Spending Stimulus Money Easier Said Than Done

Washington, DC, March 17, 2009--The federal government wants the states to begin spending stimulus money as quickly as possible but rules about how to spend the money are still being formulated and the states are hesitant to proceed.

States wanting desperately to tap into the new money are having trouble keeping track of the application deadlines and requirements in the 400-page stimulus bill. Governors must sign pledges saying they'll spend the money appropriately, but the administration is still figuring out what the rules are.

Hanging over all of this are two threats. The first was written into the law, saying that if states miss a deadline or don't spend the money fast enough, they lose the cash. The second was delivered by Vice President Joe Biden, who said last week that if states misspend the money, "don't look for any help from the federal government for a long while."

Yet figuring out how to spend the money correctly isn't easy. For example, the Energy Department is giving out money to make homes energy-efficient, and the work must begin soon, but there aren't enough trained workers for all the remodeling jobs.

"There's mass confusion still at this stage," Gov. Arnold Schwarzenegger said.

At a conference for state officials at the White House complex last week, a representative from Utah asked Obama's budget officials what data they would be required to collect from contractors. He was told to expect an answer within the next several weeks.

But the governor was preparing to sign a contract. Should he delay the project?

Even the watchdogs have new roles. Earl Devaney, the chief auditor overseeing the stimulus spending, said he can't be a traditional inspector general who roots out and exposes fraud. He has to prevent it.

Devaney and other watchdogs said they need to hire new investigators. Some agencies are recruiting auditors out of retirement. Ideally, Devaney said, he would have started working on this a year ago. Instead, he's had about three weeks.