Finkenauer announces federal investigation into fund swapping

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CEDAR RAPIDS, Iowa (KCRG) - On Monday, Iowa District 1 Representative Abby Finkenauer made a Labor Day announcement of an upcoming investigation that she said will help Iowans, specifically the state’s workers.

Rep. Abby Finkenauer announces an upcoming investigation into federal fund swapping at Hawkeye Downs in Cedar Rapids on Sept. 2, 2019. (Mary Green/KCRG)

Standing among members of the Hawkeye Labor Council at Hawkeye Downs in Cedar Rapids, Finkenauer said the Government Accountability Office will soon begin an investigation into federal fund swapping, which happens on transportation infrastructure projects in Iowa and other states.

On these projects, the federal government gives money to states, and normally, the states would then transfer that money to cities and counties to pay for the projects. Then those projects are subject to federal requirements, including the Davis-Bacon Act, which determines workers’ wages on federal construction projects, and the Buy American Act, which sets an American-made preference on materials purchased for the project.

But with fund swapping, the state holds on to the federal money and instead gives state funds to the local governments, and those projects can avoid the federal requirements. Finkenauer said this means workers may not be making a fair wage and that projects like bridges may be unsafe because they aren’t required to be made with “high-quality” American materials.

Fund swapping has been legal in Iowa since 2017 when House File 203 was passed by the state legislature.

This new investigation will look into the effect federal fund swapping has had on infrastructure projects, according to Finkenauer.

“We shouldn’t have to choose between getting federal funding into our communities and our counties and having, again, Buy American provisions and good wages,” Finkenauer said.

The Iowa Federation of Labor, AFL-CIO, spoke in support of the investigation on Monday. The organization publicly opposed the passage of House File 203 in 2017.

“This is legalized money laundering, what’s going on between the state and what’s going on between the counties," Charlie Wishman, the federation’s secretary-treasurer, said. "It needs to end, and it needs to end right now."

Finkenauer said the GAO will commence its investigation in September and should release its preliminary findings by the end of the year.

Iowa GOP Spokesman Aaron Britt issued the following statement to KCRG-TV9 in response to Finkenauer's announcement: "Rep. Finkenauer's latest press conference was simply another attempt to score points with the far-left cronies that bankroll her campaign. Meanwhile, Iowans are left waiting as she continues to ignore the USMCA, a historic trade deal that would increase exports and bring thousands of jobs to the first district."