[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009: THE ROLE OF STATE
AND LOCAL GOVERNMENTS
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
APRIL 21, 2009
__________
Serial No. 111-34
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee LYNN A. WESTMORELAND, Georgia
GERALD E. CONNOLLY, Virginia PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of BRIAN P. BILBRAY, California
Columbia JIM JORDAN, Ohio
PATRICK J. KENNEDY, Rhode Island JEFF FLAKE, Arizona
DANNY K. DAVIS, Illinois JEFF FORTENBERRY, Nebraska
CHRIS VAN HOLLEN, Maryland JASON CHAFFETZ, Utah
HENRY CUELLAR, Texas AARON SCHOCK, Illinois
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------
------ ------
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Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on April 21, 2009................................... 1
Statement of:
Gilchrist, Timothy, senior advisor for infrastructure and
transportation, Office of Governor David A. Paterson....... 19
Grannum, Colvin W., president, Bedford-Stuyvesant Restoration
Corp....................................................... 53
Robinson, David G., associate director, Center for
Information Technology Policy, Princeton University........ 64
Skyler, Edward, deputy mayor of operations for the city of
New York................................................... 29
Thompson, William C., comptroller, city of New York.......... 72
Letters, statements, etc., submitted for the record by:
Gilchrist, Timothy, senior advisor for infrastructure and
transportation, Office of Governor David A. Paterson,
prepared statement of...................................... 22
Grannum, Colvin W., president, Bedford-Stuyvesant Restoration
Corp., prepared statement of............................... 56
Issa, Hon. Darrell E., a Representative in Congress from the
State of California, prepared statement of................. 14
Robinson, David G., associate director, Center for
Information Technology Policy, Princeton University,
prepared statement of...................................... 66
Skyler, Edward, deputy mayor of operations for the city of
New York, prepared statement of............................ 31
Towns, Hon. Edolphus, a Representative in Congress from the
State of New York, prepared statement of................... 5
Watson, Hon. Diane E., a Representative in Congress from the
State of California, prepared statement of................. 81
THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009: THE ROLE OF STATE
AND LOCAL GOVERNMENTS
----------
TUESDAY, APRIL 21, 2009
House of Representatives,
Committee on Oversight and Government Reform,
Brooklyn, NY.
The committee met, pursuant to notice, at 10:10 a.m., at
Brooklyn Borough Hall, 209 Joralemon Street, Brooklyn, NY, Hon.
Edolphus Towns (chairman of the committee) presiding.
Present: Representatives Towns, Kucinich, Welch, Issa and
Platts.
Staff present: Katherine Graham, investigator; Mike
McCarthy, deputy staff director; Jesse McCollum, senior
advisor; Jenny Rosenberg, director of communications;
Christopher Staszak, senior investigative counsel; Lawrence
Brady, minority staff director; Frederick Hill, minority
director of communications; Adam Fromm, minority chief clerk
and Member liaison; Seamus Draft, minority deputy press
secretary; and Christopher Hixon, minority senior counsel.
Chairman Towns. We come to order. We're delighted this
morning to be at Borough Hall, and of course the borough
president of Brooklyn is here. And we would like for him to
have an opportunity to welcome the Members to the great Borough
of Brooklyn. Those of you that reside in our city do know his
name. I don't have to introduce him in any way. All you have to
do is just go someplace and say ``Marty Markowitz.''
[Laughter.]
Mr. Markowitz. Thank you. Thank you very, very much. Of
course, welcome to--right now we're called the Republic of
Brooklyn.
Actually, my name is Marty Towns Markowitz. [Laughter.]
Your colleagues should know, for us in public service here
in Brooklyn, we all wish we were related to Ed; and I have to
tell you that perhaps he's truly the gold standard in our
Borough. So, thank you, Ed, Congressman, very, very much.
And certainly, I want to welcome Deputy Mayor Edward
Skyler. Many people say that he bears an uncanny resemblance to
me, I have to tell you. And let me tell you a part of it is his
height. If I was his height, I'd definitely be his weight, am I
right?
Also, New York City Comptroller Bill Thompson and Timothy
Gilchrist, a senior advisor to Governor Paterson in
construction and transportation. And Colvin Grannum, it's good
to see you are here as well, president of the Bedford
Stuyvesant Restoration Corp. And David Robinson, associate
director of the Center for Information Technology Policy at
Princeton University.
I can't think of a better person than Ed--Congressman
Towns--to chair the House Committee on Oversight on Government
Reform. I think you can all agree that this is one of the most
important jobs in Congress at this moment.
In this day and age when every dollar counts, and you all
know that, we need someone like Congressman Towns to make sure
that the government spends our money wisely, along with your
colleagues.
And if there's one thing that we all agree on, the American
Recovery and Reinvestment Act, it is that this money needs to
be spent now to give to our community a jump-start, no doubt
about it. But it also needs to be spent well, so that we can
get our economy back on the right track once and for all, and
make sure that every penny allocated is used for the stated
purpose.
We go in uneasy and unsettling times but, please rest
assured, in my opinion of course, that after a long 8 years of
George W. Bush, we finally have in the White House a President
who understands that our Nation exists on the engines of
economic development of all nations.
And we are fortunate that President Obama has sent
Congressman Towns to make sure that fiscal responsibility
returns in our Federal spending policy process.
So now, Congressman Ed Towns, thank you for inviting me and
your fellow congressional Members to this event. Thanks.
Chairman Towns. Thank you. And thank you for welcoming us
to Borough Hall. Thank you. Thank you so much.
[Applause.]
Chairman Towns. Today's hearing is the first in a series of
field hearings that will be held in various locations
throughout the country. The purpose of these hearings is to
examine the crucial role that the State and local government
will play in the administration of the American Recovery and
Reinvestment Act of 2009, also known as the Stimulus Program or
the Recovery Act.
The American Recovery and Reinvestment Act of 2009 is a
historic piece of legislation, which I was proud to be one of
the nine co-sponsors of the legislation. The stimulus program
had already been and will continue to be a powerful force for
getting the American economy back on track.
As we face the greatest economic crisis since the Great
Depression, I'm especially proud to be here today in my
district, in my home, the borough of Brooklyn. New York is the
financial capital of the world. It is home to millions of these
hardworking and dedicated people from all backgrounds who stand
ready to help turn the American economy in the right direction.
I'm also happy to have my friend and colleague from the
State of California, the ranking member, Congressman Issa, here
with me today, to get a look at how we do things in the borough
of Brooklyn, and today we'll talk with people from the borough
of Brooklyn.
Just a few weeks ago, several hundred residents of Brooklyn
attended a town hall meeting on a Saturday morning that
Congresswoman Yvette Clark and I held to talk about President
Obama's stimulus program. That is a simple but telling example
of the commitments the American people have to overcome in
these economic challenges that we all are facing together. And
I emphasize the word ``together.''
New Yorkers are a unique source of strength for America.
And I know it will play a unique role in putting our economy
back on the right track.
In Washington, this committee has been working hard to make
certain that Federal agencies do everything possible to protect
your hard-earned tax dollars and see to it that they are spent
wisely.
Every dollar that we can stop from being wasted is a dollar
that is put to good use on a school improvement project for our
children, a job training program for those who want to work but
need new skills, or construction projects resulting in
something as simple but as important as a safer road or cleaner
drinking water.
For the Recovery Act to be effective, the Federal, State
and local governments must coordinate, cooperate and
communicate. As President Obama stated recently, ``This plan
cannot and will not be an excuse for waste and abuse.''
To fight fraud, the Recovery Act provides for an
unprecedented degree of oversight and accountability. For that,
the Recovery Act established the Recovery Accountability and
Transparency Board [Recovery Act Board]. Some people refer to
it as RAT. [Laughter.]
Which is designed to provide transparency on how Federal
recovery money is to be spent. The act also included
significant increases in funding for the Office of the
Inspector General, whose job is to root out waste, fraud and
abuse in Federal programs.
I applaud President Obama for his support of these
measures. But I must admit that I have concerns, and let me
tell you why. I'm concerned that a heavy burden is being placed
on the State auditors who are responsible for monitoring the
accounts for the stimulus funds they receive.
This concern was raised at the committee's hearing last
month and it needs to be addressed. Accordingly, I plan to
introduce legislation that will provide increased funding for
State audits so they will be able to meet the demands placed on
them by the Recovery Act.
With individual States receiving billions in stimulus
funding, it makes sense that the States also be fully equipped
to closely monitor those taxpayer's dollars.
Not initially providing funds for State auditors under the
Recovery Act was an omission, an omission that should be
rectified as soon as possible.
I'm also concerned that States have already started
spending funds from the Recovery Act, but they have not yet
been given complete guidelines from the Federal Government in
terms of how the money is to be tracked and how they are
required to report spending of stimulus funds.
Further, I have major concerns about the administration of
a primary transparency tool, Recovery.gov. The fact of the
matter is that Recovery.gov is currently not usable. So, it's
not a usable data base where citizens can go to see how their
money is being spent.
I expressed this concern to the chairman of the Recovery
Act Board when he testified before this committee in Washington
last month. It is my hope that he takes the concerns of
Congress to heart and transforms Recovery.gov into a
comprehensive, useful and easy to understand data base that
will bring about true transparency.
If he fails in this regard, you can be certain that the
members of this committee will exercise their full oversight
authority to ensure that he honors his commitment.
Today, we will hear from people who have been and will
continue to be at the forefront of the effort to ensure that
the Recovery Act is administered at an efficient and fair
manner at the State and the local level. We want to learn more
from our witnesses about how the Federal Government is doing so
far in administering the stimulus program, where and how can
the Federal Government do better, and to ensure that the
Federal Government is doing everything it can to help State and
local governments to successfully administer the Stimulus
Program.
I want to thank all of our witnesses for appearing here
today and I look forward to hearing their testimony. I will now
yield to our ranking member, Mr. Darrell Issa, from the great
State of California, for his opening statement.
[The prepared statement of Hon. Edolphus Towns follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. Thank you, Mr. Chairman. It truly is a pleasure
to be here in the great borough of Brooklyn. I'm also, as you
know, a Clevelander. So, we've had sort of a path of knowledge
of things that have come out of this part of the world long
before I went to California or to Washington.
I want everyone to understand that one of the reasons that
this makes today so special is that this committee is supposed
to be about waste, fraud, abuse and is supposed to work in a
bipartisan fashion.
Under your leadership, it's very clear it is doing just
that. For the chairman, obviously, and the majority of the
party of the President to start shedding light on failures that
we make in Congress, this stimulus bill of $787 billion;
failures oversights, things which we were not consulted in
advance, but in fact now, after the fact that Chairman Towns
and this committee are seeking to make sure we can rectify.
As the chairman so rightly mentioned, there was no funding
in order to do oversight by the States in this legislation. And
I join the chairman in making sure that we do find a way,
either with the existing funds or the new funds, to provide
that material to the States.
Additionally, nothing in this legislation provides
accountability below the first recipient; meaning, when Albany
receives the funds, much of what we're talking about today,
they could distribute it, meeting every requirement. But we had
no way of a guarantee, transparency below that.
So that if they were not doing their job to ensure that
once the check is written, it was used properly, there was no
oversight. We are going to work together on a bipartisan basis
to change that.
Additionally, as you undoubtedly will hear repeatedly
today, there's a little bait and switch that goes on between
the time the money leaves Washington and the time it does seem
to arrive at hospitals and other areas of need here in the
borough. And that's understandable.
Both my State of California, which had a $45 billion
deficit at one point, and a slightly smaller deficit here in
New York, were partially wiped out by the stimulus funding;
meaning, they didn't apply the money that we sent from
Washington to additional projects, but rather simply pulled
back their dollars, pushed forward Federal dollars.
And as a result, when you thought you were getting more, at
best, you may be getting what you originally were promised, or
less.
As we all know, we have lost millions of jobs in the
stimulus package. At best, if used properly, it's estimated to
save about 3\1/2\ million jobs. If we allow the moving around
of the dollars in a way that diminishes the intent, we
obviously will diminish the outcome. We cannot afford to have
one of those 3\1/2\ million jobs we hoped to save lost. And
clearly today, we will hear that is happening.
The President, in fact, has made this one of the hallmarks
of his administration early on. He did so with good intent and
I join him in the belief that we needed something that is
timely, targeted and temporary.
But as we would have begun to see, the targets are often
poorly defined. The temporary, as some States who were pushed
back on the funding, is questionable because of little nuances
pushed into the bill that are affecting the ability of States
and localities to use the money in a temporary basis, and in
some cases, require that the program may begin, which will only
be funded for 18 months and thereafter would fall to your
community.
Mr. Chairman, I'm deeply concerned about the waste that
will come if cities which were already stretched to the limit
find themselves, when the money runs out, forced to continue
with programs that may or may not suit their particular
municipal area. Here in Brooklyn, you are an older city; so new
construction and many of those items is not nearly as important
as repair and reconstruction.
