Cities Are Selling Stimulus Funds to Each Other


In Los Angeles County, cities are buying federal stimulus funds from each other at deep discounts, turning what was supposed to be a targeted infusion of cash into a huge auction.

It all started when the county’s Metropolitan Transportation Agency decided to hand out $44 million from the federal stimulus package in the form of $500,000 transportation grants to each of the county’s 88 cities. But some cities didn’t have any shovel-ready transportation projects. So with MTA’s blessing, they’re selling the grants to the highest bidder:

 

La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash. Irwindale, population 1,500, also sold its $500,000 to Westlake Village, for $325,000 cash.

 

The city of Rolling Hills, population 1,900, sold its $500,000 share to the city of Rancho Palos Verdes for $305,000 cash. The city of Avalon has reached an agreement to swap its $500,000 with L.A. County.

This is Southern California that we’re talking about–the land of eternal gridlock. MTA could have redirected the money to a nearly infinite list of other transportation projects. But chief planning officer Carol Inge told the Pasadena Star-News that the agency didn’t want to do that because “our board wanted to give every city at least a chance to benefit from the stimulus package.”

I’m sure many cities have higher priorities than transportation. And I would have liked to have seen more direct aid to ailing local governments in the stimulus bill. Still, MTA’s approach strikes me as a bit too creative. What’s next, stimuls money credit default swaps?

UPDATE: After this post appeared, MTA reversed course and invalidated these sales. It now says that the stimulus funds can only be swapped for other county money targeted for transit projects. But this probably won’t end the controversy. MTA is still handing out a half million bucks to all 88 cities in the county, including the tiny Irwindale, population 1,446. That’s $345 per Irwindalian, just for transportation. With that they could hire a worker to dig through the yellow pages and dial up free limos for everyone. H/T to TotalCapitol in the comments.

$500,000 MATCHING GIFT

In 2014, before Donald Trump announced his run for president, we knew we had to do something different to address the fundamental challenge facing journalism: how hard-hitting reporting that can hold the powerful accountable can survive as the bottom falls out of the news business.

Being a nonprofit, we started planning The Moment for Mother Jones: A special campaign to raise $25 million for key investments to make Mother Jones the strongest watchdog it can be. Five years later, readers have stepped up and contributed an astonishing $23 million in gifts and future pledges. This is an incredible statement from the Mother Jones community in the face of the huge threats—both economic and political—against the free press.

Read more about The Moment and see what we've been able to accomplish thanks to readers' incredible generosity so far, and please join them today. Your gift will be matched dollar for dollar, up to $500,000 total, during this critical moment for journalism.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.