Some stimulus funds might land in unexpected places

Some of the federal stimulus money might land in an unexpected place: a Dakota County sheriff's department squad car in Hastings. Deputy Sheriff Matt Schepers is sitting in the driver's seat of that car. And he's showing off the controls for a camera that he uses about ten times a day-- to record, say, cars driving erratically or the scene of an arrest.

Schepers's car is outfitted with an older system that still uses VHS cassettes. But he might be in line for a new digital camera system, paid for with stimulus funds. And Schepers is excited. Digital files are easier to wade through and the newer system can capture events happening even before you hit record.

"So it records what happened 30 seconds prior to you activating your lights or turning on the camera," Schepers said.

The Dakota County Sheriff's office might squeeze two camera purchases out of their justice administration grant from the stimulus package. They get $11,000, but that money is certainly not enough to hire new staff. The department currently has eight positions it would like to fill, though it could turn to other stimulus-related grant programs.

Money from the justice administration grant program could have bigger job impacts elsewhere, though. Minneapolis, for example, will get $4.8 million.

Still, Dakota County Chief Deputy Sheriff Dave Bellows isn't complaining about his $11,000.

"You really can't do anything with staffing with that kind of money," Bellows said. "But if we can use that to purchase some equipment that we couldn't otherwise be able to get, I think that's a good use of the money."

Plus, he adds, the camera purchases will boost revenues at the camera vendors.

However, the vendors are not Minnesota-based. They're in New Jersey, Kentucky and Texas.

Art Rolnick, the director of research at the Federal Reserve Bank of Minneapolis, said that doesn't matter. The vendors' location is not the sole determinant of an economic benefit to the state.

"I don't see spending money on Minnesota-made products as the right way of thinking about public investment," Rolnick said. "Public investment should be about return on investment, and I assume they went to Texas because the camera was a high-quality camera at a good price."

Rolnick isn't convinced the stimulus package will lift the nation out of recession. But he said so long as the money is flowing to public goods, like education programs or law enforcement, there isn't much of a downside.

Murray Frank, a finance professor at the University of Minnesota, disagrees.

"This is a standard misunderstanding," Frank said. "When resources are used in one way, they're automatically not spent in another way."

Frank said the government did not undertake a sufficient cost-benefit analysis in allocating the stimulus funds. And for him, that means there's no assurance the stimulus grants will produce positive results. He said stimulus money targeted at programs ike Medicaid will have the greatest chance of success, given their track record. But he's skeptical of the value of some of the law enforcement grants.

"Almost certainly, in some of the police forces it'll be a good thing, and in other police forces it will be wasted," Frank said.

Frank said a big question is whether the private sector money financing the stimulus package in the form of government bonds would be better invested elsewhere and do more for the economy.

But economist Anne Markusen at the U of M doubts that logic. She said the private sector's skittishness about investing was part of what drove the need for a stimulus plan.

"If the federal government weren't spending this money right now, it's not clear that it would be spent at all," Markusen said.

Now that the federal government is spending this money, there will be much interest in determining how much the $787 billion in stimulus funds actually do benefit the economy.

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