Jul 19, 2022 - Politics & Policy

Public health and pickleball: How cities are spending COVID money

How cities and counties are budgeting their COVID relief funds, on average
Data: Brookings Institution; Chart: Simran Parwani/Axios

Despite lawsuits and political name-calling about how cities, counties and states are spending their COVID-19 relief funds, much of the money is going to the mundane purposes it was meant for — like paying government workers and replacing tax revenue lost during the pandemic, U.S. Treasury Department data shows.

Why it matters: Many local lawmakers are busy deciding how to spend their share of the $350 billion in emergency funding from the American Rescue Plan Act (ARPA), and the flame-throwing going on overhead can singe the process.

Driving the news: Republicans are challenging how the ARPA funds can — or should — be used. Yet at the same time, new analyses show the funds are largely being pledged to unsexy-but-vital projects, like general revenue replenishment, broadband initiatives, wastewater systems and unemployment insurance.

  • Senate Republicans wrote a letter — and House Republicans held a hearing — to try to root out misuses of pandemic relief money.
  • Red states like Texas, Louisiana and Mississippi successfully sued the Treasury Department for the right to use ARPA funds to reduce taxes.
  • The Biden administration backed off a plan to withhold funds from Arizona over its school mask rules.

Democrats counter that ARPA funds are being spent on "transformative" investments in everything from job creation and housing inequity to long-deferred capital projects.

  • "There’s an acute need for these funds," said Vince Williams, the president of the National League of Cities and mayor of Union City, Georgia. "This funding is going to help us make a huge dent in some of the quality of life issues we have been ignoring for a number of years."
  • Williams — who testified at the House hearing, and was attacked for dedicating some of his city's money to an urban greenway — said the $8 million that Union City received will also go toward paying front-line workers and reducing food insecurity for seniors.
  • "I don’t know of anyone that's using these funds for frivolous or foolish things," he told Axios.

By the numbers: One new analysis shows that cities and counties had budgeted 41% of their ARPA funds by the end of 2021 — the latest numbers available from Treasury.

  • Some leaders were waiting to budget their money until Treasury issued a final rule about how it could be spent — which only happened this past April.
  • The money is primarily going "to address many of the long-standing challenges and disparities that exposed communities to disproportionate impacts of the pandemic," said Alan Berube of Brookings Metro, an author of the report.
  • His "overall impression" was of "progress and commitment by cities and counties to spend these flexible dollars largely in ways that seem consistent with the purpose" of the American Rescue Plan Act.

Between the lines: Partisan squabbling is adding a layer of headache to the already-challenging process of budgeting and spending COVID relief money — which has sent many governments scrambling to hire vendors and pay them on time.

  • "This is unprecedented," said Ernesto Freire, chief of staff at Bloomberg Associates, which is advising Chicago and Newark on their ARPA spending. "Nobody has seen this much money come in at one time — plus, the political pressure tied to it."
  • Newark, he said, "is looking at 15-18 new hires just to help execute on their economic development plan."
  • As Philip Rocco, a political science professor at Marquette University who co-authored a report on the spending data, put it: "The question of will we see more transformative expenditures — a lot of that hinges on the way that state and local politics works."

Motor City kudos: Among the cities earning plaudits for the way they're using ARPA funds: Detroit, which plans to spend $250 million on city services and infrastructure, $105 million on jobs, $95 million on blight remediation, $45 million on the digital divide, etc.

  • The city is encouraging residents to take part in meetings and events related to those projects.

The bottom line: The ARPA funds are giving local governments an unprecedented opportunity to make creative, meaningful and lasting investments — if they can skirt the political obstacles.

Go deeper