A news service for the people of Michigan from the Mackinac Center for Public Policy

News Story

City’s Politicians Strive To Beat The Clock Spending Federal Money

‘We are trying very desperately to save this money’

This is the vacant lot the city of Jackson considered spending $260,000 to build a home with federal dollars.

City council members are scrambling at the last minute to think up a project so they can beat a deadline for spending $260,000 in federal money may not be the best example of good stewardship of tax dollars.

But that’s what happened in one Michigan city when elected officials considered spending that $260,000 to build a new home on vacant property, even though a house just two blocks away was sold for about $11,000 last year.

After the council rejected the proposal by a 4-3 vote, it scheduled a special meeting and approved spending most of the federal money instead on a lighting project for a park in a historically high crime area.

Jackson Mayor Derek Dobies told the news site MLive that when council members rejected spending $260,000 to build the home, they had no alternative plan for how to spend it. The mood of some participants was reflected by City Manager Patrick Burtch, who was quoted as saying, “We are trying very desperately to save this money.” Dobies didn’t respond to an email seeking comment.

Burtch told the council on Jan. 30 that the city would likely lose the federal money if they didn’t approve building the home, according to MLive. The council rejected the plan anyway.

The money is part of the Community Development Block Grant program, which is administered by the U.S. Department of Housing and Urban Development. The grants are allocated to cities to provide affordable housing for low- and moderate-income people. MLive reported this grant money had to be spent by April 1 or returned to the federal government.

Tad DeHaven, a research analyst for the free-market nonprofit Mercatus Center at George Mason University, said the situation in Jackson highlights the problems that can happen when local officials are invited to spend federal dollars.

He said the rush by officials to spend on any project that fits the bill illustrates a lack of accountability in such situations. Instead, DeHaven recommends, local projects should be funded by local tax dollars to provide a transparent, direct link between officials collecting and spending the money, rather than through a convoluted federal process.

“There is absolutely no reason someone paying taxes in Pennsylvania or California should be involved with the building of a house in Jackson, Michigan,” DeHaven said.

City Council Member Colleen Sullivan voted in favor of spending the $260,000 on building the home.

Sullivan was asked if the City Council would have considered spending that much to build a single home if the money came from local taxes instead of the federal government.

Sullivan said in an email, “There are far too many moving pieces in this particular scenario for me to give you a simple answer.”

Sullivan said there are very strict guidelines and deadlines governing how the federal grant money can be spent. The city was in a bind, she said, because the federal money for the original project was delayed.

“This vote didn’t take place in a vacuum, it was directly linked to a myriad of factors including the desire to not jeopardize future funding,” Sullivan said. “Ensuring fiscal responsibility both long term and short term while being responsive to the intent behind dollars raised/granted and community needs are paramount.”