Energy Funds Went Unspent, U.S. Auditor Says

To see how Kentucky’s spending is progressing, visit the Open Door Portal. Efforts need to continue to ensure that federally-allocated money reaches the local communities that need it so badly. Your thoughts and comments welcome.

From the New York Times’ Green Blog:

The recession is lingering, and so is the unspent stimulus money that was meant to help end it.

The latest example is the $3.2 billion that Congress voted in February 2009 as part of an economic stimulus package to simultaneously provide jobs and improve energy efficiency through block grants to states and cities.

Only about 8.4 percent of the money had been spent by the beginning of this month, according to an audit released on Friday by the inspector general of the Energy Department, and it has produced or saved only about 2,300 jobs as of the second quarter of this year.

The program was to provide money for the purchase of better lighting or heating and cooling equipment for buildings like city halls and schools. But it is off to the same slow start as a bigger program that was initiated at the same time to weatherize the homes of low-income people around the country. An audit of that program in February, also by the inspector general, found that only $368.2 million of $4.73 billion, or less than 8 percent, had been spent.

In the new audit, the inspector general, Gregory H. Friedman, found that New York City, which got the biggest award, $80.8 million, had spent only $1.5 million, or less than 2 percent. But that was better than Chicago, which got $27.6 million and spent under $40,000, or 0.1 percent.

The problems Mr. Friedman cited are similar to the ones reported with the weatherization grants: when Congress approved the program, the Energy Department did not have the regulations or the staff to process applications. Local governments lacked the staff to make applications or handle the money they received. And federal money comes with strings attached.

The strings on the weatherization program were rules like one requiring that people spending federal dollars pay the “prevailing wage.” The government had no established number for the prevailing wage for fields like insulation installers.

In the block grant program, the strings are different but just as cumbersome; for example, if a building is landmarked as historic, any physical changes require multiple approvals. And some work requires an environmental impact statement.

“With very good intentions, Congress put in so many controls, so many provisions, that the state and local governments have not been able to spend the money as expeditiously as planned,’’ Mr. Friedman said.

“Before we re-authorize this program or develop additional programs for stimulative effects, we need to consider these situations so they money gets to the streets and people get hired,’’ he said.

The Energy Department has cut some strings; it has increased the size of contracts and subcontracts that states can approve without federal approval in advance from $1 million to $10 million.

As is customary with audits by an inspector general, the report was given in advance to the Energy Department, which had an opportunity to respond. The department said that the program was more successful than the report made it seem because much of the money has been committed to projects. The contractors who will do the work once the approvals were in place can use that commitment to make hiring decisions, it added.

But Mr. Friedman said that a plan to hire is not as good as an actual job.

Kristin Tracz

About Kristin Tracz

Kristin Tracz served MACED’s Research and Policy team from 2009-2012 working on clean energy policy, energy efficiency programs and the Appalachian Transition Initiative. She joined MACED after finishing her Master of Environmental Management degree at the Yale School of Forestry & Environmental Studies. She now lives and works in Washington, DC.