One size does not fit all. I'm hoping today that our
working in a bipartisan basis, the solidarity and the
additional committee under your leadership has begun to have
will show, and show it to the people here that this committee
will not allow this fine city to be shortchanged between the
time the money leaves Washington and the time it was supposed
to arrive here.
With that, I look forward to all the testimony that we will
have, Mr. Chairman.
Thank you very much.
Chairman Towns. Thank you very much for your statement.
[The prepared statement of Hon. Darrell E. Issa follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Towns. At this time, one of the hardest working
gentlemen in the United States, the gentleman from Ohio, Mr.
Dennis Kucinich. We yield to him 5 minutes for an opening
statement.
Mr. Kucinich. Mr. Chairman and my colleagues on the
committee and the people of Brooklyn, I'm here to support our
chairman, and also because I understand the concerns that
Brooklyn has related to the concerns of the people all over the
country now.
Are we going to see a recovery? What will that recovery
look like, will it provide more jobs, will it rebuild America's
infrastructure?
All across this country, there are people who are worried
about losing their homes, their jobs, their health care, their
retirement, their security and their investments. And this
committee has the responsibility of being the watchdog to make
sure that all Federal programs find their way through to the
beneficiaries.
And when you're talking about trillions of dollars, the
money from the recovery program, money in the troubled asset
relief program, we know that any time we're talking about
spending on that level, it is inevitable that there is going to
be problems with the way the money is distributed and problems
with the dollars spent.
You are fortunate in Brooklyn that your Congressman, Ed
Towns, ascended to be the chairman of the Oversight Committee,
because this committee has the ability to be able to make sure
that we hold all of those who are entrusted with these funds to
the highest level of accountability.
And the only way that can be done is to make sure that you
have people representing you who have the kind of experience
that can see if something looks like it's going on that is not
right.
And because of Ed Towns' experience in rising to Congress
from this borough, you can be sure that his eyes, his ears, are
going to be essential in making sure that these programs find
the way in helping people who were the intended. And also, if
there's any mismanagement involved, that would be brought to
the public's attention.
Let's go back to where we are as a Nation. The Obama
administration understands that this American Recovery Act is
only the first step. A hundred million dollars out of the
initial $787 billion will go toward infrastructure and
improvement.
And yet, Mr. Chairman, the American Institute of Architects
says there's over $2 trillion in infrastructure needs, to
rebuild our bridges, water systems, to rebuild our roads,
schools, hospitals.
America needs to be rebuilt, meaning that those people are
back to work doing that. But we will not have the confidence,
the Members of the Congress here to vote for more programs,
unless we conclude that these programs are being set up, are
going to be operated in a way where there's integrity and where
there is a commitment to making sure that the program that we
say that we want money for, that's what happened and that
they're done in a way that's honest and efficient.
I'm a person who believes the government can work, but it
only works if we have the people watching to make sure it
works. And so that's what this committee is about.
And I am proud to be here with my chairman and with the
ranking member, Mr. Issa, Congressman Platt and Congressman
Welch, so that we can hear from the people of Brooklyn about
what their dreams and hopes and expectations are and what
you're concerned about.
And we can take that information back to Washington and
share it with our colleagues. This is a great community. I am
glad to be here at this moment to be a part of this hearing and
I look forward to hearing your testimony.
And thanks again, Mr. Towns, for giving us the opportunity
to come to Brooklyn so that we can hear from your constituents
whose concerns expressed are the concerns of all Americans.
Thank you very much. Great to be here.
Chairman Towns. Thank you very much. Thank you for your
kind words, as well.
Also, I'd like to recognize a person that I've had an
opportunity to serve with as the ranking member, who was the
chair of a subcommittee and who--I had enjoyed working with
you. And he said that if you give him an opportunity to give
you input, I expect your output. And I want you to know that I
had enjoyed working with you and that it was an arrangement. I
want you to know that the deal still is an offer. [Laughter.]
Mr. Platts. Thank you, Mr. Chairman. It's great to be with
you. It is great to be with my colleagues here. First, it is
wonderful to be back in the city of New York and the borough of
Brooklyn.
I know we've called up hearings here at Borough Hall in the
past as well as at the Brooklyn School of Law, close by, and it
is just a wonderful opportunity to visit a great city. I want
to add my words of thanks to my colleagues, to you for holding
this important oversight hearing.
One of the most important responsibilities we have as
public officials, as elected Members of the Congress, is to
ensure that we are good stewards of the American people's
funds, and that is what this hearing is all about. It is
ensuring that the funds they have sent to Washington and
entrusted us to oversee are then returned to our communities,
including here in New York, in the most efficient, effective
and accountable way possible.
And this oversight hearing is all about ensuring that we
achieve that very important fiscal rule. So, thank you for your
leadership as chair of the oversight committee and also to
those witnesses who are here with us today, who have been--the
State and the local level will give us a good insight as to how
fast and more effectively we perform our oversight
responsibilities. With that, I will go back to the chairman.
Thank you.
Chairman Towns. Thank you very much.
Now, I'd like to yield 5 minutes to Congressman Welch from
Vermont, one of the very thoughtful members of this committee,
who makes sure that we do our research and homework before
moving forward.
Congressman Welch, of the great State of Vermont.
Mr. Welch. Thank you very much, Mr. Chairman. I'll be
brief. It is thrilling to hear from our distinguished
witnesses. You know what? In government we do two things. One,
we set a policy, and we did that by passing this stimulus,
which after a vigorous debate, the policy direction has been
set. And No. 2, we implement a policy. And usually we don't--
oftentimes we don't do this as well as we need to, remember to
achieve the goals. Mr. Issa outlined all of the challenges that
we face.
And with $787 billion of our money, your money at stake,
and also the ability to make the economy stop its free fall and
hopefully begin a recovery, every single dollar, every single
job is absolutely important.
And Mr. Chairman, what I appreciate of your work on this
committee is that you are getting started before the reports of
mismanagement or fraud come in, not waiting until after.
Oftentimes, with this amount of money it is inevitable. There
will be outright fraud, and that creates not only a waste of
money but bitterness in the minds and hearts of the taxpayers
who paid for it.
And oftentimes even more money is wasted because of poor
management and getting behind the curves on making certain
things, and we're doing well, we need more of it, and if things
aren't working, we stop.
So, having this hearing, Mr. Chairman, at the beginning and
working so cooperatively with Mr. Issa to get us focused at the
outset on finding the critical contribution we can make; and
what is tremendous is that we are going to start by hearing the
people on the front lines of implementing the policy.
Because in Congress we set a policy that oftentimes the
harder work is the work that you do back home to implement that
policy. So, I am very eager to hear from the folks on the front
line.
And I wanted to thank you, Mr. Chairman, for welcoming
Vermont to this important country. [Laughter.]
And I feel pretty safe so far. And Mr. Issa, it is good to
be here with you, and my colleagues, as well.
Chairman Towns. Thank you very much for everything, all of
you for your statements.
At this time, I would like to ask our panelists to come
forward.
Mr. Gilchrist, Deputy Mayor Skyler, please stand.
Chairman Towns. Longstanding tradition, I will swear all of
our witnesses in. Please raise your right hands.
[Witnesses sworn.]
Chairman Towns. Let the record reflect that they both
answered in the affirmative.
Just before we introduce our panelists, let me introduce to
you the United Talmudical Academy of Satmar. They appear in the
room from the school. Let's give them a big round of applause.
[Applause.]
Chairman Towns. United Talmudical Academy of Satmar, I am
always happy to have our young people to come in to see the
government in action. Let me introduce our witnesses.
Mr. Timothy Gilchrist is a senior advisor to Governor
Paterson, Department of Infrastructure and Transportation.
Serving in this role, Mr. Gilchrist leads the New York State
Recovery and Reinvestment Act with Governor Paterson, which
informs and oversees the distribution of Federal Recovery Act
funds throughout the State.
In his current position, Mr. Gilchrist served as a deputy
secretary to the Governor for economic development
infrastructure, overseeing the major economic development
infrastructures and transportation agencies and authorities in
the State. Before he joined the executive chamber, Mr.
Gilchrist served for over 26 years at the New York State
Department of Transportation in a variety of management roles,
including the director of strategic planning. He is a graduate
of the State University of New York at Oswego and Harvard
University, as well.
Deputy Mayor Skyler is the deputy mayor of operations for
the city of New York. Mr. Skyler has been asked by Mayor
Bloomberg to coordinate New York City's stimulus spending. In
addition, Mr. Skyler has a broad range of responsibilities
through assisting the mayor, Mayor Bloomberg.
He manages the Police Department, Fire Department, Office
of Emergency Management, Office of Management and Budget, and
the Office of Labor Relations.
Mr. Skyler also directly oversees several city agencies and
departments, which includes the New York City Department of
Transportation, the Department of Environmental Protection and
the Department of Sanitation.
Prior to his employment as a deputy mayor of operations,
Mr. Skyler served as deputy mayor for administration and as the
mayor's communications director and press secretary. He is a
graduate of the University of Pennsylvania and Fordham Law
School.
Let me say to you, I welcome both of you. Gentlemen, the
rule is that we have 5 minutes to present. And then after your
presentation, then we have a question-and-answer period. Now,
the light that we start out, the light is on green. When it
tells you that you should be conscious of the fact that your
time is about to end, it goes to yellow. And then when your
time ends, it goes to red. And it is very clear. If there is
any question about that, let me know. [Laughter.]
So, we will start with you there.
STATEMENT OF TIMOTHY GILCHRIST, SENIOR ADVISOR FOR
INFRASTRUCTURE AND TRANSPORTATION, OFFICE OF GOVERNOR DAVID A.
PATERSON
Mr. Gilchrist. Thank you very much Chairman Towns and all
the members of the committee. And I hope my transportation
background will help me work through the light system.
[Laughter.]
On behalf of Governor Paterson, who is in Albany trying to
deal with the MTA crisis, I'm very pleased to be here this
morning and hope we can help assist the committee in
considering its role for State and local governments in regard
to the implementation of the American Recovery Investment Act.
I've provided written testimony to the committee and I'll
provide a summary of that, and we're welcoming any questions
after my colleague, Deputy Mayor Skyler.
My name is Timothy Gilchrist. I serve as Governor
Paterson's senior advisor for infrastructure and
transportation, and serve as the lead for the implementation of
the American Recovery and Reinvestment Act.
Our latest estimate is that New York State will receive
over $26.7 billion in funds from the American Recovery and
Reinvestment Act, in addition to the funding that will be
provided for the local governments organizing discretionary
funding that we will be aggressively seeking, including an FMAP
increase of $1.1 billion and State fiscal stabilization funds
of over $3 billion.
And we also currently estimate that we would receive over
$4 billion for infrastructure and energy programs, $5.9 billion
to help in the services programs, $2.3 billion for education
programs, and $124 million for public safety programs.
Of all these funds, over $1.8 billion have been expended,
mostly FMAP funds, with additional funds pending disbursement.
In addition, the Governor certified over $200 million worth
of highway transportation projects that are currently out to
bid.
In anticipation of the American Recovery and Reinvestment
Act, Governor Paterson established at that time a recovery and
reinvestment cabinet on February 10th, ahead of the legislation
in order to coordinate the State's economic development.
The cabinet of which I serve as chair has representatives
from over 30 of our State agencies and authorities; and there's
a dedicated staff working in the agencies and in the Governor's
office to support the activities.
Within the cabinet, we have several work groups, and we are
constantly re-aligning these groups to meet the ongoing
challenges of moving forward. But I'm going to touch on some of
those highlights that we're doing to oversee the disbursement
of the funds and to ensure transparency in the accountability
and to root out waste and fraud.
One of the important working groups in the reinvestment
cabinet is the internal control working group, which is made up
of the State agencies, internal audit or internal control
officers in the Office of the State Comptroller, which is a
separately elected position within the State of New York.
This group is meeting on a regular basis to help agencies
review their internal control processes, look at their
contracting process, their contract disbursement process, their
contractual award process, to insure that the funds are spent
within all of the current guidelines.
What I'd like to point out is that New York State has a
very robust internal control procurement process to limit
waste, fraud and abuse. The State has a strong due process that
lines out the funding that needs to be spent in the budget that
was passed in the first week of April. All of the American
Recovery and Reinvestment Act funds that were appropriated have
been separately flagged in the appropriations so that they can
be tracked.
The Office of the State Comptroller, Central Accounting
System, has set up a special accounting code to track all of
the funding that is being spent on ARRA funds. And because a
certain amount of the funding flows directly from the Federal
Government to State authorities outside of the State budget
process, the enacted State budget requires regular reporting by
those authorities.
In addition, we have an MBE/WBE office that reports
directly to the Governor's office and has an active role as
part of the committee. We have an independent inspector general
that roots out fraud and abuse; and a separately elected
comptroller and attorney general that need to sign off on all
of the contracts that the agency allows through the competitive
processes.
We are not only going to administer all of our own funding,
but we're putting programs in place to help localities that are
not always as sophisticated as the State of New York. We report
on their funds and follow tracking programs, and have continued
outreach to with Members of Congress and members of our State
delegation to give information to not-for-profits and elected
local officials' funds.
