States and cities slow to spend federal money in pandemic, report says
As Congress envisioned a massive COVID-19 relief plan earlier this year, hundreds of mayors across the United States pleaded for “immediate action” on billions of dollars intended to shore up their finances and revive their communities.
Now that they have received it, local elected officials are taking their time before actually spending the windfall.
As of this summer, the majority of major cities and states had not spent a dime on the U.S. bailout package championed by Democrats and President Biden, according to an Associated Press review of the first financial reports due under the law. States had spent only 2.5% of their initial allocation while large cities spent 8.5%, according to the AP analysis.
Many state and local governments have said they are still working on plans for their share of the $ 350 billion, which can be spent on a wide range of programs.
Although Biden signed the law in March, the Treasury Department did not release the money and spending guidelines until May. By that time, some state legislatures had already completed their budget work for the following year, leaving governors no authority to spend the new money. Some states have waited several more months to claim their share from the federal government.
Cities have sometimes delayed decisions while soliciting input from the public. And some government officials – still trying to figure out how to spend previous rounds of federal pandemic aid – just didn’t see an urgent need for more money.
“A lot of money has been invested there. I think that’s a good sign it wasn’t spent frivolously, ”Louisville Mayor Greg Fischer said. He was president of the United States Conference of Mayors when more than 400 mayors signed a letter urging Congress to pass Biden’s plan quickly.
The law gives states until the end of 2024 to make spending commitments and the end of 2026 to spend the money. Any money not committed or spent by these dates must be returned to the federal government.
The Biden administration said it was not concerned about the initiative’s early pace. Aid to governments aims both “to meet any crisis need” and to provide “longer-term firepower to ensure a sustainable and equitable recovery,” said Gene Sperling, coordinator of the US bailout. of the White House.
“The fact that you can allocate your expenses is a feature, not a bug, of the program. It’s by design, ”Sperling told the AP.
The Treasury Department has established an aggressive reporting schedule in an attempt to stimulate local planning. He called on states, counties and cities with estimated populations of at least 250,000 to file reports by August 31 detailing their spending the previous month as well as their future plans.
More than half of the states and almost two-thirds of the 90 or so largest cities reported no upfront spending. Governments have reported future plans for about 40 percent of their total funds. The PA did not collect reports from counties due to the large number of them.
To promote transparency, the Treasury Department also required governments to post the reports on a “prominent public website,” such as their home page or a general coronavirus response site. But the PA found that many governments ignored this directive, instead placing the documents behind many navigational steps. Idaho and Nebraska had not posted their reports online when contacted by the AP. Neither had certain towns.
Officials in Jersey City, New Jersey, have asked the AP to file a formal open registration request to get its report, although it should not have been necessary. City workers in Laredo, Texas, and Sacramento, Calif., Also initially asked the PA to file open case requests. Laredo later told the AP he had spent nothing. Sacramento caved in and eventually provided a brief report saying it had spent nothing but could spend its entire $ 112 million allocation on replacing lost revenue and providing government services.
Among states, the largest share of the initial spending went to bolstering UI trust funds that were depleted during the pandemic. Arizona said it paid nearly $ 759 million into its unemployment account, New Mexico nearly $ 657 million, and Kentucky nearly $ 506 million.
For large cities, the most common use of the money was to replenish their diminished incomes and to finance government services. San Francisco said it used all of its initial allocation of $ 312 million for this purpose.
Those who did not report any initial spending included Pittsburgh, whose mayor joined several other Pennsylvania mayors in February in a column urging Congress to enact “crucial” aid for state and local governments.
“Congress must act, and it must act soon. Our communities cannot wait another day, ”wrote the mayors of Pennsylvania.
Pittsburgh ultimately waited to spend the money until Treasury guidelines were released, community members had a chance to comment, and city council was able to approve spending plans. Going forward, the city plans to use some of its federal manna to buy 78 electric vehicles, build tech labs in recreation centers, and start a pilot project paying 100 low-income black women $ 500 a month for two years to test the merits of a guaranteed income program.
Federal money will also help pay the wages of more than 600 city employees
“Even though the money had not been technically spent” according to the Treasury Department’s reporting schedule, “the receipt of the money was enough for us to delay major layoffs,” said Dan Gilman, chief of staff at the Treasury Department. Mayor of Pittsburgh, William Peduto.
Some officials take their time voluntarily.
Missouri Gov. Mike Parson, a Republican, has chosen not to call a special session to appropriate funds from the latest federal pandemic relief law. So far, it has only publicly presented one proposal – $ 400 million for broadband.
Parson’s budget manager said the administration would present more ideas to lawmakers when they meet for their regular session in January. By then, the state should have enough money from a previous federal relief law to cover the costs of tackling the virus, budget director Dan Haug said.
“We want to try to find things that will benefit Missouri not just next year or the year after, but 10 or 20 years from now,” Haug said. “It takes a little thought and planning.”
Republican State Representative Doug Richey, who heads a House panel on federal stimulus spending, said he was not convinced Missouri should spend all of its US bailout funds.
“To the extent that we spend these dollars, we participate in growing federal debt or bad monetary policy,” Richey said.
Missouri was one of many states waiting to claim its initial allocation. 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 by the deadline set by the Treasury on August 31.
Tennessee wanted to make sure small towns were prepared for a 30-day clock that starts ticking for them to seek funding once the dollars get to the state, spokesperson Lola Potter said. of the Ministry of Finance and State Administration. A South Dakota official cited similar reasoning for the delay. Chief Financial Officer Colin Keeler said it was difficult for small towns to take the necessary 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. “
Leaked documents open ‘Pandora’ box of financial secrets