As Congress hammers out a debt deal that likely will mean huge cuts to states, some California agencies still are sitting on millions of dollars in unspent federal stimulus money from 2009.
A clearly frustrated Sen. Alex Padilla, D-Van Nuys, chairman of the Senate Energy, Utilities and Communications Committee, grilled agency heads at a Capitol hearing yesterday about unspent stimulus funds.
When Republicans in Congress are advocating massive cuts to government spending, Padilla said, "we should not be in the business of giving them low-hanging fruit to cut or sweep back."
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The hearing focused on state audits that found the California Energy Commission and Department of Community Services and Development lagging behind in stimulus spending. According to a July audit [PDF], the Energy Commission had not spent $183 million, or 81 percent, of stimulus money that will expire at the end of April. Another audit [PDF] found that the community services department hadn’t spent $90 million of a 2009 federal grant to weatherize homes for low-income families.
Padilla called the numbers “chilling.”
“Here we are at the 11th hour with millions of dollars in federal funds at risk and, most importantly, hundreds of job opportunities at risk,” Padilla said. “This is a prime example of why the public is increasingly frustrated with our government.”
Heads of both agencies said their departments are ramping up their spending to meet the deadlines.
John Wagner, acting director of the community services department, said federal requirements on stimulus dollars caused big delays at the beginning of the programs.
The state audit of the department found that it stands to lose $37.4 million when the weatherization funds expire. Wagner said that at its improved spending rate, the department would lose only $22 million, and that's expected to decline further.
Wagner also said the state has requested an extension of the federal deadline. He noted that an extension would delay the layoffs that are expected when stimulus funds run out.
"The loss of jobs could be pushed off for a further amount of time to weather the economic downturn even longer," said Wagner. "That would be a side benefit to the extension."
Padilla was not convinced. "The more people that get back to work sooner rather than later, that's the economic recovery we’re talking about," he said.
The audit found part of the funding bottleneck at the local level. Using stimulus money passed on by the state, the cities of Oakland and San Francisco planned to weatherize hundreds of homes by last April 30. By that date, however, the cities had spent very little of their grants and hadn’t completed work on any homes.
The Los Angeles Department of Water & Power, meanwhile, planned to weatherize 806 homes by the end of May. By that date, the department had spent 43 percent of its funds but only completed 9.7 percent of the homes.
Officials at the community services department acknowledged the problems but said all three local agencies are being monitored and showing "measurable progress."
For the Energy Commission's stimulus programs, State Auditor Elaine Howle testified, "We have some very serious concerns about whether a number of these programs are going to get up and running … before the deadline."
Stimulus dollars fund commission programs to provide green jobs training; retrofits of state buildings; and low-interest loans to schools, hospitals and local governments for energy efficiency projects.
Padilla asked the commission's leadership: "At what point do we switch gears here? If we can’t get the money out the door, putting people to work … then the Legislature wants a timely opportunity to redirect those funds."
Robert Oglesby, the commission's new executive director, said the agency had awarded all of the stimulus funds and is monitoring local recipients to make sure they are spent on time. Some funds have been spent, but the state hasn't received the invoices yet, he said. Still, Oglesby acknowledged the mounting challenge.
"There is a great deal of money that has not gone out the door that needs to go out the door," he said.
Oglesby said his staff has redirected some grants away from poorly performing recipients and has requested oversight assistance from the state Department of Finance.
"We want to bring an outside set of eyes in to help us," he said.
Howle said she was disappointed with the agency's progress. She first brought up problems with the Energy Commission's stimulus spending in a December 2009 audit [PDF].
"We’re not seeing specifics," she said. "We would have expected to have seen a plan by now."