I look forward to your questions.
Chairman Towns. Thank you very much for your testimony, Mr.
Gilchrist.
[The prepared statement of Mr. Gilchrist follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Towns. Now, we call upon you, Deputy Mayor Skyler.
STATEMENT OF EDWARD SKYLER, DEPUTY MAYOR OF OPERATIONS FOR THE
CITY OF NEW YORK
Mr. Skyler. Good morning, Chairman Towns, Representative
Issa, and other members of the committee. Thank you for the
opportunity here today. I'm here on behalf of Mayor Bloomberg,
who is actually in Washington with some of your colleagues for
that bill to be signed by President Obama later in the
afternoon.
I'm here to testify on the measures the city has in place
to ensure that all stimulus funds allocated to the city are
spent appropriately and the steps the Federal Government is
taking to assist us in this endeavor.
In total, the city and citywide entities are expected to
receive about $4 billion in expenses and $1 billion in capital
funds for the next 2 years. For the stimulus funds, we want the
city to be a national paragon of transparency and
accountability. We intend to not only use our existing systems,
but take additional steps to ensure that our share of funds are
spent properly. This increased transparency will enable you and
the public to hold us accountable on many levels.
First, when we discuss New York City's robust fraud and
waste prevention measures; the Mayor's Office of Contract
Services oversees all procurements throughout the city. City
agencies must conduct background checks on all potential
vendors, checking for compliance regarding the worker filing
and licensing rules, as well as the means for passing a company
or its principles; and then make the responsibility
determination for every contract awarded.
In addition, vendors who have received contractors or
subcontractors that meet certain financial thresholds must
submit detailed questionnaires with the companies and its top
principal officers, which are entered into the city's Vendex
system to inform the agency decisions regarding vendor
responsibility.
For awards greater than $100,000, the city's Department of
Investigation also conducts a vendor name check, checking every
entity in person names on the Vendex questionnaire against
their data base to see if they've been subject to any criminal
investigations and if there is any other relevant information
that should be provided to the contracting agency to aid in the
responsibility determination.
Next, all contracts must be certified by the relevant
agency's chief contracting officer. We've assigned specific
point people to take responsibility with the integrity of our
contracts, including compliance with the city, Federal minority
and woman-owned business participation requirements.
For every contract, other than those obtained by
competitive bidding, the mayor's office will certify that the
city has complied with all applicable laws and rules, and the
corporation counsel will certify the legal authority of the
contracting agency to proceed with the award.
In addition to the mayoral oversight, the Department of
Investigation and the Comptroller, people we will hear from
later, we also closely monitor contract work going in.
On top of these checks we already have in place and prior
to the enactment of the stimulus bill, we created a government
structure known as the Stimulus Oversight Group, through which
all stimulus funds are overseen by the mayor's office and the
appropriate oversight agencies.
We've assigned every funding stream for which the city is
eligible to working groups: infrastructure and energy
efficiency, social safety net, economic and work force
development, public safety and fiscal assistance.
These working groups review allocations, applications and
documentation for all funding streams. Adjustments are based on
the following criteria: ability to deliver program results, job
creation, economic stimulus impact, the speed at which spending
could occur, long-term public benefit, integrity and fraud
prevention.
All working groups are represented under the oversight
group, the deputy mayor, and the oversight agencies; and this
level of involvement has brought unparalleled scrutiny to each
funding decision.
In addition to these steps, we're also implementing an
additional way of public transparency. We launched an
interactive Web site called the Systems Tracker, available
through New York City with the government. This will track all
dollars on the way from districts, city programs and projects
through the step of contracting, financial processing and
payment for project work.
So, the ultimate impact of each fund is shown on the lives
of the New Yorkers. These features are set to be fully
operational by the end this month. In addition, we obtained an
additional level of scrutiny provided by KPMD, whose services
were obtained to help guide New York City's stimulus reporting
process.
By obtaining experts in the accounting field, we will start
to meet and exceed the Federal and State reporting requirements
for these stimulus funds.
Taken together, these measures will provide an
unprecedented level of oversight in funding additional
contracts that allows us to verify that we are spending our
stimulus moneys as efficiently and effectively as possible.
As you know, New York State is 1 of 16 States that's to be
audited by the Government Accountability Office. Our staff
recently met with GAO, and we did indicate to GAO we have
specific information of those hired by the Federal Government,
but we are challenged to account for the impact of our funds in
a manner consistent with the government expectations.
For example, we strongly recommend the creation of
standardized job creation methodology that accounts for
regional differences. With the new Federal guidelines, we would
ask that local governments be allowed to ask the Governors to
use stimulus dollars to meet enhanced reporting requirements.
We encourage Congress and Federal agencies to issue additional
guidelines as soon as possible.
Thank you very much for the privilege to testify this
morning. I'm happy to take any questions you may have.
Chairman Towns. Thank you very much.
[The prepared statement of Mr. Skyler follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Towns. I want to thank both of you for your
testimony.
Now, we would like to start the question and answer period.
There was an article in the Wall Street Journal yesterday
entitled, ``Stimulus Confusion Frustrates Business.''
Have either of you heard about any widespread confusion
that businesses have about the timing or details of the
stimulus program?
Mr. Gilchrist. Yes. Certainly, in our conversations around
the State, in the forum such as in Brooklyn a few weeks ago and
in other forums throughout the State, I believe that there's
not an understanding in a lot of the business community as to
the availability of the funding.
And that often they're looking for funding for programs
that were not authorized within the bill. We have received over
16,000 projects worth over $100 billion in our request for
projects, many of which are not really eligible for the
program.
And that's part of the education that we are working to
carry forward as the Federal Government comes out with
information to put on our Web site, Recovery.ny.gov,
information on those programs for New York businesses.
Chairman Towns. Thank you.
Mr. Skyler. Our concern has been reaching out to Federal
agencies as to the questions from the private and not-for-
profit sector to get a better understanding of the guidelines
that are coming out.
We calculate that about 50 percent of the individual
programs included in the stimulus bill have yet to--that
there's not guidelines distributed for them, including
deadlines for application submission. So, there's still a great
deal of information that needs to be distributed by Federal
agencies charged in distributing funds. And as soon as we get
that information, we pass that on to the stakeholders in the
private and not-for-profit sectors.
Chairman Towns. Thank you.
Let me say that just a few weeks ago we met with Mr.
Devaney, who is the inspector general and a superstar among
inspector generals, who is in charge of the board. And he
indicated that without very aggressive--because we're very
aggressive--leadership from this committee and others in terms
of--what's involved with the stimulus package, that out of the
$787 billion that's being allocated throughout this fashion,
$55 billion would go to waste, fraud and abuse.
Can any of you help us out? Do you have any ideas or
suggestions on how we can cut down? Because that to me seems to
be a lot of money that can do a lot of good things for a lot of
areas in this Nation. But $55 billion, that's a lot of money.
So, do you have any ideas what we might be able to do as a
committee to bring about some changes, to be able to prevent
this from happening?
Mr. Gilchrist. One thing, Mr. Chairman, you and other
Members, one of the things that you've done today is an example
of what can happen; and also what's going on with the GAO and
the accountability of the board, is paying attention to issues
such as waste, fraud, abuse up front.
Often, hearings like this were reviewed by an IG, and done
well after a contractor is close in the implementing process,
and the agency doesn't have time to make a course correction.
So, constant reviews that we often see as burdensome by the
implementing agencies do give us the opportunity to make sure
that we move forward and still prevent waste and fraud abuse.
And then your opening remarks also made a very important
point. The act provides for a lot of funding, Federal agencies
and Federal IGs for oversight. While they're not a direct
allocation to State auditors or State Governor's offices, who
are all under very tight fiscal control--so are the mayor's
offices--under tight fiscal situations, to hire contractors or
additional staff to help us.
So, the city is going to bring in independent outside
consultant firms or auditors to help us. We are scraping within
our funding to provide that, while on the Federal level, the
moneys that are provided out of the Recovery Act to the
agencies.
Mr. Skyler. First, let me say that Mayor Bloomberg's
intention and the government's intention is to make sure this
is the case and that not one penny of stimulus dollars of New
York City is wasted. The mayor is very appreciative of the
funds that are going to New York City because of this
legislation, and he is doing everything in his power to ensure
the trust being placed in New York City is not undermined.
We believe in New York to that end; and to that end what we
have done voluntarily, and continue to do as programs are
funded, is put as much information on the Internet as possible.
We already started our public announcements to try to put out
as much information about the grants as we can.
We announced $260 million in transportation funds for
streets and bridges in New York City, and a press release of
around 30 pages, talking about how much each project was,
explaining when ground would be broken. So, we're going to put
out as much information and we will be judged by the public, by
the Congress, by the media, and that is one of the things we've
voluntarily done in going at the Federal requirements.
We've also spent non-stimulus dollars for our accounting
office, so that we have somebody on our behalf independent
scrubbing our books to make sure we're not accumulating
inappropriately and every dollar is accounted for. We do not
want to embarrass the Congress or the President by allowing
fraud or misuse of funds to take place.
So, we would certainly provide more information about those
two steps, but also encourage this panel to make sure that
others take similarly transparent steps.
Chairman Towns. Thank you very much.
Now, the ranking member from California, Mr. Issa.
Mr. Issa. Thank you, Mr. Chairman.
Mr. Gilchrist, when you said, rightfully so, that there was
no money in the stimulus bill for your portion of the
oversight, I had to muse a little bit. Because you said there's
a lot of money for oversight on the government side. Now, I'm
just an old fashioned businessman, so bear with me for a
moment. If you took $1 billion out of the $787 billion, and put
it into a very conservative T-bill, maybe for California' tax
freeze, it would make 5 percent a year.
One billion would give you $50 million of income a year, if
you factor $1 billion. The total allocation for oversight of
GAO is $25 million, so you wouldn't get half of what you'd get
on $1 billion in the bank for a year. It's a very, very small
amount, and the attorney general has authorization for, I
think, for 30 staff people, and doesn't have them yet.
So, I'm very concerned that although it seems generous from
those of us who earn a little bit of money; looking up, it is
really very little relative to the size that we're going to be
asked to oversee.
I think a couple of questions are particularly germane here
and I'm glad that the State and the city are represented.
Mr. Gilchrist, have you ever been in a meeting in which
there is a discussion, or have you heard of a meeting in which
there is a discussion, about how Federal stimulus dollars could
be used for already budgeted projects which would then free up
those dollars to be used elsewhere? State dollars to be used
elsewhere by putting, plugging the Federal dollars stimulus
into that use?
Mr. Gilchrist. Well, I think there's a multiple part to
that question, Congressman, because as we move forward with,
for example, transportation programs, in order to meet the
Federal requirements and to meet with timeframes, we have taken
projects that were in the original programs that we've created
in the State Department of Transportation or the Metropolitan
Transportation Authority, that could not be funded because of
cost overruns from the last several years.
Mr. Issa. I appreciate that. I'll narrow the question.
Let's look at transportation. Were there on-budgets--at the
time that Albany was viewing the Governor's budgets, were there
projects in the budget which are now in shovel-ready projects
being allocated Federal funds to do them?
Mr. Gilchrist. Yes; and the State funds and the
government----
Mr. Issa. And then the State funds were used elsewhere.
Mr. Gilchrist. No, no. The State funds were reprogrammed to
presentation projects and the Governor has signed the required
maintenance of effort requirement for the next year's budgets;
and these are the requirements for the Accountability Act.
Mr. Issa. So, following up with this----
Mr. Gilchrist. There was a slowdown in the fall of State
spending on all areas.
Mr. Issa. I understand. And I understand that. The reason I
asked that because--I happen to have my wife's first cousin
living here, three blocks away; and she's watching your
hospitals, not yet well-funded and finding themselves being
closed even though stimulus dollars are being allocated. And
what she is seeing is the total dollars----
[Applause.]
Chairman Towns. This is a Federal hearing, not a town hall
meeting. [Laughter.]
Mr. Issa. It is important to me because what I see from the
oversight standpoint is very clear to my home State of
California, the State of New York, cities within the States
have budget deficits. We filled some of those budget deficits.
No matter how much we said is allocated in a certain way, the
truth is where it is being allocated is not a net increase.
And isn't it true that many of these programs were
obligations? So you couldn't have not funded them if nothing
came from us; and yet they didn't get flushed up even when
they're using the Federal funds. Isn't that a reasonably fair
statement, yes or no? Please, followed by a comment.
Mr. Gilchrist. You have a yes and no; because you need to
work through each one of the different programs. And the State
had a very difficult challenge, in that we're one of the first
States that had to implement our budget 6 weeks after the
Recovery Act was passed.
