In an effort to figure out what the stimulus package will mean for Philadelphia and the region, we dispatched online reporter Ben Bradlow (email) to try and find out how (or if) the money will find its way here.  In this first of what we intend to be ongoing explanations and observations of the stimulus at work, Ben lays out the very basics about the stimulus funding as a whole.  In the future, we’ll try to look at individual parts and see how they are or are not working for Greater Philadelphia.

Following the money

by Ben Bradlow, WHYY Online

There is a lot of money coming out of the federal government these days. Yesterday, Barack Obama signed a bill authorizing a historically large chunk of this money with the new federal stimulus package.

Let’s admit our self-interest here. We want to know what this bill means for the city of Philadelphia.  When - and where - are we going to see the money?

Shortly after President Barack Obama’s election, Mayor Michael Nutter led a committee of mayors from across the country to submit a list of shovel-ready projects in American cities that could receive federal stimulus funds.  Still, it has long been clear that state governments would be receiving most of the funds.  Alan Berube, a senior fellow at The Brookings Institution, said that this is due to distinct Washington, DC political realities.

“The mayors were up against a couple things. One is just interest group politics in Washington and that transportation has often been dominated by less urban interests, people like the road builders,” he said. “They also faced the obstacle that the purpose of this bill was to spend money quickly. The bias in the bill was to put money into existing programs, not creating new ones.”

So it’s up to Harrisburg to decide what money the city gets.

There are still some places in the stimulus package where cities like Philadelphia have direct access to the money.

Let’s start from the beginning.  If you have anything to do with the public school system you should be seeing some of this money. The federal government will be giving out money allocated by the stimulus package to public school systems themselves for work that falls under the mandate of the bill.

The main work will come in the form of school repairs and related construction projects. This is part of what is called Title 1 spending.

“[Congress] augmented Title 1 spending between ten and fifteen percent.  Philadelphia’s share of that money will go directly to the school district,” Berube said.

Title 1 spending is a rare example of money going directly from the federal government to the city. In other cases, like a transportation project, the fact that the state has control of the money could be a major determining factor as to what ends up happening here in Philadelphia, Berube said.

This means that we don’t know yet exactly where transportation funds, which theoretically could be spent quite heavily in cities, will actually end up.

As Berube explains, “historical experience isn’t totally positive for cities. A lot is going to hang on top line policy decisions like in the case of transportation. Are states going to ‘fix it first’ or are they just going to plow money into road building? If they do the former, cities in big metropolitan areas will get a fair shake.”

Included in Nutter’s “shovel-ready” list were a number of SEPTA-related infrastructure projects, but there has been little word as to the likelihood of funds coming SEPTA’s way. Governor Ed Rendell will receive the funds and decide how to spread the money allocated for transportation around the entire state. Even though Philadelphia is arguably his top constituency, there will be other competing interests angling for those much-needed dollars.

On Feb. 11, Nutter cautioned against expectations that the stimulus funds could somehow help Philadelphia overcome its staggering budget shortfall:

“These dollars are not to fill budget holes. Everyone has made that very clear,” Nutter said tonight. “The theory here is when more people are working, they are paying taxes. Then tax revenues will flow and those dollars will come back to Philadelphia.”

This warning was repeated by his chief of staff, Clay Armbrister, at the first citizen’s budget workshop last Thursday night.

While stimulus funds may not aid in overcoming the city’s budget problems, some money that comes into the city could actually bypass City Hall entirely.

“The thing that gets overlooked that doesn’t go straight to City Hall is all the funding that go to vulnerable families. So increases in food stamps, increases in child care, increases in earned income tax credit. Philadelphia benefits from all of those things because it has a pretty high poverty rate,” Berube said. “One could argue that giving money to poor Philadelphia families is more effective than giving money to the city to give to the families. You’re sort of cutting out the middle man in a way.”

The money bypasses the city government because the funds in these kinds of programs have always been distributed directly through federal agencies.

According to Berube, as the bill morphed from its House version to its Senate version to the current version determined in conference between the two chambers of Congress, cities lost out. A program created last year called Neighborhood Stability Program provided help for people suffering from foreclosed homes. The original House version of the bill set aside $4 billion for the bill, which was cut once the bill reached the Senate.

Though lobbying by mayors like Nutter may have helped address some urban priorities, state governments, often beholden to more rural interests, will, for the most part end up with the final say. “It would be fair to say that Philly would be worse off if we didn’t pass this package,” Berube said. “Could we have passed a package that would have been better for places like Philly? Definitely.”

More information:

WHYY’s arts and culture reporter, Alex Schmidt, checked in with the Greater Philadelphia Cultural Allliance for their reactions to the $50 million in stimulus funding that is directed to the National Endowment for the Arts.

How are your federal tax dollars being spent?  Once the money starts flowing in earnest, you can track it at Recovery.gov, the federal governments attempt to make everything as transparent and accountable as possible.