When Congress considered a massive COVID-19 bailout earlier this year, hundreds of mayors across the United States advocated billions in “immediate action” aimed at shoring up their finances and revitalizing their communities.
Now that they have received it, the local officials are taking their time before actually spending the windfall.
By the summer of this year, the majority of major cities and states hadn’t spent a penny on the American bailout plan advocated by Democrats and President Joe Biden, according to a review of the first statutorily due financial reports by Associated Press. According to the AP analysis, states had spent only 2.5% of their original allocation, while major cities had spent 8.5%.
Many state and local governments reported that they were still working on plans for their share of the $ 350 billion that can be spent on a variety of programs.
Although Biden signed the law in March, the Treasury Department didn’t release the money and spending guidelines until May. By then, some state legislatures had already completed their budget chores for the next year, leaving the governors with no powers to spend the new money. Some states waited several more months to ask the federal government for their share.
Cities sometimes delayed decisions while soliciting suggestions from the public. And some government officials – who were still trying to figure out how to spend previous rounds of federal pandemic aid – simply saw no urgent need for additional money.
“A lot of money was spent there. I think it’s a good sign that it wasn’t spent lightly, ”said Louisville Mayor Greg Fischer. He was president of the U.S. Mayors’ Conference when more than 400 mayors signed a letter urging Congress to swiftly pass Biden’s plan.
The law gives states until the end of 2024 to spend commitments and the money until the end of 2026. All funds that are not committed or spent by these dates must be repaid to the federal government.
The Biden government said it was not concerned about the early pace of the initiative. The aid to governments is intended to “address any crisis needs” as well as “provide longer-term firepower to ensure a lasting and equitable recovery,” said Gene Sperling, coordinator of the US White House rescue plan.
“The fact that you can split your expenses is a feature, not a bug, of the program. It is by design,” Sperling told AP.
The Treasury Department set an aggressive reporting schedule in an attempt to stimulate local planning. States, counties, and cities with an estimated population of 250,000 or more were required to submit reports by August 31 stating their spending for the previous month and future plans.
More than half of the states and nearly two-thirds of the roughly 90 largest cities reported no first-time editions. Governments reported future plans for about 40% of their total funds. Because of the large number, the AP did not collect reports from the counties.
To promote transparency, the Treasury Department also urged governments to post the reports on a “prominent publicly accessible website” such as their home page or a general coronavirus response page. But the AP found that many governments ignored this policy and instead hid the documents behind numerous navigational steps. Idaho and Nebraska had not put their reports online when they were contacted by the AP. Both had no cities.
Officials in Jersey City, NJ asked the AP to file a formal open record application to get his report, although it would not have been required to do so. City officials in Laredo, Texas and Sacramento, California also initially directed the AP to file requests for open records. Laredo later told the AP that he hadn’t spent anything. Sacramento relented, eventually delivering a brief report saying it had spent nothing but could potentially use its entire $ 112 million to replace lost revenue and provide government services.
Among states, most of the initial spending went to support unemployment 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, the money was most commonly used to replenish their reduced income and fund government services. San Francisco reported that it used its entire initial allocation of $ 312 million for this purpose.
Among those not reporting initial spending was Pittsburgh, whose mayor joined several other Pennsylvania mayors in a February column calling on Congress to pass “crucial” aid to state and local governments.
“Congress must act, and it must act soon. Our churches cannot wait another day, ”wrote the Pennsylvania mayors.
Pittsburgh eventually waited to spend the money until the Treasury Department’s guidelines were published, community members had a chance to comment, and the city council could sign the spending plans. Going forward, the city plans to use a portion of its federal money to buy 78 electric vehicles, build tech labs in recreational centers, and launch a pilot that will pay 100 low-income black women $ 500 a month for two years to enjoy the benefits of a. to test guaranteed income program.
The federal money will also help pay the salaries of more than 600 city employees
“Even though the money wasn’t technically spent,” said Dan Gilman, chief of staff for Pittsburgh Mayor William Peduto.
Some officials deliberately take their time.
Missouri Governor Mike Parson, a Republican, chose not to convene a special session to raise funds from the latest federal pandemic aid law. So far, he’s only publicly outlined one proposal – $ 400 million for broadband.
Parson’s budget director said the government would propose more ideas to lawmakers when they meet for their regular session in January. Until then, the state should have enough money left over from an earlier federal aid law to cover the costs of fighting the virus, said budget director Dan Haug.
“We want to try to find things that Missouri will benefit from not just next year or the year after that, but 10 or 20 years later,” said Haug. “That takes some thought and planning.”
Republican State Representative Doug Richey, who chairs a House Committee on federal stimulus spending, said he was not convinced Missouri needs to spend all of the US bailout funds.
“By spending those dollars, we are getting involved in ever-increasing federal debt or poor monetary policy,” said Richey.
Missouri was one of several states waiting to apply for their first allocation. Five other Republican-led states – Oklahoma, South Carolina, South Dakota, Tennessee, and Texas – waited long enough not to have to file reports by August 31.
Tennessee wanted to make sure small cities were prepared for a 30-day clock that began ticking for them as soon as the dollars hit the state, said Lola Potter, a state department spokeswoman for finance and administration. A South Dakota official gave similar reasons for the delay. Colin Keeler, director of financial systems, said it is difficult for small cities to take the steps to apply.
“The state was in no hurry at all,” he said. “The cities wanted to get theirs, but we had to be prepared.”