And to be fair, the issue in the report, some of the
questions had been, how the money was allocated in your
budget----
Mr. Issa. One final question, and I'll let you answer both
together. For both of you, since it's very clear that there is
money shifting in order to meet these requirements, isn't it
fair for the Federal Government, particularly this committee,
to demand not just a recognition of where the dollars went, but
a detailed analysis of the shifting that went on? So that, as
we see dollars at a par level to hospitals and we see dollars
moved elsewhere, isn't it fair for us to know, was it stated in
the health care system, or the shortages, and are you prepared
to deliver us that kind of explanation over and above the
initial requirement? Where you spend it, can you tell us all
the shifting of the sand that is going on with the other money?
Mr. Gilchrist. Yes.
Mr. Issa. Will you----
Mr. Gilchrist. Yes. On Friday or early next week we'll be
sending out the fiscal report early required for the
implementation of the State budget; and that will detail how
recovery funds were used.
It is interesting to be answering your questions about
whether or not the money is used to offset other things, while
we've been widely criticized since April 1st since the size of
the increase in our overall State budget, which is because the
recovery funds were listed over and above the normal spending.
So, we will be issuing a report on our State budget. We will
make sure that the committee has that report.
Mr. Skyler. We not only believe it's fair for you to get
that, we've voluntarily started to do that. So, $260 million in
transportation money directly received by the city funded eight
projects that were already funded by city dollars.
So, what we did is, we programmed the Federal money,
stimulus money, to those eight projects. And the $260 million
that was freed up by the stimulus and was allocated toward 25
other projects that didn't have funding to go forward; and also
didn't meet the criteria of the time deadlines being shovel
ready, etc., to be part of the stimulus program.
Sometimes with the Federal reviews, and environmental
reviews, there was an 180 degree window. So, prior to falling
out of that window, there was still time to get Federal
funding; and we will do that with every other program.
For example, we were able to work out of the State an
arrangement to save 14,000 teaching positions in our city
school system with stimulus money. And that money will stay
within the school system. So, in short, we think it's fair that
we will work with you to do that, so there is no three card
monte with the funding.
Chairman Towns. Thank you very much.
Five minutes from the gentleman from Ohio, Mr. Kucinich.
Mr. Kucinich. Mr. Skyler, how long will it take you to
spend $4 billion?
Mr. Skyler. We believe we'll spend the $4 billion over 2
years; 2 fiscal years, on the spend side. On the capital side,
we have about $1 billion. There is $250 million for
transportation, as I've mentioned; about $250 million in clean
water, and about $426 million or so for the Housing Authority.
So, in addition to $1 billion the MTA will receive.
For those, we hope to be breaking ground on the majority of
these projects this calendar year. Some of those projects, such
as bridges, are multi-year projects. Some of those capital
projects actually stretch over possibly a 2 or 3 or 4 year
window.
The expense funding, as soon as we get the money here,
we're putting it right to the budget. For example, we've
already put in about $250 million of the FMAP money. And we
have an allocation for funding that we expect to put into our
next police classes, funded by the Department of Justice.
So, we're not going to waste any time. We're not going to
save for later use. As soon as the money is received by the
city, we will pump it right into the programs it is intended
for.
Mr. Kucinich. In your program response, when you say you'll
spend it over 2 years, after 2 years, what happens to the
programs that received the money?
Mr. Skyler. It's an excellent point, sir. We're not able to
use our financial situation to baseline any of these programs.
Mr. Kucinich. Can you explain that?
Mr. Skyler. The city operates on a financial plan, which
means match our revenues with our expenses on a year-to-year
basis. And we put forward tax projections over the 4-year
window. And we can only afford programs that we knew we have
revenues identified to fund them.
So, stimulus funding which is over and above those tax
revenues, we can only provide for a year or 2-year duration.
So, after that time period closes, we will not have all of the
other funding available. And we will not have the resources to
continue them.
Mr. Kucinich. So, these stimulus funds, and this goes into
a question, and I'm sure it's raised--they're being used to
supplement additional spending--you're not substituting for
city spending? You're not swapping the funds and using the
funds for anything else? Using your funds from the city budget
for something else?
Mr. Skyler. What we are doing is, using the stimulus funds,
essentially gap closers, to continue extension services that we
otherwise did. It provides, for example, without the use of the
stimulus funds, we would be forced to reduce the work force of
the Department of Education, a work force of 14,000 teachers.
So, even though we're in an economic downturn, we intended
to continue with those positions. We did not have the funds to
do so until the full stimulus money came through.
Mr. Kucinich. Let me ask you about this. The stimulus money
is plugging a $4 billion downturn gap or helping you address $4
billion in needs. You are the person that goes over all of
these numbers. What are the needs? Are they more than $4
billion? Are they $6 billion, are they $8, $10, $12? What are
they? What are your capital needs? Are they $1 billion, are
they $10, are they $20? What are they?
Mr. Skyler. I can't give you an answer on what our needs
are, because we do try to spend within our means. We have a
capital plan, which the mayor will announce later next week,
for $70 billion. That is an enormous amount of money, but it
will be cut, like 30 percent, when we present it.
So, we try to fill what the pressing needs are and match up
the resources to it. Program stimulus--the Mayor presented his
budget in January, a $4 billion budget deficit. With the
stimulus funding available this fiscal year, about $1 billion
of it was in the form of gap closing through money which is
being used to keep existing programs afloat, or to do
additional work force training or other services that the city
wouldn't have the money to do or weren't contained in the
financial plan.
Mr. Kucinich. Mr. Chairman, I think one of the things that
we will be doing with this committee is that we really analyze
how much of a stimulus this stimulus package is for the
economy. We're talking about a couple years. The implication is
and, I think, the expectation throughout the country is that it
stimulates something. The stimulus is something that happens
over a couple of years. That's No. 1.
No. 2, there's no doubt that New York and other cities
across the country are experiencing severe declines in their
tax revenues, which is creating huge needs and demands. It may
be that this stimulus program is just beginning to set the
stage for a necessity in going forward with its general revenue
shares.
The third thing I want to point out is that, according to
the revenue architects, we need over $2 trillion in repairs for
infrastructure. It's something that local communities aren't
going to be able to support. So that might be an opening for
some later spending that may keep the stimulus going if they
find some way to get the shovel-ready projects going to really
move the economy, like FDR did in the 1930's when we had the
New Deal that rebuilt a lot of this community.
Thank you.
Chairman Towns. Point well taken.
At this point, I yield 5 minutes to Congressman Platts from
Pennsylvania.
Mr. Platts. Thank you, Mr. Chairman. I thank both of our
witnesses for their testimony.
And as I said in my opening statement, one of the most
important responsibilities that we have as officials is being
good stewards of the funds. Each of you in your respective
rules, city level and State level, play a critically important
role in that sense.
I want to, first of all, question my colleagues on the use
of the funds to supplement and not replace State levels, so
that it truly benefits the increase in the enhancement, if not
status quo.
Mr. Skyler, you laid out pretty well what the city is doing
with its transportation money, 260 funded shovel-ready
projects; and to the city's 260 move an 25 additional projects.
So, is it fair to say that you will see that same approach
statewide, Mr. Gilchrist, that at the end of the day, we're
going to see any of these projects with Federal money in and X
number of additional projects are added?
Mr. Gilchrist. Yes. But on the transportation side, we
operate on a 5-year program. One of the things we're tracking
are all of the projects that are selected, whether or not they
were part of the original 5-year program. And if they were,
then how the funds are reprogrammed, similarly the way the city
has come forward.
It's a little more cumbersome for us to move forward,
through the 13 plans and organizations that are doing the same
thing as the city. That's part of our tracking.
Mr. Platts. I think I'm the only Member in Congress who
actually was a member of the NGO, my local community, from my
State house days; and I actually enjoyed transportation issues
immensely and I'm glad to be part of that effort.
One of the concerns--and I hadn't seen it in my region, but
I have seen it in Pennsylvania, that some of the projects that
we're working for, bridges, because of the timeframe
restraints, that we're moving projects that are not the
substantive type of infrastructure projects that ultimately are
going to have a long-term benefit--but because of the short
timeframe.
Is that a concern you have in New York?
Mr. Gilchrist. Well, one of the concerns that they
expressed about the projects that are in there, many of them
are projects such as bridge painting, culvert repair, minor
paving and minor bridge repair.
But let's point out two things. One is, all of those are
transportation issues. So, all of those are very important
things that any kind of asset management system can tell you
are investments; that they should be made.
The second note is, the stimulus portion of the program,
they are all very labor-intensive jobs. It can get people to
work. There's not much individual support, labor-intensive;
they're replacing the culverts or painting a bridge or fixing
cracks on the highway.
And that puts people to work. There's $2 billion that New
York State got for transportation, not taking care of our
backlog, that would allow to get projects out there and get
people to work.
Mr. Platts. And I share the opinion that these maintenance
projects for the long-term will prevent further or more
substantive work having to be done because you do it now.
You kind of touched on my next point, both of your
testimonies. You touched on the issue of a common methodology
being important when it comes to job creation and job retention
numbers; because our goal here is 3\1/2\ million jobs created
or obtained.
You both touched on that testimony. The way it was touched
on is, that you get to see firm guidance from GAO on how to
establish those job numbers. And, in fact, I think one of you
said that perhaps the approach is that you provide all your
data and let this be successful for your job creation numbers,
very essential jobs.
Can you expand on that and what, if any, additional
guidelines have been given by GAO?
Mr. Skyler. I believe we are in discussion with the
individual agencies. For example, on the transportation side,
we use the Federal transportation formula to calculate about
25,000 jobs be created by the transportation problems the city
is going to do, for construction jobs.
On the Housing Authority, we are owed money which is about
$430 million or so. We do not have comparable guidelines from
HUD on how many jobs that we could create. So, we're trying to
do different types of work to make those calculations.
And on our Web site, we have tracked how many jobs we
created. And we want to make sure that those numbers are
accurate. Some of these are easier to measure. For example, COP
funds, which is we're going to fund the police officers
straight toward these accounts; education money that we got
through the Governor's help to save 14,000 teacher positions
that we can have.
Construction jobs are a little more subjective. So, we
would like to get it from a centralized source; it would be
incredibly helpful.
Mr. Platts. And I agree with what you said where the
Federal Government could be very helpful for providing that, as
well as direct and indirect jobs that you created.
It gives you an ongoing dialog with GAO at the State level,
specifically, that have guidelines with OMB and the guidance of
the agencies. One of our recommendations would be that,
something that OMB will be taking control of, and not
necessarily the administration agencies.
Thank you, Mr. Chairman.
Chairman Towns. Thank you.
At this time, I will yield to the gentleman from Vermont,
Mr. Welch.
Mr. Welch. Thank you very much, and I appreciate your
testimony.
Now, there are three issues that keep coming up about
stimulus. One is the confusion, Mr. Chairman, that so many
people have about whether the money is there for their
particular program. And then after all the testimony, it's best
to explain what the limitations are and it sounds like an
infinitely funding bill.
Second, to stop fraud, and both of you outlined your good
procedures to try to stop it, and be on top of it.
And the third issue that we're starting to talk about, the
most challenging, is how do you make it effective? And once you
go beyond the categorical programs, how do you make it
effective?
And I guess that I'll ask each of you--there's two
questions. One is, how do you make it effective? What are the
points that each of you focuses on in the implementation?
When you started mentioning maintenance projects, I happen
to agree with it. It's visible, labor-intensive and consistent
with the goal. But do each of you have some comments about
that?
And then second, how do we measure effectiveness so that
you can strategically make mid-course corrections? It's got to
be done at the delivery level, not the Washington level.
Mr. Gilchrist, can you answer this?
Mr. Gilchrist. On the State level, what we're trying to do
is take a look by program to go through what our measures are,
the objectives of spending the money on. We talk a lot about
transportation money that had the earliest deadlines.
But for the water and sewer funding or any of the other
funding that comes through by formula, we are asking each
agency to make sure that they articulate and have a Web site
for public comment; what their criteria are. What are the types
of water systems that are funded sooner? How much attention
they pay to energy conservation plus other issues and job
creation issues.
We're also asking the New York State Energy Research
Development Authority about our energy program, putting
together the plans to outline ahead of time what their
objectives are.
The last point you hit on is public policy. One of the more
difficult ones is finding those effective formulas that were
used to go through that. But we are all going through our
cabinet structure or agencies to go back south in the system
and what their measures would be beyond the job creation or the
job retention program.
Chairman Towns. Thank you.
Mr. Skyler.
Mr. Skyler. I think for us, that starts at the inception,
which is in our oversight; where every deputy mayor with a
stimulus funding for a program to present to the working group
and justify the funding.
We haven't carved up the pie and given it to our
colleagues, ``This is your amount, this is your amount, do with
it what you wish.'' Externally, there's oversight to make sure
that the needs are real.
Some of the programs lend themselves to efficiency issues
that are managed better than others. For example, $80 million
in energy efficiency.
We have auditors in place; the city verifies energy
efficiency already, so that we can tell what the payback is for
$80 million worth of project. We'll be able to measure them as
time goes by; where they are relating projects or generation
projects, hybrid vehicles. How much money the city had saved
from other places, such as the work force. The Investment Act
and job training will be able to measure how many people were
trained.
