Federal help bypasses Clark County

CARSON CITY -- The recent announcement that the much touted high-speed maglev rail project between Las Vegas and Southern California didn't get any money from $8 billion in federal grants left residents wondering why Clark County was left out once again.

Not getting federal programs that could have stimulated the local economy to recover more quickly from a deep recession has become a habit for the state's most populous county since the summer.

In mid-January, despite the fact that the area has one of the highest foreclosure rates in the nation, Las Vegas governments learned that they were getting nothing from a $2 billion federal program designed to put families into foreclosed homes owned by banks.

Local governments had requested $367 million. They got nothing. Reno received $21 million, although its foreclosure problem isn't as bad as in Las Vegas.

And there were two other federal snubs of Southern Nevada in 2009.

Not one cent of the $225 million in federal tax-exempt bonds allocated to the state through two jobs stimulus programs went to Clark County over the summer, despite the fact that the county has one of the highest unemployment rates in the nation.

Under one program, local governments could use $90 million in bonds on projects of their choice. Under the other, $135 million was made available in bonds for private company proposals.

Reno and Washoe County received almost $200 million of that money, even though they have lower unemployment.

They already have used some of the bonds to retrofit Washoe County schools and public buildings with more energy-efficient lighting, heating and cooling systems. And $11.2 million was given to the University of Nevada, Reno for construction of a medical education building.

In the next couple of months, they plan to award the remaining bonds to private companies willing to build factories or businesses that will put people back to work in their county.

This lack of success in bringing home grants to Nevada, and especially to Clark County, has sparked a verbal war between Republican Gov. Jim Gibbons and Democratic U.S. Sen. Harry Reid, the Senate majority leader.

Both trail in polls in their re-election battles and could use some positive news about their efforts to get the economy moving.

Gibbons also faces the unpopular task of coming up with a plan in the next few weeks to cut state spending by 22 percent, or $900 million, while Reid tries to salvage some kind of health reform bill at a time when Democratic popularity is plunging in parts of the country.

Gibbons blamed Reid on Jan. 28 for failing to use his clout to guide the maglev grant application through the federal bureaucracy, saying Reid cost Nevada $83 million in funds for the magnetic levitation train project.

"I am surprised Reid calls Nevada his home state when he uses his position to insult every citizen," Gibbons said in a dig at the majority leader.

Reid's spokesman fired back that the governor needed to look "in the mirror" if he wanted to place blame.

Reid's office posted a video on YouTube of U.S. Transportation Secretary Ray LaHood stating that the reason the project wasn't funded was because Nevada "did not release any paperwork or any proposal for high-speed money."

In a letter, the Transportation Department also said the maglev project was not far enough along to merit grants that the Obama administration intends for more immediate economic stimulus projects that generate jobs.

Train proponents disagree and are asking for reconsideration.

The U.S. Department of Housing and Urban Development gave different reasons for rejecting Las Vegas Valley communities' application for $367 million in foreclosure funds on Jan. 14.

HUD Secretary Shaun Donovan told Rep. Shelley Berkley, D-Nev., that the local governments had not spent much of an earlier $64 million grant to buy foreclosed homes and they were asking too much of the new $2 billion grant.

In this case, two of Reid's Republican challengers, Sue Lowden and Danny Tarkanian, beat Gibbons to the punch in accusing Reid of failing to serve his constituents.

"Someone has dropped the ball, clearly," Lowden said.

Reid has demanded a formal explanation from HUD, adding the federal agency needs to provide the resources the state needs to deal with the foreclosure crisis. Last week he announced that HUD was sending eight additional employees to Las Vegas to help the area deal with the home foreclosure crisis.

How Clark County also lost tens of millions of dollars in bonds to create jobs to Washoe County wasn't widely reported last summer, although it is another example where Gibbons blamed Reid and the congressional delegation for miscues.

If the funds had been awarded on the basis of each county's unemployment, then Clark County and Las Vegas would have received more than $170 million.

Even Storey County, with 4,000 residents, received $2.2 million in bonds. The entire population of the Northern Nevada county is less than one-20th of the number of unemployed people in Clark County.

In this case, Gibbons warned the congressional delegation that the formula for distributing bonds zeroed out Clark County and asked them to intercede.

In a letter, he pointed out that the county had 80 percent of the state's unemployed residents and "every available stimulus dollar we can fairly allocate to them should be flowing their way as expeditiously as possible."

But Clark County Commissioner Steve Sisolak said Gibbons' letter was just for "publicity purposes." By the time the governor sent it, Sisolak said, the bond allocations already had been made by the federal government.

"When we learned about it, it was at a point that there was nothing they (the congressional delegation) could do."

Under the formula used by the U.S. Treasury Department to make the allocations, only counties and cities with "employment losses" could receive economic stimulus bonds.

Employment in Clark County, however, grew by 7,000 jobs in 2008, according to U.S. Department of Labor statistics, even though its unemployment rate nearly doubled.

At the time, more unemployed people were moving into the county to look for work than the number of additional jobs being created, Sisolak said.

In contrast, Washoe County lost 4,000 jobs in 2008 and qualified for the bonds.

Jon Summers, a Reid spokesman, prefers not talking about what Clark County lost in stimulus programs, but what it gained.

"Recovery Zone bonds only represent one provision and a fraction of the funding Nevada received from the economic recovery act," Summer said in response to questions on why Clark County was left out.

According to his calculations, the county has received $633 million in stimulus funds and residents are receiving $334 million in tax savings.

Under the Making Work Pay tax credit, workers saw about $400 a year less in federal taxes taken out of their paychecks.

Reid's office realized Clark County had lost out on the bond program to create jobs. It sent out a news release that listed which counties were receiving bonds. Clark County was not on the list.

Maureen McKissick, Reno's grant and funds manager, said she was "stunned" when she found out her city would receive bonds that mostly would have gone to Las Vegas.

"I sympathize with Clark County, but we need jobs up here, too," she said.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.