THE BLOG
02/16/2009 05:12 am ET Updated May 25, 2011

Going Local: Building a Smarter Recovery Package

Congressional leaders and President-Elect Barack Obama are moving to create an economic-recovery package ready to sign as soon as Jan. 20. That's great news for a reeling economy. But while a no-strings bailout to struggling state and local governments, as some are seeking, may ease painful decisions ahead, Congress should consider a much more strategic approach.

Done right, such an approach would get money into the economy more quickly, encourage public-private partnerships, nurture green industries and begin reinvesting in the nation's deteriorating infrastructure in ways that can help in both the short and long terms.

As new chairman of the Democratic National Committee's 100,000-strong caucus of municipal elected officials, I would argue the federal government shouldn't try to do everything itself. Pushing money down to the most local possible organization, and providing preferences or other incentives that encourage private-sector involvement, will have a bigger, faster impact than any more-centralized approach.

Cities and other local government agencies are best poised to nimbly fulfill much of the government role in stimulating the economy in concert with substantial federal funding. Local governments and their private-sector partners have in place approved projects totaling many billions of dollars in the Los Angeles area alone, awaiting the money to make those projects happen.

The federal role may be most cost-effective providing the bridge money, last-piece funding and loan guarantees that can leverage thousands of money-starved local priorities into reality.

Perhaps the biggest immediate need: more affordable housing. Private developers typically finance such projects by cobbling together private and public funds and tax incentives, but are hamstrung by the downturn. Yet the need for these projects is higher than ever, as many face the triple whammy of lost job, house and credit rating. Targeted federal help could overcome the credit crunch stalling many projects.

The Los Angeles area also has billions of dollars in other ready-to-go and badly needed improvements, for parks and power grids, light rail and street lighting, highways and public housing, including:

● MTA street repair and surfacing projects, $500 million;
● Metro Blue Line rebuilding, $350 million;
● L.A. Department of Water & Power electrical-distribution
improvements, $100 million;
● Public housing, repairs and renovation, $791 million;
● Griffith Park trail restoration and a horticultural learning
center, $19 million;
● Street-lighting replacement for energy efficiency and public
safety, $7 million.

The DWP's ambitious Solar L.A. project, with accelerated federal assistance, could comprehensively convert more of the city's infrastructure to alternative-energy sources, while creating jobs in green industries. Federal funding also could substantially accelerate private green-conversion efforts by replacing or enhancing tax credits and rebates with up-front consumer incentives to "buy down" steep solar-installation costs.

A smarter recovery package, perhaps distributed in more than one round of funding, also takes care not to punish states such as California with substantive local environmental regulations. Speedy action is vital, yes, but given the importance of a California recovery to the economy as a whole, any diversion of funds to less environmentally conscious locales, or to projects that are shovel-ready but are not strategic, would be self-defeating. A brainy recovery package would be smart enough to make sure all boats have a chance to float again, and soon.

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