To save $300 per year for a few, taxpayers will lose millions under a new three-year $61 million state “weatherization” program spawned from the federal stimulus package.
Gov. Martin O’Malley estimates that 6,800 low-income families will save $300 to $400 each year on their energy bills as a result of energy audits and home improvements paid for by the program. If 150 people are hired as a result of the program money as estimated by O’Malley, they will benefit too. But what about everyone else?
How a short-term program that pays for one-off projects will spur long-term growth should be the bigger question. But since the state will spend the money, the government should at least guarantee taxpayers that 100 percent of the money will be devoted to achieving project goals.
It’s already clear, however, that much of the money will be lost to waste and potentially fraud with the Maryland Department of Housing and Community Development in charge of the program.
Since 1998, the Maryland Department of Legislative Services has cited DHCD for mismanagement of state funds. And many of the problems first noted in audits over 10 years ago still exist, according to a DLS audit in March of this year.
Major highlights of the most recent report include:
**The agency does not keep complete records of loans; could not fully assess when loans were delinquent; and did not sanction borrowers when they became delinquent. The agency said it had started a process to watch the loans, but DLS found that loan records for 268 loans worth about $188.9 million had yet to be properly monitored.
**It regularly allows borrowers to submit required reporting statements late. Operating budgets and statements were frequently submitted late and not reviewed in a timely manner by the agency.
In one instance, it found DHCD did not try to collect on a Neighborhood Business Works Program loan with an outstanding balance of $688,000 that had been in default for two years. But it gets worse. The original loan in 1999 was $385,000. DHCD loaned $378,000 more to the unnamed borrower after he or she was already six months late on the original loan to avoid potential bankruptcy.
** The audit also found that the agency gave money to projects that were not ready to use the money, violating state regulations. And it noted that 51 projects worth $4.7 million over August 2005 to August 2007 had not requested funds as of July 2008.
So, an agency that can not keep track of the money it loans, gives money to projects that do not meet state guidelines nor want it, and grossly abuses the public trust by lending money to people it knows will not pay it back, is supposed to be in charge of distributing $61 million more taxpayer dollars in a timely and effective manner?
The program requires recipients to show that they meet low-income guidelines of 200 percent of the poverty level. That translates to $44,100 for a family of four. Local agencies are supposed to analyze applicants to make sure they meet guidelines. But given DHCD’s oversight, it’s clear that it won’t be hard to skirt the rules.
It’s also clear that many not meeting the income guidelines will benefit since the improvements, capped at $6,500 per house, will make homes easier to sell. Unless the state plans to force homeowners to stay in their house for a specified amount of time, the state could unwittingly be running its own version of A&E’s “Flip this House.”
Making homes more energy efficient will save money for the lucky few who benefit from the program. But it will barely dent energy use in Maryland and help the state to reduce consumption by 15 percent in 2015, a top goal of Gov. O’Malley. And unless other states are a lot more efficient than Maryland, the $453 million targeted nationally for the program, with more to come, will achieve the same results.
State taxpayers would have been much better served if Gov. O’Malley instead reduced state spending by $61 million. That would save taxpayers hundreds of millions in years to come since new programs only grow in size. In that light, cutting the bills of 6,800 households is not worth the cost.
Examiner columnist Marta H. Mossburg is a senior fellow at the Maryland Public Policy Institute.