So, we are endeavoring to create that for each category,
and obviously there are dozens of categories, and some of them
are more challenging. But at the inception, what we wanted to
do is make sure that none of these are done in the back room
and that every person in administration that's involved in the
process comes to where the money is being spent. And then we
have that internal accountability. And then when decisions are
made, we're externally accountable.
Mr. Welch. And the final question.
What suggestions, concrete suggestions, do you have for
what we can do in Washington and make it more likely to be
successful here in New York?
Mr. Skyler. Keep sending it.
Mr. Gilchrist. I think he's saying that to try, making sure
there are some consistencies in the guidelines. Because through
it, and the Federal Government does what it often does, we'll
share the information across the States. So, when you go
through your processing and you pick up a good idea, you can
get it to us so we can also look at it.
Mr. Skyler. We are chomping at the bit, and not just from
the authority, but from the information from the Federal
agencies on how to spend funds. They all have rigorous
guidelines attached to them. And although we started meeting
and decided where we wanted to fund programs, we don't know
when those, for instance, eligible agencies put out the
information.
As I said before, over half the programs don't have the
guidelines, the guidance and deadlines out there for us to
judge. So, we can't make the internal funding decisions where
we manage the money until that information comes out.
So, as far as maximizing the effectiveness of the money,
stimulating the economy, if the stimulus has the intent to
speed it as part of that, as soon as these Federal agencies can
get that information to us, we will take advantage of that.
Mr. Welch. Thank you very much.
Chairman Towns. Thank you very much.
Let me take a moment to introduce a person that served on
this committee for 24 years, Congressman Major Owens.
[Applause.]
Chairman Towns. Let me start the second round of questions.
And as I move around, companies, small companies, small
businesses, they have a complaint. They're saying that we have
more opportunities. We're left out, what do we do. When we talk
about ``stimulus,'' they don't mean us.
Now, what can we do to grow small businesses and at the
same time meet your deadlines? And I understand that there's
time differences in all of that. But what can we do to be able
to let the small businesses come in? But they are saying that
they wanted to talk about the big guys.
Mr. Gilchrist. One of the challenges we face, Congressman,
and I think we need to work on, is getting information out into
the community early about what is going on; so there will be
that contracting opportunity. And so we can move as much as
this through the competitive bidding process as we can, which
helps you with the waste, fraud and use standard contractor
process. We at the State level are struggling on how to do a
better job, getting out not only to the State job bank where
the jobs are, information for the small businesses, so that
they can work with the other contractors and suppliers.
And that's one of the challenges we're facing as we're
moving forward. And one of the things we really need to do as
we put the first set of contracts out, there's a lot more that
we can do in that regard.
Chairman Towns. Mr. Skyler.
Mr. Skyler. Thank you.
We have on the private side, the greatest opportunity for
us, we got small businesses involved in construction. Most of
the expense funding goes directly to the city agencies for
public employees, whether education money, it goes to the
grants, essentially for existing city programs.
There are contracts, but the opportunities are not-for-
profit sectors. And we have, Mayor Bloomberg announced last
week, one person in the mayor's office who's going to be
basically the outreach for not-for-profits. Any not-for-
profits, a question on getting contractors in the city; whether
it's stimulus related or not, we'll have one person to call for
30 or so city agencies with different contracts. They can get
the opportunity to have, essentially, one-stop shopping.
And we're continuing to work with the city council and
their partners in construction industry are MWBE programs, to
make sure that everybody possible benefits from at least the $1
billion in construction funding stimulus that pumps into the
economy. And that has been a priority from the beginning and we
will do that.
Chairman Towns. Thank you. The Recovery.gov Web site states
that, ``. . . Does not plan to issue formal guidelines directly
to State or local governments. But agencies should seek to do
so as appropriate, potential infrastructure funding through
their programs.''
Does it concern you that the guidelines on stimulus funding
may come down from the individual agencies instead of one
uniform guidance document?
Mr. Gilchrist. In certain regards, particularly toward the
job creation and the tracking and the reporting, I think the
State would prefer we had several guidelines. For certain
ideas, especially job creation, the reporting requirements,
some of the overall contracting requirements, we would prefer
central guidance rather than to have to deal with multiple
agency requests.
And the agencies, we believe, are best left to specific
rules, such as the authority for water, sewer funds, and those
agencies with specific responsibilities; rather than the
overall reporting-type guidance that we think should come
central.
Mr. Skyler. For us, a lot of these programs are existing
programs that existed in the past. So, for example, the TARP
program, we have a relationship with their office in DC--GOJ,
that administers the program.
So, their relationships from people that worked in the
cities, the administration, and people in the Federal agencies
have worked with State administration to administer certain
programs so that there is existing infrastructure to move
things forward.
So, we can live with the existing system. As we mentioned
before, our main priority would be the speed of the information
getting out. Since the administration appears to make a
decision from a centralized warehouse of information that comes
from the agency's administrator, then we just urge them to
please expedite the issuing of the guidelines.
Chairman Towns. Let me ask you this. Does New York State
and offices of New York City have adequate staff to be able to
deal with the situation? I ask both of you that question.
Mr. Gilchrist. One of the things that we are processing
through right now--we have a work force route set up to deal
with every agency, so that we can go through and measure their
needs, particularly in the current budget climate, in
implementing the program. And we will bring the staff in from
the agencies.
Mr. Skyler. Although extra resources would be helpful in
administering of the stimulus funding, we will do what needs to
be done with the existing resources we have. I have redirected
people on my staff from other responsibilities to this.
It is a priority. Similarly, the economy is a priority. And
all the programs within the stimulus funding are, and the
decisions we need to make are what the priorities are.
Certainly, we won't turn away funds that were made available,
but we don't want to be taking funds on one hand and
complaining on the other hand that we don't have enough people
to administer them. So, it will be helpful, but we'll do what
we can with what we have.
Mr. Gilchrist. And I'd like to clarify where we're really
looking at positions, temporary positions such as construction,
especially. We're not adding to the overhead of the agencies.
Chairman Towns. Thank you.
Mr. Issa. Thank you, Mr. Chairman.
Mr. Skyler, I'd probably focus on you, but it is a question
for both of you. I happen to be a child of a child of the
depression. My grandfather worked on WPA projects, for
carpenters and cabinet makers. There was no work for much of
those jobs. And he left behind a legacy of things that actually
were built during that time that my grandmother and my mom
would tell me about, and even go show me a museum to see a
piece that he worked on.
So, I appreciate that it was a model, in the Great
Depression, of Federal money used to keep people employed, and
keep their skills--keep their work ethic. And we--it's not a
measurable item. I'm sure there are figures of how many people
were employed under WPA and other programs, but he left a
legacy.
This summer I was on the West Coast, and I drove from
Seattle--I was on summer vacation, going from defense
contractors, and then drive down the coast. The drive down the
coast part, I went over bridge after bridge after bridge, all
of which were built under the WPA.
As a result, I think what differed here, $800 billion is
actually bigger than several years of WPA. Yet, if I read
correctly, you talk about how many jobs were saved and so on.
Isn't it fair, Mr. Skyler, to say that if you move Federal
dollars into things which you can't fund under our rules, and
then you moved dollars elsewhere, that it's almost likely,
whether you saved 14,000 jobs or in fact that money really went
somewhere else and it created 6,000 jobs?
Isn't that an accounting nightmare to actually give us a
fair assessment and--in a sense, wouldn't you also take just
the number of, you know, X amount per million we're going to
create because--you are in a position where the numbers you
report are where you used our money but not necessarily where
you're using the money that's freed up for other projects,
which may or may not be labor-intensive?
Mr. Skyler. I agree with your assessment that it is very
difficult to get accurate job estimates. On the construction
side, it is by far the simplest task because we do it all the
time on city projects, how much--replacing a ramp on a bridge,
how much to replace a sewer main, how many jobs that creates.
Unfortunately or fortunately, depending on what your
priorities are, the vast majority of funding in the stimulus
bill is actually not for infrastructure. It is----
Mr. Issa. We are acutely and sadly aware of the case.
Mr. Skyler. Mayor Bloomberg met with the President along
with Governor Arnold Schwarzenegger in March to discuss
reauthorization of some key legislation; but there is a huge
need for infrastructure.
Mr. Issa. Sure. And we need 5 to 10-year programs. I'll
followup with just a couple of questions. For all those
potential contractors, for any parts of the stimulus, because
in many cases here in New York and my home State of California,
really, what you have is a group of projects you are already
doing and a group of projects that you're able to say or do as
a result of the stimulus.
In a sense, there's really no new work for a contractor.
These are two pools which before the stimulus may or may not
have been funded. And now that they've got the stimulus,
instead of a $10 million, $15, $20 million cut across the board
of the State, you're cutting less.
So, from an expectation, shouldn't the expectation of
contractors be, well, it's not going to be as much of a down
year because New York was able to deal, at State and city-
level, with its shortfalls? So, realistically, they'll look for
new work--less reduction than they otherwise would have had.
And as a result, put your expectations reasonable with the new
opportunity. If anything, it's going to be a little slower this
year.
Is that a fair enough way to put it?
Mr. Skyler. I agree with you. The assessment depends on
what program you're talking about. The city will receive in
fiscal year 2010, according to our projections, $6 billion less
in tax revenue, off the basis.
Mr. Issa. So, if you're talking about receipt is less, the
State and the city level, from the previous year, including the
stimulus, your net output will be less, too.
Mr. Skyler. So, what I can do is assure you that only
because of this, of the Stimulus Act, the pain that will be
felt in our private sector, in the government sector of New
York City, will be considerably less than it would have been.
Mr. Issa. I'm sure less. Let me ask you one last question.
The chairman alluded to this in the beginning, and I very much
support it.
Wouldn't you say that one possible legacy of the stimulus,
if we are able to allow you to redirect funds or, potentially,
a new fund; would it be, if in fact the Federal Government and
the States and the major cities were able to advance the
reporting systems with computers and the ongoing oversight--
this isn't the only Federal funding; you receive them every
year--If we can get a portion of this money allocated to be
reallocated for new funds?
And I realize as--we don't know for sure what we're
committing to, but if we would at least create that
opportunity, wouldn't one of the best legacies for your jobs be
to really, really make a modern leap in the ability to account
and report for funding that we all do within government?
Mr. Skyler. That would absolutely be an amazing legacy. Too
often in government, projects are judged by the costs, not the
outcomes. And that is the model Mayor Bloomberg is trying to
get away from: Not judging projects by how much you spend, but
what you get for the money.
Mr. Gilchrist. And on the accountability, also, what we're
discovering is the ability to show to the taxpayers all of the
sources of funding that are going to the community, where
before it was often left to the individual agencies. So, now we
are trying to line up highway, water and sewer modernization
and housing projects all together.
Chairman Towns. Thank you very much.
Congressman Kucinich.
Mr. Kucinich. Mr. Skyler, how much funds have the city of
New York received already from this program?
Mr. Skyler. It's $250 million.
Mr. Kucinich. You're expecting a total of----
Mr. Skyler. $4 billion, sir.
Mr. Kucinich. $4 billion.
Mr. Skyler. In additional capital.
Mr. Kucinich. And when will that $4 billion be finally
received?
Mr. Skyler. I believe that's--for example, the FMAP funds
goes from three separate fiscal years. So, we expect to get
installments into, I believe, fiscal 2011. We got our first
installment in the current fiscal year 2009, until--over 2\1/2\
fiscal years, we'll be getting installments of that money.
Mr. Kucinich. When this money comes in, where does it go?
Just walk us through it. The Federal Government sends you
money; how do they deliver it?
We are doing oversight. Walk us through, how do you get
$250 million from the government?
Mr. Skyler. Essentially, the city--my understanding of the
way these are treated is that--for accounting purposes, we
don't really exist. We are creatures of the State and our
funding, our Federal funding, actually flows through the State
of New York, to a large degree, to prevent----
Mr. Kucinich. Through what, please.
Mr. Skyler. Through the State of New York. And, for
example, the Medicaid funding, although we worked with our
allocations----
Mr. Kucinich. Mr. Gilchrist, how much money has the State
of New York received?
Mr. Gilchrist. We've spent about $1.8 billion so far.
Mr. Kucinich. Now, the U.S. Government gives you $1.8
billion. What do you do with it? Where does it go, physically?
Mr. Gilchrist. Physically, it changes by program.
Mr. Kucinich. Where does it go? Does it go into an account?
Mr. Gilchrist. The State treasury, an account the State
treasury would hold, through the Tax Department in the State of
New York.
Mr. Kucinich. Now, what does the State treasury do with its
deposits? What happens to that money in the State treasury? Do
you invest it in various banks?
Mr. Gilchrist. It's invested in various securities for
overnight or daily, depending upon the State cash-flow, or it's
turned right back around. A program such as FF would go back
and the funding would go from the State program and go out
through the localities.
Mr. Kucinich. So, let me ask you this.
I just want to take a few minutes to understand this
involvement.
