This post originally appeared at https://www.badgerinstitute.org/years-after-pandemic-evers-spending-arpa-money-on-soccer-and-a-railroad-museum/

Yet more reason for more legislative control over spending of federal bucks

After Gov. Tony Evers announced last week he was diverting $36.6 million in federal emergency pandemic funds for, among other things, a soccer stadium, a sports center and a railroad museum, state Sen. Duey Stroebel tweeted, “I struggle to see how any of these projects relate to pandemic relief.”

Evers opened himself up to a whole lot of questions that have nothing to do with the public’s fondness for the beautiful game or old trains. Such as: Why is the governor still doling out pandemic money years after the pandemic is over? How much of that pandemic money is still waiting to be spent? And why is he the only person in the state of Wisconsin who gets to decide how to spend it?

“This is Tony’s little game, to keep us guessing,” Stroebel, R-Saukville, told the Badger Institute. “If we (the Legislature) had something to say about it, we’d do this in a prudent manner. But this is Tony’s slush fund for him to splash around in, to buy love and to buy votes.”

The governor’s latest money drop is a mere rounding error in the $6.8 billion allocation Wisconsin got through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the American Rescue Plan Act (ARPA) and several relatively smaller pandemic emergency bills.

The state-run website Badger Bounceback itemizes hundreds of ARPA allocations in nearly two dozen categories, including minor league baseball, movie theaters and summer camps. From the descriptions of many of the allocations, it isn’t hard to wonder how the projects in any way relate to the pandemic.

As the Badger Institute has reported for more than two and a half years in our series, Tracking the Trillions, the Evers administration has spread the money far and wide and, as its officials acknowledged in February, failed to document how or why they decided to spend. And as we’ve reported, the governor and his administration have sole authority over the spending.

Evers explained that this particular $36.6 million ARPA expenditure was necessary because “members” of the state Legislature removed those five projects during 2023-25 capital budget negotiations, according to his press release.

“These aren’t needs, they’re wants,” Stroebel says. “It’s using ‘free money’ as an excuse to expand government. We don’t know how much of this ARPA money we have remaining. I’ve been trying to find out what’s left.”

The Badger Institute has asked the Legislative Fiscal Bureau to disclose how much ARPA funding the Evers administration still controls. The state has been transparent about the amount of funding allocated but secretive about how much of that funding has made its way to the state and local agencies and how much of that has been spent.

After months of requests by the Badger Institute, the Department of Administration acknowledged that from the passage of ARPA in March 2021 through the end of 2022, most of the state’s $2.53 billion had been allocated but only $813 million, or just 32%, had been spent.

In the meantime, Stroebel says he expects the Senate to approve for the second time Assembly Joint Resolution 6, asking voters in a statewide referendum to change the state Constitution to wrest some of the authority for large federal spending bills from the governor and give it to the Legislature.

The Badger Institute testified on behalf of the resolution when it was first introduced in early 2022.

The resolution passed for a second time in the Assembly in September. Both the Assembly and Senate passed the measure as required last year.

If and until voters consent to such a power shift, the taxpaying public is at the mercy of Evers’ spending decisions about money from ARPA and, most recently, the Infrastructure Investment and Jobs Act.

In his release last week, Evers touted these projects: a $15 million ARPA grant for a sports and convention center in Janesville; $9.3 million for a new soccer stadium in Milwaukee’s Iron District; $7 million to expand the National Railroad Museum in Green Bay; and $5 million to create a Bronzeville Center for the Arts in Milwaukee. And he boasted that the $36.6 million in spending would yield a $68 million boost to the general economy and would create 400 jobs.

His figures were extrapolated from a study by the Associated General Contractors of Wisconsin using a multiplier that, at least for government contracts, has been repeatedly debunked by economists.

Scott Niederjohn, a professor of economics and the director of the Free Enterprise Center at Concordia University of Wisconsin, says such estimates assume the government project is the best use of the funding and isn’t simply a shift of money and labor from something better. 

A cottage industry has arisen among economists through local governments building stadiums and arenas, Niederjohn says.

“Independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development,” he says. “The employment multiplier is even harder to argue for when Wisconsin’s unemployment rate is so low (3.1%) and even lower in construction.

“And obviously this is a ridiculous use of emergency health dollars.”

At the start of the pandemic, when government officials employed such multipliers to help justify trillions in emergency spending, economists were there to provide evidence from the Great Recession in 2009.

In an August 2020 study, Veronique de Rugy, a senior research fellow at the Mercatus Center of George Mason University, looked at two dozen studies showing negative rather than positive impacts from government spending. And an International Monetary Fund review of 41 studies found not one that showed a positive impact from the government spending.

“These large fiscal multipliers were used to estimate that the 2009 stimulus package would create 3 to 4 million jobs by the end of 2010,” de Rugy wrote. “In reality, 2.3 million jobs were lost during this period.”

The Badger Institute contacted Associated General Contractors of Wisconsin to ask if, perhaps, it wasn’t in the interest of member contractors to promote a government contract multiplier.

Robert Barker, executive vice presidentof the AGC in Madison, declined to say if or how much his association’s members benefited from a “boon” from ARPA spending in the state.

“Not sure a ‘boon,’” Barker said in an email. “Our members avoid state work if they can do private work, and fortunately the private market has been very good.”

Mark Lisheron is the Managing Editor of the Badger Institute. Permission to reprint is granted as long as the author and Badger Institute are properly cited.

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