Comparing stimulus plans: Great Depression vs. Great Recession

One of the big issues that Belmont will be wrestling with this year will be how to negotiate around what’s fondly been dubbed “the cliff” — that is: the funding cliff that Belmont and other Bay State towns will encounter now that much of the Federal stimulus money that the state received has been used up. ARRA money was critical to patching a huge hole in the town’s finances in this latest budget season- with funds earmarked for schools, special education as well as roads and other infrastructure. There should have been available to smooth over the bumps for FY 2011 as well. But the State’s fiscal free-fall in Q4 08 and Q1, 2009 prompted the Governor to accelerate distribution of the stimulus funds. The numbers for 2010 don’t look good, but don’t look terrible, either, especially with increased meals and rooms taxes kicking in some extra revenue (though less in Belmont than, say, Cambridge).  The bare facts remain that Belmont will have to address its structural budget deficit in the midst of what would have been a bruising year. Its probably too early to say the door is closed on further stimulus funds; there have been rumblings about a second federal stimulus, but with the economy seemingly finding its feet again, that now looks like a harder sell. But

I think its safe to say that we’re likely to remember the federal stimulus funds for the disaster they helped avert in the here and now, rather than the great future they provided for.

How does the current federal stimulus measure up?

How does the current federal stimulus measure up?

That put me to thinking back to a conversation I had with my friend and Selectman Dan LeClerc about one of the last times the town received a big infusion of money from Washington D.C. and what we got out of it that time – in 1944 in the waning days of World War II. Dan’s done some research on the topic and dug up a great article from the Belmont Citizen about the town’s success in getting federal approval for its postwar reconstruction plans. The total amount of reconstruction funds? $3,144,735 — and that’s 1944 dollars, people. In 2009 dollars, that translates into $38,478,513 according to my handy dandy CPI inflation calculator. Just to help get a bearing on how big a boost that is — $38 million is pretty close to the amount Belmont will spend to operate its entire school system in FY 2010. True, the ’44 stimulus money was to be spread over six years, but that still amounts to around $524,000 a year for six years — the equivalent of around $6.5m in today’s money.

According to a copy of the article Dan passed me, the Belmont of the 1940s exhibited few of the Ostrich-like qualities we see in evidence today. The article notes that Belmont had postwar plans on file in Washington as early as 1941 after Congress phased out the Depression era Works Progress Administration (WPA) and requested plans from communities about improvements. The Selectmen at that time established a special, emergency Post War Planning Commission, separate from the regular Planning Commission, to identify needed public improvements in the town, given its anticipated growth, over the succeeding six years. Plans were developed  for meeting those needs after consultation with various department heads and stakeholders in town, then delivered to Washington D.C.


With its plans on file early, Belmont was among the first — if not the first municipality to get a green light from D.C. as the tide shifted in the Allies favor in 1944. (The Allies would enter Germany in September of that year.) Its plans called for construction of roads, a new Town Hall, municipal garage, fire station, sewer and storm water conduits, underground wire conduits and mosquito control efforts.

What’s amazing to think about is the scale of the investment here. $3m to one tiny Boston suburb  -even over six years – was a huge amount and would have been transformative to the town at that point, as the inflation adjusted figures and scope of infrastructure projects targeted indicates. The ARRA stimulus to municipalities, while large, has been more modest and — because it is distributed by states, rather than granted to towns directly, tends to get spread thin to give everyone a taste and focused on simple, “shovel ready” projects rather than more complicated (but necessary) infrastructure improvement, along the lines of what Belmont had spec’d out in 1941.

I know from talking to our Representative, that there’s already concern that some of the town’s urgent road repairs and improvements, such as the Trapelo Road corridor, won’t qualify for federal stimulus funds because they require too much study and planning to be considered “shovel ready” (though its possible that other federal funds will be available for them in coming years.)

This article suggests what the federal government can do when its serious about stimulating infrastructure spending (and its interesting to read about how China’s spending its $600 billion in stimulus money).

I’d be interested on hearing from Dan (Dan?) how much of the $3.1m that was approved actually got spent by town and on what. Perhaps its an opportunity for a follow up post.