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US Cabinet officials head to hard-hit auto states

(Agencies)
Updated: 2009-06-03 19:27

LANSING, Mich. -- Officials in four Midwestern states badly hurt by the auto industry's woes are lining up to ask the Cabinet secretaries crisscrossing the region for a better deal when it comes to getting funds from the federal recovery act.

US Labor Secretary Hilda Solis announces an additional $49 million in federal aid to help Michigan workers who lose their jobs because of foreign trade during a visit to the General Motors Powertrain plant in Romulus, Mich., Tuesday, June 2, 2009.[Agencies]

With the bankruptcy filing of industry icon General Motors Corp. just days old and Chrysler LLC plants shut down until the company emerges from its own bankruptcy, the states -- Michigan, Ohio, Indiana and Wisconsin -- hope to persuade the visiting officials that they deserve a big chunk of $87 billion in discretionary federal recovery dollars being handed out.

They haven't done very well at getting a larger-than-average share of the $116 billion dispersed so far under the American Recovery and Reinvestment Act, according to an Associated Press analysis of figures on the federal government's official recovery Web site.

Michigan has the nation's highest unemployment rate. Ohio and Indiana are in the top 10. But the formulas used by the recovery act usually don't consider unemployment and layoffs, so these states aren't getting anything extra for being hard-hit. Many states with lower jobless rates, such as Massachusetts, West Virginia and Louisiana, are getting a bigger amount per person.

"The formulas are what they are, and there's not a lot of options to adjust those" because they're controlled by Congress, said Leslee Fritz, who oversees the recovery money flowing to Michigan. "Where we really are focused is on the grant side."

Michigan already has applied for discretionary grants, including a sizable share of a $2 billion pot for advanced battery research for electric cars, $5 billion for school districts that improve struggling schools, $1.5 billion for transportation projects such as expanding the lock system in northern Michigan that controls Great Lakes shipping and $8 billion for high-speed rail that would link Chicago and Detroit.

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"Those are the areas where we are pushing very hard and believe that the Obama administration has the ability to honor the commitments they've made to states like Michigan to be helpful," Fritz said.

But those decisions are likely to come over the course of the summer, not immediately. "Unfortunately it's on their timetable, not ours," Fritz said.

During stops Tuesday in Michigan, Ohio and Indiana, the officials told workers and community leaders that the federal government is cutting red tape so auto communities can get both quick relief and more recovery help down the road.

"Look at the guys who are getting the training dollars. Look at the auto dealers who are now able to finance their inventory. Look at the people who ... are unemployed who now will have access to Pell grants," White House auto recovery czar Ed Montgomery told The Associated Press while wrapping up a trip to Michigan on Tuesday. "We've been ... getting dollars out."

He said the White House is stepping up the pace for getting those funds to the auto states. Michigan learned last month it would be the biggest recipient of discretionary funds for redeveloping old industrial sites. On Tuesday, Ohio learned it would get $88 million to modernize the computers and software it uses to handle unemployment claims and Indiana learned it would get $8 million for clean water projects.

And the auto states have gotten a bigger share of recovery dollars that do take jobless rates into account, such as worker retraining funds and money for extended unemployment payments.

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