband has an acquaintance/friend-of-a-friend who applied for and received covid relief funds, which the acquaintance then used to pay off his personal credit cards. So there’s likely a fair amount of fraud on the individual side of this as well.

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  5. Scott says:

    I wonder how many states and local governments used the cash for normal, everyday expenditures and then cut taxes.

  6. Sleeping Dog says:

    There’s a regular click-bait survey that asks the question, “Should stimulus relief funds go to illegal immigrants?” If the purpose is economic stimulus, then the answer should be, Yes, after all the purpose was to get/keep the economy moving, so it doesn’t matter who spends the money and on what.

    As unsatisfying as the projects noted are, the effect was to get the money circulating, so from the Fed Gov POV, that should be adequate. Now, from a local citizenry POV, such actions indicated a failure on the part of the local government to spend money in a manner that provides the greatest benefit for the largest number of citizens.

    An individual, applying for a grant to pay salaries or support a business, who then diverts that grant money to buy himself/herself a Ferrari is committing fraud.

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  7. Sleeping Dog says:

    @Scott:

    I believe the administration has been sued by a few R states who want to do just that. The grants came with a string attached that said the money couldn’t be used for tax relief.

  8. gVOR08 says:

    To the extent it’s supposed to pay for COVID treatment and mitigation, that’s bad. To the extent it’s supposed to be stimulus, it’s Ok if they bought beer.

  9. Gustopher says:

    Given that we don’t have the funds for buying a second round of boosters, or the therapeutics — that lovely pill that cuts the risk of hospitalization by 90% — and new variants will be appearing, I think this is a time where we have to look forward and just shovel more money in.

    And, once we have completed that task that should take about an hour, then look back and investigate how the previous infusions were misspent, and whether safeguards need to be added, and whether things should be referred to the justice department.

    Right now, I don’t care about “$6.6 million to replace irrigation systems at two golf courses in Colorado Springs.” It seems wrong, but it’s a drop in the bucket, and all human endeavors have some degree of corruption and error. I care that hospitals are overcrowded and that people are dying unnecessarily and that I might eventually be one of them.

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  10. Skookum says:

    One of my concerns, besides money being spent for developers’ benefit rather than constituents quality of life, is that I see Republicans spending the money without acknowledging that it was the Democrats who made the investments in local communities possible.

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  11. James Joyner says:

    @Skookum:

    Republicans spending the money without acknowledging that it was the Democrats who made the investments in local communities possible.

    Tons of coronavirus money went out when McConnell was running the Senate and Trump was signing the bills.

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  12. JohnMcC says:

    @DK: Helicopter money, they used to call it.

  13. Skookum says:

    Tons of coronavirus money went out when McConnell was running the Senate and Trump was signing the bills.

    True, but, in general, Democrats supported the spending. Not one Republican supported the American Rescue Plan, yet they are sure enjoying spending it to get kudos in their legislative districts.