So, some of the money that's coming from the Federal
Government, in fact, is going into the Treasury and you
reinvest that money, right?
Mr. Gilchrist. Well, the bulk of it is given to us on a
reimbursement basis.
Mr. Kucinich. Meaning?
Mr. Gilchrist. So, for example, our highway program----
Mr. Kucinich. So, you spend it and----
Mr. Gilchrist [continuing]. We spend, the Federal
Government reimburses us. So, we have to have----
Mr. Kucinich. But what about the other programs we were on,
the programmatic--the highway?
Mr. Gilchrist. Again, I believe that FMAP money that we
received, was the ability to build back to last fall----
Mr. Kucinich. So, you're saying all the Federal dollars you
received from this American Recovery and Reinvestment Act are--
you're just getting reimbursed.
Mr. Gilchrist. I can't say every dollar. It depends on--
each program is different.
Mr. Kucinich. How much of the money are you not getting
reimbursed for, that in effect, you are getting money and then
you're going to spend it?
Mr. Gilchrist. I would have to get back to you on that; I
couldn't----
Mr. Kucinich. Well, do you have any idea at all?
Mr. Gilchrist. I couldn't give you an accurate answer.
Mr. Kucinich. Well, what I'm interested in, Mr. Chairman,
is this: I'm only interested where national stimulus funds are
going in. Are States reinvesting that money as a way to spend?
Because if they are, then that's another way to help the banks.
And so, I'm very concerned about this. It's not just New
York or any other State. I want to find out--let this committee
know. When the money is coming, what happens to the money? And
if you're talking about--if your State is issuing financing,
like participation notes, OK, are you then issuing this money
and then these are helping pay off interest?
I want to find out the role of the banks in this chain of
custody of the money. And are the banks in any way--not just in
New York but across the country, are the banks in any way
benefiting from the Federal dollars that are coming in, and the
money is not being spent, is waiting to be spent?
We have heard testimony here that some of this money won't
be spent till 2011. Now, if that's a fact, I'm interested in
knowing where the money is, when it's being transferred.
Reimbursements I can understand, but I want to know if any
money is sitting around waiting to find a program while there
are people around the country waiting for a job. So, if you
could give us that information, we'd be----
Mr. Gilchrist. We will provide that. I don't believe we
have any money sitting around.
Mr. Kucinich. Thank you.
Chairman Towns. We will hold that open to receive the
information.
Congressman Platts.
Mr. Platts. Thank you, Mr. Chairman.
Mr. Kucinich started our followup, but first I want to
commend Mayor Bloomberg and his administration for a hands-on
approach to ensure accountability, transparency in the tracking
system, the Stimulus Tracker.
On the detail, to followup my colleague, where the money is
going to be spent, how detailed do you expect it to be in the
sense of the flow of money, all the way down to identifying
subcontractors on construction projects that actually are
recipients of these funds, or were the initial contractor and--
--
Mr. Skyler. What I will do is, I will get the committee a
sample when we bid out the first construction project. I will
then be able to show you exactly what level of detail goes into
it. We already have some information on the projects, but we
haven't done the bidding yet. We haven't put all the--the
details don't exist yet.
What we will do is, we will get to you a sample of the
level it goes to. If there's suggestions on going even deeper
into it, we will certainly do it. Some of the programs don't
really lend themselves to that type of depth.
For example, we received an increase in money for food
stamps. We've got 1.3 million New Yorkers whose allocations
have gone up by 13 percent. So, there isn't the same type of
detail provided for that.
But for one such as construction, we trace it from
allocation to groundbreaking. We should be able to provide any
and all information.
Mr. Platts. And when there's a contract for using these
funds, being different than a contract signed, subcontractor
signed, and then that would be relevant, to kind of follow the
trail.
Related to that--and I do commend the mayor in his
approach. Do you have concerns from the OMB--I know they talk
about the guidance coming, leaving to a great extent right now
up to the State--and advise how extensive your reporting
process is and what detail you're going to include?
But if these recent guidelines early this month would be
left open, then they have the authority and may require
additional information. As you advise your system, that may
create problems. You don't want to spend a lot of money on an
information technology system that generates X data and then
find out they want something else.
Again, is there a dialog at your level or perhaps at the
State level that gives you some assurances that the money
you're spending on your information technology is going to be
well spent? Because I'm going to have to be revising one or two
down the road because of all these changes.
Mr. Skyler. We haven't had any situations thus far that,
where we've gone for information from OMB or gotten from a
Federal agency. So, I assume part of their plan in making OMB
kind of a clearing house for Federal stimulus funds--to
delegate that responsibility to an agency that there wouldn't
be cross information and confusing the different municipalities
or States.
The mayor did meet with Peter Orszag several weeks ago to
talk about systems accountability; and we gave them a sample of
our Web site so that they'll be able to see it. And on my
level--and I called several officials at OMB on different
issues that the FMAP funding or other ways to budget, and they
then called back within 24 hours. And so, we're pleased with
the direction and response from the administration.
Mr. Platts. And that approach that you're taking, the mayor
is very commendable.
Mr. Chairman, if I could ask one more here.
At the State level, Mr. Gilchrist, the reference to your
testimony that the inspector general had an important role at
the Federal level to play, in reference to the jurisdiction
including overall private entities that receive funds for doing
business with--to what extent is that authority to go in and
look at financial documents of those recipients? How extensive
is that authority? I know it's early in the process, 2 months
in; but has there been any IG efforts as far as early stages
and saying, ``Hey, this concerns us?''
Mr. Gilchrist. We've done, early on, some preventive
measures. State law requires us to select the lowest
responsible bidder, which means that these are similar to the
City Vendex program, and have the contractor go through and
show us the financial capability and relationship of those
areas.
Early on in this process, what we're doing is going back
and reviewing previous findings to make sure that corrective
actions have been instituted as our first level of prevention;
of broad-based prevention.
Mr. Platts. I've had the privilege of chairing, not the
full committee, like Mr. Towns, but of a subcommittee; and that
approach was to have interim controls, and up front information
is critical.
Mr. Gilchrist. Dennis Whalen, who is the director of State
operations, who all the State agencies report to, issued a memo
last month that requires each agency by May 1st to give Dennis
and the Division of the Budget a report on what their internal
control programs are doing, all of the programs who received
ARA funds; and what they have done to solve all of their
outstanding audit findings. And we're also instituting a broad
waste prevention training program in conjunction with the
Office of the State Comptroller.
Chairman Towns. Thank you.
I yield to the gentleman from the State of Vermont, Mr.
Welch.
Mr. Welch. Mr. Chairman, my questions have largely been
answered from the questions of my colleague, Mr. Kucinich.
Mr. Kucinich. Mr. Skyler, in your contracting that's going
on as a result of the money that you're getting, what do you do
to make sure that no minority business enterprises are actually
going to be part of that?
What kind of effort is being made so that all this money
that's coming doesn't just go to the big name contractors who
don't necessarily find a way to link up with minority
departments?
Mr. Skyler. We have existing programs for minority and
women-owned businesses in New York City. In all stimulus
programs, especially----
Mr. Kucinich. I know you have programs, I'm familiar with
those programs. But what kind of effort is being made? Have you
had meetings already with minority business entrepreneurs
telling them how they become part of the program?
Mr. Skyler. As I mentioned before, we set up a one-stop
shop or one-point contact for the nonprofit communities. A lot
of the contracting that's desired in that community is actually
the not-for-profit sector.
We've designated a one-point person to be accessible and to
have meetings and to share information as information is made
available to us so that there is transparency and there is
accessibility to the programs; so people don't get lost.
And as I said, part of our frustration is that we haven't
gotten guidelines of a great many programs from the Federal
Government, I think, something like 50 percent. So, we don't
necessarily have the answers to the question being asked of us.
We do commit to share that information, whether it's
through the Web site or whether it's through one-point
contacts, to try to get these question answered.
Mr. Kucinich. Thank you. One last question.
Do you deal with the MTA?
Mr. Skyler. I do. I'm not on the board, but I'm the Mayor's
Office liaison.
Mr. Kucinich. Could you answer this: I understand that the
MTA may be assessed billions of dollars in penalties by banks
for technical default--no insurance because of AIG. Have you
heard about that?
Mr. Skyler. I have not, sir.
Mr. Kucinich. OK. Maybe afterwards we can talk about it.
Thank you.
Chairman Towns. Thank you very much. If there are no
further questions, let me thank you, first of all. We look
forward to working with you to make certain that the money is
used for the purpose intended. And that is, stimulate the
economy, not stimulate the big guy's pocket. [Laughter.]
We need to make certain that's not the case. We will be
talking with you as we move along, because we think oversight
and the responsibility is important. And for the superstar of
inspector generals to say to us, even if we are aggressive, of
the $787 billion, that $55 billion will go to waste and fraud,
is disturbing.
I understand that never before in all of my years I have
seen this kind of money flow out. At the same time, we have to
make certain that the money is used for the purpose; that is,
to stimulate the economy.
Thank you so much.
[Applause.]
Chairman Towns. Next. Mr. Colvin Grannum is the president
of the Bedford Stuyvesant Restoration Corp., one of the oldest
community development organizations in the United States.
Restoration owns and manages a 300,000 square foot
commercial and cultural center in Brooklyn that provides
services and programs in the areas of arts and education, youth
education, work force development and housing development.
Mr. Grannum formerly served as founding director and CEO of
Bridge Street Development Corp., a community development
corporation which continues to serve the community through
promoting housing development, home ownership and financial
literacy.
He practiced law over 17 years before embarking on his
career in community development. He has been employed by the
U.S. Department of Justice, the New York State Attorney
General's Office, and the New York City Corporation Counsel.
Mr. Grannum was in high school right here in Brooklyn
before he headed off to the University of Pennsylvania and, of
course, Georgetown Law School. He has devoted much of his life
to working for the people of Brooklyn, and we are happy to have
him today as one of our witnesses.
And let me move on to Mr. David Robinson. David Robinson is
the associate director of the Center for Information Technology
Policy at Princeton University. Before accepting his current
position, he was managing editor of the American, a business
magazine published by the American Enterprise Institute.
He has written about the social impacts of technology for
the American, the Wall Street Journal and Time magazine. And
his work at the center includes research and writing, strategic
planning and management of the center's operations. He's a
graduate of Princeton University.
Mr. Robinson, we welcome you. We welcome you, Mr. Grannum,
as well. Gentlemen, I would ask you to summarize your
statements within 5 minutes, which will allow us to have a
question and answer period.
If you, Mr. Grannum, would start out; and a maximum of 5
minutes. Thank you.
STATEMENT OF COLVIN W. GRANNUM, PRESIDENT, BEDFORD-STUYVESANT
RESTORATION CORP.
Mr. Grannum. Thank you, Chairman Towns, and the other
members of the committee. I want to just thank you for the tone
you are setting through your early intervention and oversight
of this process. It really is a tremendous amount of resources
that the country is investing in the stimulus plan. And it is
critically important, as you have articulated, that there be
oversight. So, to ensure not just efficiency but that the
purposes of the legislation are achieved.
I've been invited to speak about the impacts on the local
community. A community such as Bedford-Stuyvesant, which is a
very robust community, of course, has a substantial number of
people who are low income and a substantial number of people
who have been hurt by the current economic downturn. So, I want
to speak to that a little bit. I have submitted written
testimony, which I'll try to briefly summarize.
Chairman Towns. Written testimony will be included in the
record.
Mr. Grannum. Thank you. By the summary, the way I'm looking
at it, is that it's very clear. I believe that the stimulus
package will have some very concrete benefits for a community
like Bedford-Stuyvesant, which has very high unemployment
rates, very high mortgage foreclosure rates.
As you know, the high school graduation rates lag behind
the city and statewide averages. And very high, relatively high
poverty rates; despite the fact, as I've mentioned earlier,
that it has a robust community with a range of incomes--people
with a range of household incomes.
And the community just before the economic downturn had
been experiencing a very significant growth. But the act will
have benefits clearly, I think in the area of infrastructure
development, energy efficiency, education, job training and
social safety net. And those benefits will improve the
conditions in the community, particularly physical conditions.
And I speak a little about that in the testimony.
I think what's less clear is, despite the significant
benefits, is whether residents of communities like Bedford-
Stuyvesant residents who are low-skilled and chronically
unemployed will directly receive employment opportunities as a
result of the act.
And the second consideration would be whether minority and
women-owned businesses will directly receive business
opportunities as a result of the act.
These are serious concerns, but I don't want to downplay
the benefits because they are real. For example, in places like
Bedford-Stuyvesant, as mentioned, because of the substantial
number of people who are living in poverty or who are working
poor, in that poverty number, a fair number of people are
working poor. The fact that we're going to have extended
unemployment insurance benefits, the Social Security one time
payment, the enhanced food stamp benefits and the lower payroll
taxes are all going to have a significant positive impact for
residents and local businesses. That's clear.
I think in addition to that, the city of New York, I
think--I'm in favor of what the city of New York did with the
money, to use the lion's share of it for youth employment.
