By Sheena Dooley | Iowa Watchdog
DES MOINES – Federal agencies have infused at least $1.9 billion into Iowa’s economy via stimulus dollars during the past three years, with millions more waiting in state coffers.
The money, in theory, was meant to help prop up ailing state economies when the recession hit in 2009.
Three years later, however, a review of federal reports by Iowa Watchdog shows 452 projects – or 38 percent – that received stimulus money under the American Recovery and Reinvestment Act are incomplete. Another 27 have yet to get under way. The unfinished project costs total nearly $1.3 billion, according to Recovery.gov.
Ames Construction, for example, gave Minnesota Republicans Rep. Michele Bachmann and Rep. Erik Paulsen $12,000 in 2010 and $10,000 this year, respectively, according to campaign finance reports on OpenSecrets.org.
The Minnesota-based company has offices across the nation, although none in Iowa, and landed $33.8 million in Iowa stimulus-funded work, making it the sixth largest recipient of the state’s funds.
“There is precious little the state can do,” said David Swenson, an economist at Iowa State University. “We don’t have control over that. As it stands now, states can’t discriminate against a company because of where they are located. It goes to the lowest bidder that meets the specifications gets the job.”
“It all balances out,” he said.
To date, nearly 700 projects have been completed using Iowa stimulus dollars. In return, the state has created an average of 3,215 jobs in each of the past six quarters – the most recent ending March 31, according to federal figures.
Iowa’s unemployment rate sat at 5.2 percent in last week’s most recent jobs report by Iowa Workforce Development. That compares to 6 percent a year ago and a current national unemployment rate of 8.2 percent.
Swenson’s research estimates its cost taxpayers $63,807 for every job created. That figure is based on the total economic impact, including businesses, workers and added demand, he said.
Stimulus dollars flowed to states in the form of expanded unemployment benefits, expanded medical care for the poor, broadened access to welfare and community assistance, saved teaching jobs and education programs, and grants to improve the state’s transportation and infrastructure. It also propped up funding for higher education and pumped dollars into university research programs, which was part of the intent.
“The stimulus propped up the economy by injecting money that provided services that wouldn’t have otherwise been provided,” said Andrew Cannon, a research associate for the Iowa Policy Project, which has studied the impact of federal stimulus dollars in Iowa.
“Doctors and nurses continued to provide services. There is an increase in Medicaid funding. Fewer teachers were cut. It allowed state and local government workers to stay on the payrolls. Those people have more money to spend at the grocery store and on vacation. All of that money circulates into the economy,” he said.
The money came at a time when Iowa was already receiving millions in federal recovery aid to help rebuild after the massive floods of 2008, which devastated Cedar Rapids and other areas of the state.
Most of the disaster funds went to rebuilding communities, tying up much of Iowa’s construction companies. That could be a large reason why the state has so many unfinished stimulus projects, Swenson said.
The Iowa Department of Transportation, for example, was the largest recipient of the state’s stimulus money, with awards reaching $296.2 million, according to federal figures. Department officials, however, have only completed 99 of 239 projects worth nearly $91.8 million – or 23 percent – of its total allocation, the numbers showed.
Belmond, a north central town of 2,300, also has yet to complete its renovation project to the city’s medical center, said Nancy Gabrielson, chief executive director of Belmond Medical Center.
The town was the 13th largest recipient of stimulus money in Iowa, securing a $21.6 million low-interest load that is paying for the expansion and renovation of a medical facility that hasn’t been thoroughly renovated in more than 60 years, Gabrielson says.
Belmond Medical Center has been under construction for the past two years, creating just more than 60 short-term construction jobs, according to federal reports.
Gabrielson called the statistic misleading. For example, the employer will add — at least — 24 permanent jobs because of the additional services the facility can offer once the work is complete, Gabrielson said.
“When we went out to bid, we broke up the project into however many different bid packets because our board wanted to make sure local people and companies had the chance to bid on the work,” Gabrielson said. “It’s been a huge boost to the economy. We absolutely needed this.”