Americans are getting a better picture of what the $1.9 trillion American Rescue Plan Act will mean for local and state governments struggling in the wake of the pandemic.
One of the largest spending items in the entire bill was $350 billion designated for state, local and tribal governments. According to Moody’s Analytics, the infusion of cash is enough to completely erase the shortfalls brought on by COVID-19 for at least 31 states.
Government officials don’t yet know all the specifics of the rules governing how the relief money can be spent. We do know, though, that it can’t be used to lower taxes or to pay down pension obligations. (Sorry, Illinois.)
For cities and counties, the numbers look just as promising. Projections indicate the City of Dubuque will receive $27.4 million, while Dubuque County is projected to receive about $18.9 million. Cities and counties throughout the tri-state area are anticipating similar windfalls.
That’s good news as local governments have been hit harder than states in terms of pandemic job cuts. Three-quarters of the more than 1.3 million jobs lost nationwide among state and local governments since February 2020 have been at the local level, according to Moody’s.
The idea that a stimulus bill will make all these governments whole financially seems hard to imagine. But that doesn’t mean things will be back to a pre-pandemic “normal.” In many cases, what’s happening on the revenue side doesn’t necessarily reflect the state of employment. More than 10 million fewer workers are employed now than before the pandemic.
It’s the same story locally. Some 55,500 Dubuque County residents were employed in December 2019. One year later, in December 2020, that figure had fallen by 5,000, or about 9%. Economic development officials believe the decline has much to do with the personal challenges that many people faced in the past year.
As local governments wait to learn all of the rules and assess how to spend stimulus money, employment and education stand out as two areas hit hard by the pandemic.
If government officials spend stimulus money wisely, it could increase employment and help out those in need through various community programs. It may be able to help provide summer and after-school educational programming to shore up the slide so many kids experienced during pandemic school closures and virtual learning days.
It is incumbent upon city and county leaders to determine how to spend the relief aid to create long-term benefits for the broadest swath of the community and to reach those most in need. What projects and programming could be done to make communities safer, cleaner, stronger — without increasing local taxes?
Whether or not citizens agree with the monumental federal expenditure of the relief aid, local governments are getting the money. Local leaders must spend that aid judiciously to benefit the community as a whole.