Because I think this summer, they have young people working,
acquiring skills, being able to supplement the household
income, that's going to be very important. Of course, that was
a given also, in part, because these funds have to be spent in
2 years.
And of course, there is going to be substantially more work
force development funds available to assist residents,
particularly in the job training area; and other benefits as
they relate to the physical conditions in the community.
For example, one of the projects being funded by the city
of New York, one of the transportation projects is the
improvement of the commercial corridor in central Brooklyn
along Fulton Street, where Your Honor's offices were previously
located.
And that's going to result in new sidewalks, new signage,
new street furnishings, new streets. This is important for that
particular corridor because it will assist the local businesses
in creating a safe and attractive environment that will
facilitate the improvement of their business operations.
Another area that there's going to be some concrete
benefits that will assist local income residents is--my 5
minutes are up? [Laughter.]
Quickly, that was a quick 5 minutes.
Well, let me just say that my concerns have to do with 2-
year spending. Obviously, it's reasonable given the intended
purpose, which is to jump-start the economy. But the concern is
that, as agency heads thought about how to spend funds in 2
years, they have been inclined to think about using the
existing contractual relationships, which frequently don't
include small minority-owned businesses.
And the difficulty is trying to figure out processes that
incorporate them quickly. And the other thing is the prevailing
wage requirement, which is also relatively reasonable when you
look at it on paper. But again, that has the possibility of
limiting the incorporation of low skilled workers.
[The prepared statement of Mr. Grannum follows:]
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Chairman Towns. Mr. Robinson.
STATEMENT OF DAVID G. ROBINSON, ASSOCIATE DIRECTOR, CENTER FOR
INFORMATION TECHNOLOGY POLICY, PRINCETON UNIVERSITY
Mr. Robinson. Chairman Towns, members of the committee,
thank you very much for your invitation to me and holding this
important hearing. I suppose I'm here to help you if I can, to
bring some of the important questions that have already come up
about Recovery.gov and use of the Internet to make the stimulus
as transparent as possible.
Information technology can make recovery activities more
transparent than any government project has ever been.
Government transparency means making all public information
available in a way that is useful for citizens. Because we are
starting fresh with Recovery.com, there's a rare opportunity
here to get this right.
What might it mean in practice? First, obviously,
transparency can help government institutions to become more
effective. Where there is broader abuse, public attention gets
problems solved. Where government is working well, that same
attention can build trust and confidence in public actions.
Second, transparency lets people as individuals to put
pieces together in new and unexpected ways. For example, Vivek
Kundra ran a contest while he was serving as Washington, DC's,
technology officer that encouraged people to take advantage of
data being published by the city.
Inspired citizens responded by building a dashboard and map
that shows local demographic, transit, business and crime
information, all in an integrated Web site.
If the same approach were used to publish recovery related
information, sites might emerge to highlight the benefits
stimulus funding brings to specific communities; and by
extension, the good work of State and local officials across
America.
Third, transparency can let individuals and businesses spot
the economic opportunities that are available to them, helping
not only themselves but also the economy as a whole. The
Recovery Act creates so many possible grants, contracts and
loans that it's tough to match each opportunity to really make
the most of it.
There is a competition among different ways of finding out
about these stimulus opportunities. In each case, reuse is the
key. Whatever public data is reported by States or agencies, we
need to make it easy for innovators to get their own complete
copy of that data in a computer-friendly way so that innovators
can develop new tools.
An increasing number of experts and groups have highlighted
the importance of data reuse. The Association for Computing
Machinery is one example. But a public policy committee that I
served on recently issued consent recommendations for the
government, which I've included with my written testimony.
The most recent, as has been discussed, detailed
information we have about transparency for the stimulus is in
this April 3rd memo from OMB. There are some good signs, but
also concern about the hundreds of billions of dollars that
will be spent by States.
They report that, at least initially, the Recovery Act will
be able to tell people if that money was sent to a certain
State and then to a locality, but not what ultimately became of
the funds. The States will decide how much detail to reveal.
The longer-term picture, though, is less clear. OMB
reserves the right to require reporting on ``all levels of sub
awards.'' How will they use that power? An uncertainty about
OMB's intentions leaves States with tough choices. That's what
the Federal Government is doing. State governments may wish to
create new infrastructure to expose the details of their
recovery extending to public view.
But any new systems being deployed today could turn out to
be a risky investment. It could become redundant or even
obsolete if OMB later decides to centralize and standardize the
nationwide reporting of the same information.
Ideally, OMB would either collect detailed information
about State stimulus spending itself, or else set a clear and
public minimum standard of disclosure for each State to follow.
How far will OMB's plan extend its reporting requirements for
States? Will it collect all of the data that we need for real
transparency, or will it cede responsibility for States to
collect and manage the most detailed information?
Either way, OMB should lose no time in reaching a decision,
and clearly and publicly communicating its intention.
Thanks for the chance to appear. I look forward to your
questions.
[The prepared statement of Mr. Robinson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Towns. Thank you very much, Mr. Robinson.
We are joined by the comptroller of the city of New York.
We swear all of our witnesses in. If you would stand and raise
your right hand.
[Witness sworn.]
Chairman Towns. Let the record show the comptroller has
been sworn.
Be seated.
Mr. Comptroller, you are allowed 5 minutes to give a
statement; and then, of course, your entire statement will be
included in the record. And then we'll have questions to ask.
You may begin.
STATEMENT OF WILLIAM C. THOMPSON, COMPTROLLER, CITY OF NEW YORK
Mr. Thompson. Thank you, Mr. Chairman. It is a pleasure
seeing you this afternoon.
Ranking Member Issa, members of the committee, observers,
again, good afternoon.
I'd like to thank you for holding this hearing and inviting
me to discuss implementation of the economic stimulus package,
the American Recovery and Reinvestment Act of 2009.
As many of you know, New York City is set to receive more
than $4.5 billion under President Obama's economic stimulus
package, and these funds could not be more necessary.
Our city today is facing an economic crisis unlike any
we've seen since the Second World War. And people need help.
We've lost over 100,000 jobs since August. Millions of New
Yorkers are worried about skyrocketing transit and water rates,
and families across our city are struggling just to make ends
meet.
Yet while the stimulus package should certainly be seen as
a tremendous opportunity to create jobs both for our struggling
economy and provide relief to our city's many forgotten New
Yorkers, we should also look at the distribution of these funds
as another kind of opportunity as well, the opportunity to put
in place a blueprint for much-needed transparency and
accountability reforms in city government.
These reforms are long overdue. In fact, in the almost 8
years now during my tenure as city comptroller, I repeatedly
called on city agencies to improve the all-too-often opaque
process by which taxpayer funds are disbursed. In January 2008,
for example, I called on the administration to immediately
implement transparency reforms at the City Industrial
Development Agency, an agency that promotes economic
development through disbursement of taxpayer funds to small
businesses.
As an IDA board member, I saw firsthand the need to shine a
bright light on the selection process of IDA beneficiaries. I
sent a letter to Deputy Mayor Lieber. I made 10 detailed
recommendations toward that goal. Two months ago--let's skip
over that.
We must avoid these pitfalls for the stimulus moneys, and
ensure that job creation and salary criteria are clearly laid
out before funds are disbursed. We also sought to infuse good-
governance principles like openness, transparency and
accountability through all my work as city comptroller.
Last year my office introduced a new online application
that for the first time allows vendors to track online the
real-time payments or real time status of their payments from
the city.
When I took office in 2002, I insisted that every audit
conducted be posted on my Web site. And to date, we've saved
over $248 million in savings.
In keeping with the principles of good governance, I
believe that before a single stimulus dollar is disbursed, we
must first and foremost ensure that these funds are actively
accounted for and that outcomes are carefully measured and
monitored. This is a job that will, in part, be undertaken by
the authority of my office. The charter-mandated role of the
Comptroller's Office is to ensure that all funds are tracked
accurately and transparently. And this is a responsibility I
take seriously.
As many of you know, I also am responsible for approving
all contracts and agreements between the city and its many
vendors. As a comptroller, a close inspection of these
contracts is a priority. This focus has saved our city
millions.
Rest assured, I'll bring this same vigilance and attention
to detail to my work overseeing the contracts and contract
amendments that result from stimulus spending. Through your
registration process, my office will continue to ensure the
integrity of vendors and the bidding process. We're already
moving forward on many fronts to ensure the smooth transition
of stimulus money to job-creating, shovel-ready projects in our
city.
Two weeks ago my staff and the mayor met with the
Government Accountability Office to discuss its needs, as we
work to design a system that will track and display stimulus
funds in real time. One potential difficulty in monitoring
stimulus funds would likely be the need to differentiate
stimulus moneys spent under preexisting contracts.
For example, before stimulus funds are used to add jobs or
benefits to existing contracts, we must first put in place a
system that allows for the separate tracking and outcome
monitoring of stimulus funds and funds spent under that
preexisting contract. This will surely be a challenge.
Fortunately, however, the city already has in place strict
contractor integrity reviews and detailed procurement rules.
In the end, we have to move quickly. New Yorkers deserve,
above all, a transparent system that will by its very nature
help ensure the taxpayer moneys are spent responsibly. Under my
watch, New Yorkers will be afforded this right, will be able to
see exactly how, why, when and where their hard-earned tax
dollars are being spent.
Thank you, Mr. Chairman.
Chairman Towns. Thank you very much for your testimony.
I thank all of you for your testimony.
We move to the question and answer period. Let me begin
with you, Mr. Robinson.
In a recent article, you suggested that regulatory
monitoring rules and regulations impedes modernization of
government Web sites.
What regulations will need to be changed to eliminate this
problem? How should we change those regulations?
Mr. Robinson. That is an excellent question, Mr. Chairman.
And as I'm sure you can imagine, the answer would call for a
great deal of detail about particular ones. But I think the
bird's eye view--which I would be pleased to provide and to
consult with, and I'm sure my colleagues would as well--the
bird's eye view is that many laws that were passed before the
Internet have unintended implications that are impeding the use
of the Web by government.
So, for example, if a group of citizens collaborated on a
Web site, are they identical to an advisory committee? Or if
people are filling out an online poll, does that raise
paperwork-reduction issues?
So, I would say there are probably two levels on which this
can be addressed. One is the administration doing what it can
through executive action or intends to do what it can. But I
think that Congress should look at the list--the long list of
more than 20 different regimes that current Federal Web masters
have to comply with; and think about laws that would sweep
those, maybe in the case of the Web, aside, in favor of clear
guidance of designs for the Internet.
Chairman Towns. Thank you very much. I really hope that you
would submit some additional information in terms of the
specifics. We'll keep talking about this for quite some time.
Mr. Robinson. Yes, sir.
Chairman Towns. Mr. Grannum, based on your experience, do
you think that community organizations in general currently
have the ability to track and audit stimulus funds for the
city?
Mr. Grannum. I think it depends. I think with respect to
existing programs--for example, weatherization is an existing
program where community-based organizations have been involved,
in some cases, more than two decades, sometimes almost three.
And the prophecies are longstanding and well monitored by the
State.
I think in some additional areas, it may be questionable.
And I think one of the concerns is whether and how much
administrative burden you put on not-for-profits in this
process as well. Obviously, it's a balance. We need to be able
to account for the funds, but at the same time, some of the
administrative burdens that are imposed by the government make
it very difficult for organizations to participate, not just
not-for-profits, but small businesses.
Chairman Towns. Let me ask you, Mr. Thompson. Based on the
fact that this has never happened before, not in my lifetime,
that $787 billion is given as an opportunity for the country;
and then they are called upon to monitor this. Do you have the
staff to make that possible, to do it within the present
structure?
Mr. Thompson. I believe that we have the staff in this
current environment to be able to monitor and oversee this;
yes, I do. I think that the changes that have been made over
the last 7 or 8 years, the growth of use of technology, some of
these are the foundation that we have established already, as
well as new data bases will allow us to be able to do that.
Again, obviously, it will take not just my office but working
in conjunction with the mayor's office and others, the ability
to get that done.
I believe that we should be able to track this money,
follow it, and make sure that we can account for every dollar.
And that is the mandate. I think that is something that we
should be able to do. Obviously, if this were 10 years ago, I
wouldn't be able to make that representation. But I think that
now, given the use of technology and other things, we should be
able to do that.
Chairman Towns. The reason I raised that question with you
is that Mr. Delaney, who is the superstar inspector general,
has indicated to us that even if we are aggressive, out of the
$787 billion, $55 billion would go to waste, fraud and abuse.
So that's the reason why I raise the question. To me that's
a shocking number. I think that's a lot of money that can be
used to really turn things around in a positive way. And it
will end up in somebody's pocket in the wrong way.
Mr. Thompson. Mr. Chairman, I couldn't agree with you more.
I think in this current economic environment that we are in,
every dollar needs to be well spent; and to go over the
purposes of the vendors that the Houses, as well as the
President, has determined what it should be used for.
