When Congress considered a massive COVID-19 relief package earlier this year, hundreds of mayors from across the US called for “immediate action” on billions of dollars to bolster their finances and revitalize their communities.
Now that they’ve got it, local officials are taking their time to actually spend the windfall.
As of this summer, most major cities and states had not spent a cent of the American bailout plan championed by Democrats and President Joe Biden, according to an Associated Press review of the first financial reports submitted under the law. According to AP analysis, states spent just 2.5% of their original appropriations, while major cities spent 8.5%.
Many state and local governments have reported that they are still working on plans for their share of $ 350 billion to be spent on a wide range of programs.
Although Biden signed the law into law in March, the Treasury Department did not release instructions on money and spending until May. By that time, some state legislatures had already finalized their budget for next year, leaving governors unable to spend the new money. Some states waited several more months to ask the federal government for their share.
Cities have sometimes postponed decisions by soliciting proposals from the public. And some government officials still struggling to figure out how to spend previous rounds of federal pandemic relief simply didn’t see the urgent need for the extra money.
“A lot of money has been invested there. I think this is a good sign that the money was not spent lightly, ”said Louisville Mayor Greg Fisher. He was president of the United States Conference of Mayors when more than 400 mayors signed a letter urging Congress to adopt Biden’s plan as soon as possible.
The law gives states the right to commit to spending by the end of 2024, and to spend money by the end of 2026. Any money that has not been allocated or spent by these dates must be returned to the federal government.
The Biden administration has said it is not worried about the initiative’s early pace. Aid to governments is designed to both “meet any crisis needs” and provide “long-term firepower to ensure a lasting and just recovery,” said Gene Spurling, coordinator of the White House’s American Rescue Plan.
“The fact that you can spread your expenses is a feature, not a software bug. This is intentional, Sperling told AP.
The Treasury has set a strict reporting schedule to try and stimulate local planning. He required states, counties and cities with estimated populations of at least 250,000 to file reports by August 31, detailing their spending for the previous month, as well as plans for the future.
More than half of the states and nearly two-thirds of the roughly 90 largest cities reported no start-up costs. Governments have announced plans for the future for about 40% of their total funds. AP did not collect reports from the districts due to their large number.
To ensure transparency, the Treasury Department also required governments to publish reports on a “well-known public website” such as their home page or the general coronavirus response site. But the AP found that many governments ignored the directive, instead hiding documents behind numerous navigation steps. Idaho and Nebraska did not publish their reports online when contacted by AP. There was not a single city.
Officials in Jersey City, New Jersey demanded that the AP file a formal request to open the records in order to receive the report, although it shouldn’t have been necessary. City officials in Laredo, Texas and Sacramento, California also initially designated AP for filing requests to open records. Laredo later told AP that he had not spent anything. Sacramento relented and eventually submitted a short report stating that it had spent nothing but could use all of its $ 112 million to recoup lost revenue and provide government services.
Among states, the largest share of start-up spending went to support unemployment insurance trust funds that were depleted during the pandemic. Arizona reported nearly $ 759 million in its unemployment account, New Mexico nearly $ 657 million, and Kentucky nearly $ 506 million.
In large cities, money was most often used to replenish diminished revenues and finance public services. San Francisco said it has used its entire initial $ 312 million appropriation for this purpose.
Among those who did not report start-up costs was Pittsburgh, whose mayor joined a number of other Pennsylvania mayors in February in a column urging Congress to provide “important” assistance to state and local governments.
“Congress must act, and they must act soon. Our communities cannot wait another day, ”wrote the mayors of Pennsylvania.
Pittsburgh ultimately waited to spend the money until Treasury instructions were published, community members would have the opportunity to comment on the situation, and the city council would approve spending plans. Going forward, the city plans to use some of its federal revenues to buy 78 electric vehicles, build technology labs in recreation centers, and launch a pilot project paying 100 low-income black women $ 500 a month over two years to test the vehicle’s worth. guaranteed income program.
Federal money will also be used to pay salaries to more than 600 city employees.
“Even though the money was not technically spent,” according to the Treasury Department’s reporting schedule, “the money was enough to postpone major layoffs,” said Dan Gilman, chief of staff for Pittsburgh Mayor William Peduto.
Some officials deliberately take their time.
Missouri Governor Mike Parson, a Republican, has decided not to call a special session to disburse money from the latest federal pandemic law. So far, he has publicly laid out only one proposal – $ 400 million for broadband.
Parson’s budget director said the administration will provide lawmakers with more ideas when they meet for their next session in January. Until then, the state should have enough money left over from the previous federal aid bill to cover the costs of fighting the virus, said budget director Dan Hogue.
“We want to try to find something that will benefit Missouri not only next year or next year, but 10 or 20 years from now,” Haug said. “It takes some thought and some planning.”
Rep. Doug Ritchie, who chairs the House Commission on Federal Stimulus Spending, said he was not convinced Missouri needed to spend all of its American Rescue Plan funds.
“To the extent that we spend these dollars, we are engaging in ever-increasing federal debt or bad monetary policy,” Richie said.
Missouri was one of several states that waited to request an initial disbursement. Five other Republican-led states – Oklahoma, South Carolina, South Dakota, Tennessee and Texas – have waited so long that they were not required to file reports before the Treasury Department’s August 31st deadline.
Tennessee wanted to make sure small towns were ready for the 30-day period, which begins counting down funding searches for them as soon as dollars enter the state, said Lola Potter, a spokeswoman for the State’s Treasury and Administration. A South Dakota spokesman cited a similar reason for the delay. Financial Systems Director Colin Keeler said it is difficult for small towns to take the steps required to apply.
“The state was in no hurry,” he said. “The cities wanted to get theirs, but we had to be ready.”