The U.S. Army Corps of Engineers constructs large water projects (dams, levees, pumping sand on beaches) across the country. In the stimulus bill the agency receives $4.5 billion, nearly doubling their annual budget.

In FY08 the agency received $5.6 billion, the FY09 budget has not been finalized. The major areas of funding emphasis are doubled: construction ($2 billion stimulus; $2.3 billion FY08) and operations and maintenance ($2.225 billion stimulus; $2.2 billion FY08). Additionally, the Corps has received billions in emergency/supplemental funding to help expedite construction of flood and storm damage reduction projects in New Orleans and coastal Louisiana. In effect, the agency will be bursting with new funding. It is hard to see how the agency could effectively administer and allocate this enormous increase in funding. The safeguards and oversight required to spend it wisely would slow any legitimate stimulus effect to a crawl.

The bill provides little prescription as to what should be funded and where. Funding is supposed to go to projects that have already received funding, but considering the spread a little funding to a lot of projects approach Congress has taken over the years, that is hardly a limiting restriction. There is also general guidance to prioritize projects that can be executed quicker, can be completed in the next two years and are more labor intensive, but nothing requires that certain projects be prioritized or that concentrating construction resources on major rehabilitation instead of new construction.

One provision that should be a concern to taxpayers is cost-sharing for construction on inland waterway projects is waived. Under current law, 50 percent of an inland water construction project (a navigation lock for example) is paid by the taxpayer and the other 50 percent comes from the inland waterway trust fund, which is funded by a user fee – a tax on fuel used by inland waterway operators. The trust fund is essentially bankrupt, which is a reflection of declining traffic levels on the system. That is clear evidence that these funds could be better used elsewhere, somewhere that actually stimulates the economy. This provision should be rescinded or at the very least, the industry should be required to pay back this loan to the trust fund.

The bill requires the Corps to file quarterly reports as to how the agency has spent the funds. But, the Corps has a checkered history with building politically popular projects that deliver paltry benefits for exorbitant costs. Handing the agency a blank check with few guidelines and restrictions is a recipe for waste.

Bureau of Reclamation

The Bureau of Reclamation operates in the 17 western states, constructing and operating large water supply projects. The stimulus bill provides $500 million, nearly 50% of the agency’s FY08 budget of $1.2 billion. Of the $500 million, $126 million is for Title XVI water reclamation and reuse projects, and $80 million is for rural water systems. The bill generally requires repayment as under current law, but with some wiggle room to make deals. Other than the carve outs for reuse and rural systems, the Bureau is left to its own devices to pursue projects, without any restrictions or prioritization for projects that are more likely to stimulate the economy or remove work from the country’s “to do” list.

For more information, please contact Autumn Hanna at (202) 546-8500 x112 or autumn [at] taxpayer.net.