So I think it is important that government be pushed on to
its limit to be able to oversee, make sure every dollar is well
spent and that there is no waste. And given that, I think it is
an excellent opportunity for government in the future to make
sure there is less waste as we move forward, not just in these
dollars, but all other dollars being spent.
Chairman Towns. The gentleman from California.
Mr. Issa. Thank you, Mr. Chairman. That question leads
right into my question.
You believe that you can oversee the stimulus funds in
order to minimize waste, fraud, abuse; right?
Mr. Thompson. Yes.
Mr. Issa. Do you surf the Net using Google or Yahoo or any
of the other search engines?
Mr. Thompson. Sure.
Mr. Issa. Can I search your data the same way by going in,
clicking on it and finding relevant information so that I can
look over your shoulder?
Mr. Thompson. Absolutely.
By the time we put in place, along with the mayor's office,
certain data bases, yes, you should be able to surf the Web to
be able to visit specific Web sites, whether it's mine or
others.
Mr. Issa. No, that wasn't my question.
I want to be able to second-guess your oversight for waste,
fraud and abuse, contract pricing, who is the sub and the sub
of a sub, and whether qualified as a minority, woman-owned or
business. I want to know how much they would disburse or what
on a given day.
Will I be able to do that?
Mr. Thompson. You should be. I'm not sure how many levels
down, but you should be able to do so.
Mr. Issa. Do you have that? Is that technically public data
would be available under normal freedom of information?
Mr. Thompson. Yes, it is.
Mr. Issa. OK.
Mr. Thompson. It is available under freedom of information.
Mr. Issa. And I'm playing devil's advocate for a reason:
Because the chairman and I have, on a very public joint agenda,
to try to make that possible.
Today the Federal Government is not giving you any money
for that; is that correct?
Mr. Thompson. Correct.
Mr. Issa. And according to Mr. Robinson's testimony, today
we are not giving you standards so that searchability engines
could search more easily by having common data base rules and
terms; right?
So, that leads me to the question, and I'll go to Mr.
Robinson in just a second; and this is from your response.
Do you believe that either with existing funds it can be
redeployed or with new funds, that the Federal Government
should be tasked to nominally set those standards but then
facilitate that on an ongoing basis so that the public can in
fact search any use of Federal funds, whether directly by the
Federal Government or all the way down to this spending of it
for the sub of a sub, if that information is technically public
information?
Mr. Robinson.
Mr. Robinson. I think that, yes, absolutely.
Mr. Issa. And is that technology, as I used the example,
technically available, but not implemented?
Mr. Robinson. There is a question here about how much of
the presentation of the data should be the government's task.
And I think we would all agree that it would be ideal for
Recovery.gov that we would go out and perhaps cover the local
areas to be user-friendly and to be able to be used.
But at the same time, it would ideal if the data itself
that underlies such a site were published, so that there could
be many different ways to search. So if you like to Google and
have a copy, and Yahoo can have a copy, probably it might, as
well. And compete to show us the data most clearly. These are
technically possible things, but I think they do require a
considered commitment to implement.
Mr. Issa. This committee, under the chairman's leadership,
has been quoted by Mr. Devane and rightfully so, that the
expectation is that if the government does a good a job and
there is no more waste than other comparable programs, that we
will waste or lose or misallocate at least $55 billion.
I'm going to ask each of you whether, no matter where the
funds come from, if we find a way to make available, both in
Federal implementation and particularly at your levels, 2
percent--that would be about $15 billion--to help in that
implementation standard setting, modernization of equipment, so
that either through your own engines or, as Mr. Robinson said,
through competition within the search engine community, this
information that you pore through every day could also be pored
through by the public who pays their taxes; would that be a
fair investment?
Mr. Thompson. It would be both a fair and a good
investment, yes.
Mr. Issa. Mr. Robinson, would it be fair and good and is it
enough?
Mr. Robinson. It would be fair and good. Let me stop at
that. In addition to helping government, I would hope some
fraction of it could be used to incentivise the third parties
who also would go to the work of oversight. And I think that
would also be highly effective.
Chairman Towns. Mr. Grannum.
Mr. Grannum. I think that's right. I think that there are
lots of stakeholders who are interested in the information,
even from the perspective of whether people are receiving fair
treatment with respect to the allocation of funds.
Mr. Issa. And I would assume that data base was effective
and competition was there so that searches became better and
easier; as most of us would use Google or Yahoo or MSN Search,
that your organization would then have an easier time doing its
task, because that would be the resource for you.
Mr. Grannum. That's correct.
Mr. Issa. Thank you.
Mr. Grannum. Thank you, Mr. Chairman.
Chairman Towns. Thank you very much. And now we yield to
the gentleman from Ohio, Mr. Kucinich.
Mr. Kucinich. Thank you very much, Mr. Chairman. I voted
for the stimulus in the hopes that the money is going to get to
help the people for whom it is intended. After witnessing many
years of trickle-down economics, I understood that the trickle
seldom gets down. [Laughter.]
Now, I want to find out about, does the torrent of money
that is going through this, and that's a trickle of more than
$787 billion, how does it get down? Now, Mr. Grannum, in your
work, your Bedford Stuyvesant restoration, are you concerned
that this great amount of money that you see coming is not
going to get to the people who really need it?
Mr. Grannum. I think I have to make a distinction right
there. There are two categories. So, the social safety net
money, I think I have little concern, will get there; I believe
it will.
I think that the money that could stimulate business in
communities like Bedford-Stuyvesant, I have greater concern,
because unless there is some intentional mechanism to open up
avenues that have been previously been closed, the money is
going to flow as it has in the past.
And so, that is a major concern. I think one of the things
is that we want to break away from having the proportion of
funds that go to communities like this be funds that are
subsistence, and have a greater amount of those funds be funds
that generate enterprise and work.
Mr. Issa. Mr. Thompson, do you agree with that?
Mr. Thompson. I would say that is one of the challenges, in
making sure these funds don't necessarily just go to the same
old places.
Mr. Kucinich. That's the point I'm asking all around the
country, because it's like not only do we often have two
classes of society in terms of where the income goes, but
structure of businesses in any community, the fact that some
people are getting the money all these years, they tend to just
keep getting it; instead of the new entrepreneurs who are in
the minority and miss the opportunities. So, what should we be
doing to make sure?
Mr. Grannum. Well, transparency has a lot to do with it.
Mr. Kucinich. I will address that and I know that Mr.
Robinson, you're from Princeton, you're involved in information
technology and that's very good. Now, but according to the
CIA's Factbook, it has all kinds of information that is
sometimes useful. And one of the bits of information they say
is that in America, there's approximately 223 million users of
the Internet.
Now, for those who are aware of the population statistics,
the population right now is over 300 million. So it's quite
possible that some poor people in this country do not use the
Internet.
Now, we're talking about the trickle getting down, it is
most likely--and I'm just guessing at this--but it's most
likely that people who don't use the Internet happen to be in
neighborhoods where there's a lot of poverty, social
disorganization and such things. They can't afford either the
Internet connection, or they can't afford the terminal,
whatever.
How do we make sure that people still know about these
programs? If you have to go to the Web site to apply, how do
you get the information?
Mr. Robinson. Not only is it a good question but it is an
absolutely salient question and one, in fact, that we have
studied. I would say that--the analogy I might use is the
computers in the classroom. There are some kinds of some
programs for Washington, Maryland public schools, one computer
in every classroom; and it's just for the teacher, we thought
at the time. So it will just be one, you can't help all the
students, you think 30 students using one computer, and that
was true.
But what turned out to happen was that the teacher would
use the computer to get in the new lesson plans and other new
information.
Mr. Kucinich. How will he get the information through?
Mr. Robinson. And that's a question for the rest of us. And
so what I would say about the Internet is, if the information
about what is available to disadvantaged communities is itself
public instead of being buried in some file somewhere, that
means that people who are engaged in the work of trying to lift
up those communities, people like Mr. Grannum and his
colleagues and others around the country, are better able to
assist their communities in need, even if the people they are
helping are not online, it is still the case that the Internet
could help them.
Mr. Kucinich. Thank you.
Here is what I'm getting at. As it is apparent, I just want
to conclude with this. With all this money being available, it
seems to me we should be able to hire people to knock on doors
to tell people what programs are available.
[Applause.]
Mr. Kucinich. And that's all I have to say.
Thanks.
Chairman Towns. Thank you very much. We'll continue with
the gentleman from Pennsylvania, Mr. Platts.
Mr. Platts. Thank you, Mr. Chairman, and my thanks to all
three of the witnesses for your participation here today.
Mr. Grannum, I've more of a comment and then a thanks and a
question. And that is, just your concluding in your testimony
the comments about the prevailing wage and the impact on job
creation and who will be able to participate.
I'm one of those who believes that, unfortunately, the
prevailing wage, which was well-intended when it was initially
created, has resulted today in negative consequences. I say
that as a former Teamsters Union member. I know there are union
colleagues who will support the minimum wage.
But you well lay out in your testimony that the prevailing
wage requirements in this bill will likely lead to fewer jobs
being created because of the inflated costs associated with the
minimum wage, as well as making it harder for small business
owners and minority-owned business owners to participate in
them because of the regulations that go with prevailing wage.
And so, I want to thank you for including that, as well
that we need to be aware of the fact that while that may be
well-intended, at the end of the day it may be hurting more
people than helping with their prevailing wage.
If you want to comment?
Mr. Grannum. I would say that it is certainly uncomfortable
for me to criticize the prevailing wage. I'm from a union
family, as well. But on the other hand, there are many projects
that are getting done in communities like Bedford-Stuyvesant
that would not get done if the prevailing wage were required in
all of them. It would just not be feasible to do the projects.
Mr. Platts. And I think that's the issue here, as we know.
We recognize perhaps some of the merits of that law but know
that there should be limitations in store in how we impose that
law. So, I appreciate you including that in your testimony.
Mr. Robinson, this next question is for you. What would you
identify in your written testimony to address the concerns
about the administration's guidance thus far? I sought to raise
that with State and existing local officials in previous
panels.
What do you see as the most glaring shortcomings of the
administration's guidance to State and local governments and
other recipients of these funds thus far?
Mr. Robinson. I understood, at the earlier panel in
response to your question, Mr. Skyler had indicated that they
haven't received contradictory guidance from these variety of
sources from different agencies of the Federal Government, the
OMB and so on.
And I suppose that is a cause for comfort; but at the same
time, I think part of the reason that there haven't been any
contradictory things is that they had just been so vague in
some respects that there hasn't really been the kind of
guidelines that really could make things absolutely clear.
So, the guidance that was issued April 3rd says that the
OMB intends to give States the option of either reporting
directly into a Federal Web site, or else compiling reports at
the State level and submitting those. I'm not sure that having
a diversity of approaches among States--I'm not sure what that
would do necessarily for uniformity.
But in any case, the question of how data is submitted is
only half of the puzzle. The other half is, what data do they
have to submit?
And on that, I would submit that the guidelines that were
released on April 3rd is less than totally clear. It's clear
that they intend to require some additional information besides
what is presently required in the future.
They talk about expanding the reporting model. But the
question is how far it will be extended and whether or not when
they're done extending it, it will still be the case that we
need extra information that has to come from the States because
the ultimate OMB requirements don't include the guidelines.
That remains to be seen.
Mr. Platts. And the possible negative result of that is
that States may spend a lot of money on information technology
in designing these reporting systems; and then months from now,
2 years from now, they will actually want it in this initial
form or initial information, not that information. And then we
have a new expenditure.
And so, that is the concern, that we need to get it right,
the sooner the better, for a complete and better uniform bill.
Mr. Robinson. Absolutely. One concern is obsolescence. The
other is a wait-and-see attitude, where they're saying is, ``I
don't know what the OMB is going to do so I'll wait.''
Meanwhile, the money isn't being spent.
Mr. Platts. Either way, there's a risk that OMB has to make
a decision, and hopefully it's a decision that is uniform for
all agencies that are involved in disbursing the funds; rather
than in a hodgepodge approach.
Mr. Chairman, thank you; and again, my thanks to the
witness.
Chairman Towns. Thank you. Thank you for everything that
you've said. And I know that talk about prevailing wages, I
think if we get rid of the waste and abuse, there will be no
problem. [Laughter.]
Let me thank all the witnesses today and the Members who
attended this hearing today. Before we adjourn, let me say that
America demands that all stakeholders under the Recovery Act
work in good faith to protect the public and safeguard our
unprecedented investment in America's future.
I want to be clear, and be crystal clear, that this
committee will be watching and working furiously to ensure
accountability and transparency over the funds.
Let me also thank the ranking member, Mr. Issa, for his
leadership in standing up with me to demand the strictest
oversight.
Finally, please let the record demonstrate my position of
abiding with documents relating to this hearing.
And of course, I want to conclude by saying to all of you,
I appreciate your coming out. You can see that we have a lot to
do.
And without objection, the committee stands adjourned.
[Whereupon, at 12:39 p.m., the committee was adjourned.]
[The prepared statement of Hon. Diane E. Watson follows:]
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