Thread: Portsmouth Turns Down $2.5 Million Stimulus

Wednesday, February 17, 2010

City Turns Down $2.5 Million Stimulus

Beware the attached strings. Stimulus rules may make it profitable to refuse money. That is what the city of Portsmouth found out when reviewing grants from the American Recovery and Reinvestment Act.

Please consider Portsmouth says no to $2.5M in stimulus funds http://www.seacoastonline.com/articles/ ... WS-2090401

As stimulating as it might have sounded at the time, the city recently declined $2.5 million from the American Recovery and Reinvestment Act for its new water treatment plant because federal wage regulations would have forced the city to pay more for the project.

Ranked as the fifth most pressing drinking water project in the state, the state Department of Environmental Services awarded the city $5 million in March 2009 for the project — half of which would be a grant, and the other half borrowed from the state's low-interest revolving loan fund.

When the bids came in, the low bidder — Penta Corporation — presented final cost of $21 million with the stimulus funds and $17.3 million without.

Stimulus funds mandate workers are paid using Davis-Bacon Wage Determination, which sets the pay scale for workers on federal projects and added $2.5 million to the bottom line.

The "Buy American" provision would've added another $500,000 and Allen said there would have been significant administrative costs — upwards of $100,000 — for the city to track it the way the government requires over the course of the two-year project.

Articles like this are a clear indication that much stimulus money is wasted in bureaucratic red tape, monitoring, and above all union work rules.

For more on Davis Bacon please see

Prevailing Wages - Your Stimulus Dollars At Work http://globaleconomicanalysis.blogspot. ... llars.html

Thoughts on the Davis Bacon Act http://globaleconomicanalysis.blogspot. ... n-act.html

The Davis-Bacon act is a real porker and it needs to go. Taxpayers should expect to see jobs completed for the least amount of money possible, not the most.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot. ... mulus.html

What this article fails to mention is that Union construction workers pay higher taxes, have healthcare, retirement programs and in most cases are higher skilled. Non union contractors usually pay about 50% of the union wage without any of the benefit costs. They employ 3 unskilled workers for every skilled one who directs the the first 3. The work is usually of shoddy quality done in any unsafe condition the contractor deems to be cost saving.

Bottom line is that by using non-union there will most definitely be added costs down the road that are not considered at the outset of the project. Just remember cheaper is hardly ever better and you get what you pay for.