Economics

The Secondary Market for Stimulus Funds

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Here's a beaut, care of the Pasadena Star-News:

With enough shovels….

A few area cities have found an alternate way to use their federal stimulus money: selling it to other cities for cash.

Metropolitan Transportation Authority has allocated a minimum of $500,000 in federal stimulus funds to each of the 88 cities in [Los Angeles] county for transportation-related projects. Unincorporated areas will benefit, too.

Several smaller cities, some without shovel-ready projects, are making deals with others to sell or swap such funds and replenish their general funds.

"The best way to see this is as a huge windfall for us because we do have the flexibility of using the general fund money now," city manager Shauna Clark of La Habra Heights said. […]

La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash. Irwindale, population 1,500, also sold its $500,000 to Westlake Village, for $325,000 cash. […]

Part of the reason the MTA did not simply reallocate the unused money, said chief planning officer Carol Inge, was that "our board wanted to give every city at least a chance to benefit from the stimulus package."

Whole hilarity here.