Low bid prices force some cities to return stimulus funds

When the winning bid for a major streets-improvement project in Lynden, Wash., came in 27 percent below the estimate, city officials were pleased. They thought they could spend less of the city's money for the work while still relying on the $1.3 million in federal economic stimulus money they got.

"Our euphoria lasted a very short time," Lynden Public Works Director Duane Huskey said.

Within 24 hours, they were told to give back some of the stimulus money because the bid came in lower than the estimate. They lost about $328,000, money the small city had to borrow off a line of credit. Paying it back will further strap future revenue from property taxes, sales taxes and real estate sales taxes.

"It's not money that we had just laying around," Huskey said.

Lynden tripped over bad news in what's normally good news: low bid prices. The town, which is rebuilding Grover Street and other nearby streets, gave back the most stimulus money of any Whatcom County government. It's now getting $981,000 in stimulus funds, and paying another $1.3 million from various other sources.

Other local governments have lost stimulus money, but it hasn't been as painful.