Local officials now have the money and are taking their time before spending it.
According to the Associated Press review, the first financial reports required by the law had not been submitted. According to the AP analysis, states had only spent 2.5% of their initial allocation while large cities had spent 8.5%.
Many states and local governments indicated that they were still working out plans to receive their share of $350 billion. This money can be used for a variety of programs.
Although Biden signed the law March 31, the Treasury Department did not release the money or spending guidelines until May. Some state legislatures had already completed their budget work for next year and left the Treasury Department with no authority to give the money to the governors. Some states waited for several months before asking the federal government to share their portion.
Sometimes, cities delay decisions and solicit suggestions from the public. Some government officials, still trying to figure how to spend the previous rounds of federal pandemic assistance, simply didn’t see the urgent need for additional cash.
“It’s a lot money that’s been out there. It’s a sign that the money has not been wasted,” said Louisville Mayor Greg Fischer. When more than 400 mayors signed a petition urging Congress to pass Biden’s plan, he was the president of U.S. Conference of Mayors.
The law allows states to make spending commitments until 2024 and then to spend the money until 2026. All money not spent or obligated by these dates must be returned the federal government.
Biden’s administration stated that it doesn’t care about the initiative’s early pace. According to Gene Sperling, White House American Rescue Plan coordinator, the aid is meant to both address “any crisis needs” as well as provide “longer-term firepower to ensure a durable recovery.”
“The fact that you have the option to spread out your spending is a feature of the program, and not a bug.” Sperling explained to the AP that it is designed.
To encourage local planning, the Treasury Department established a strict reporting schedule. The Treasury Department required that all states, counties, and cities with at least 250,000 inhabitants file reports by August 31. These reports should detail their expenditures for the month prior as well as future plans.
Nearly half of all states and almost two-thirds in the 90 largest cities reported that they had not made any initial expenditures. Future plans were reported by the governments for around 40% of total funds. Because of the high number of counties, the AP didn’t collect reports from them.
The Treasury Department required that governments post their reports on a prominent public-facing website, such as their home page or general coronavirus response web site, in order to promote transparency. The AP discovered that many governments did not follow this directive and instead hid the documents behind multiple navigational steps. When the AP reached out to Idaho and Nebraska, they had not made their reports available online. Both had not posted their reports online in some cities.
Officials in Jersey City (New Jersey) required that the AP file a formal open records request to obtain its report. However, this shouldn’t have been necessary. Initial instructions to the AP were given by officials in Laredo (Texas) and Sacramento (California). Later, Laredo told the AP that it had not spent any money. Sacramento eventually relented, and provided a brief report that stated it had spent nothing and might use its entire $112million allocation to replace lost revenue or provide government services.
The largest proportion of the initial spending was directed to rebuilding the trust funds for unemployment insurance that were depleted by the pandemic. Arizona reported that it had spent nearly $759 million on its unemployment account. New Mexico was close to $657 million, and Kentucky nearly $506 million.
Large cities used the money primarily to replenish their revenue or fund government services. San Francisco used its $312 million initial allotment for this purpose.
Pittsburgh was among those reporting no initial expenditure. In February, the mayor of Pittsburgh joined other Pennsylvania mayors to write a column asking Congress for “crucial” assistance for state and local governments.
“Congress must act quickly and must act immediately. “Our communities cannot wait any longer,” wrote the Pennsylvania mayors.
Pittsburgh decided to wait to spend the money. The Treasury guidelines had not been released and community members were able to comment before the City Council could approve the spending plans. The city will use part of the federal windfall to purchase 78 electric cars, to build technology labs in recreation centers, and to launch a pilot program paying 100 low-income Black women $500 per month for two years. This is to evaluate the benefits of a guaranteed income program.
Federal money will also be used to pay salaries for more than 600 city employees
“Even though technically the money had not been expended,” according to the Treasury Department’s reporting timelines, “the receipt was sufficient for us to hold off major layoffs,” stated Dan Gilman, chief staff to Pittsburgh Mayor William Peduto.
Some officials deliberately take their time.
Missouri Gov. Republican Mike Parson chose not to call a special session in order to allocate money from the federal pandemic relief bill. He has so far only presented one proposal: $400 million for broadband.
Parson’s budget director stated that the administration will present additional ideas to legislators when they meet for their regular session in January. Budget director Dan Haug stated that the state should have sufficient money from an earlier federal relief law to pay for the cost of fighting the virus until then.
Haug stated that Missouri wants to be able to benefit from “all the things we can find” not only next year, but also 10 to 20 years in the future. It takes planning and thought.
Doug Richey (Republican state Representative) said that he isn’t convinced Missouri should spend all its American Rescue Plan funds.
Richey stated, “To the extent we spend these dollars we are participating an ever-increasing Federal debt or bad monetary policy.”
Missouri was among several states that waited for their initial allotment. Other Republican-led states, including Texas, Oklahoma, South Carolina and South Dakota, waited so long they were not required to file reports before the Treasury’s August 31 deadline.
Lola Potter, spokesperson for Tennessee Department of Finance and Administration, stated that Tennessee wanted to ensure small cities are prepared for a 30-day clock to allow them to apply for funding. Similar reasoning was used by a South Dakota official for the delay. Colin Keeler, Director of Financial Systems, stated that it is difficult for small towns in order to complete the application process.
He said, “The state wasn’t in any hurry at all.” “The cities wanted theirs, but we had to be ready.”
