Ohio County Rejects Stimulus Money

Warren County, Ohio has told the feds to go home and take their stimulus money with them. The federal funds were earmarked for adding buses to the county’s rural transit system. The county commissioners, however, said the buses weren’t needed.

The county [Warren County] is the only one in the state that has rejected stimulus money for transportation improvements, according to the Ohio Department of Transportation.

Commissioners rejected $373,000 in stimulus money to buy three new transit buses and upgrade their fleet, citing their opposition of deficit spending for buses and vans.

“I’ll let Warren County go broke before taking any of Obama’s filthy money,” Commissioner Mike Kilburn said.

ODOT spokesman Scott Varner said the money was specifically for transit improvements in rural areas to improve transportation for disabled people, seniors and others needing access to health care and educational opportunities.

What is particularly telling about this story is the nature of the spending itself. By paying the capital costs of the bus, the county would still have to fund their operations and maintenance. Thus, the county would be obligating itself to higher spending well after the federal money was gone. Of course, by then, the economy will have rebounded, creating the illusion of higher tax revenues to fund the system. To keep the system running during tight times, the county would have to raise taxes to fund the operations. In public finance, we call this the “flypaper effect”: once programs are funded (or expanded) the tendancy is to ratchet up spending to keep them in place.

Fortunately, Warren County commissioners are trying to avoid this too.

Commissioner David Young said the commissioners also are looking for a way to give back $1.8 million in stimulus money allocated for energy efficient windows and roofs on government buildings.

“We are working with the prosecutor’s office to find a way for us to give back the money and make sure that no one else spends it,” Young said.

“We want to make clear that we are saying ‘no, thank you’ to spending this money and we are reducing the $787 billion being spent by $1.8 million.”

Unfortunately, the Ohio Department of Transportation is looking for ways to simply re-allocate the money to another county willing to take the transit funds.