American Cities are Getting Billions in Federal Aid: Now What?

As part of the American Rescue Plan Act, the Biden Administration’s signature COVID relief package, an unprecedented amount of flexible federal aid is going to state and local governments, as well as DC, US Territories, and Tribal governments. That $350 billion in federal aid (referred to as fiscal recovery funds) is meant to go beyond tackling the immediate and direct consequences of COVID-19, and is part of Biden’s call for America to “Build Back Better” (I’ve previously written about this here and with Phil Rocco here). Because of that vision, the fiscal recovery funds can be used for a wide range of policy goals and programs–everything from retrospective premium pay for essential workers to affordable housing to remediation of lead paint. The Biden administration has also emphasized racial equity and targeting the spending to underserved communities as key principles of the fiscal recovery funds program.

How governments use the funds hinges on what elected officials and policymakers think “building back better” means for their respective communities. Additional factors–like institutional capacity, federal restrictions and guidelines, and the decision making process–will also influence how the money is spent. 

Figuring out how cities plan to spend the money now, and the factors that influence that decision making, is crucial for any subsequent post-mortem program evaluation of the fiscal recovery funds’ impact. To get a sense of cities’ plans, I used the National League of Cities’ COVID Action Tracker. This post is the first in what I hope/plan to be a series digging into how cities plan to and ultimately do use the fiscal recovery funds, as well as how the program unfolds over time.

Some Background + Details on the Fiscal Recovery Funds

The fiscal recovery funds are one component of the giant ARPA package, and there’s federal funding for other programs in different parts of ARPA (like the Emergency Rental Assistance Program.) I’m only focusing on the fiscal recovery funds though.

Of the $350 billion in federal aid, $130.2 billion is set aside for the 30,000+ local governments that are eligible to receive it. For local governments, the money is distributed in two tranches, and the first one went out in May. Importantly, only 1,166 cities receive the funds directly from the federal government; all other cities, towns, and villages are “non-entitlement units of local government” (or “NEUs”), and for these communities, state governments are responsible for distributing the federal aid. (if you are confused, don’t worry, I still get tripped up by the details sometimes)

Unlike grant programs in which governments have to apply to get aid, the ARPA fiscal recovery funds are given to governments upfront. While governments have some autonomy over how to use the aid, it is not entirely discretionary. Instead, the aid has to be used on spending that falls into one of the following categories: a) addressing the direct health and economic impacts of COVID; b) government services and revenue replacement for COVID revenue shortfalls; c) water, sewer, and/or broadband infrastructure projects; and/or d) premium pay for essential work. The Treasury Department has guidance detailing these broad categories further. Government aren’t limited to spending the money on just one thing, and can spend it on multiple things, the spending just needs to fall into one of the above four categories.

Governments have to report how they use the funds to the Treasury Department, and if an audit reveals that the money was used for an ineligible purpose, governments are on the hook to pay it back.

So How is the Money Being Spent?

The short answer is we don’t totally know yet. Again, only half the money has been distributed, and governments have until the end of 2024 to use the funds. NEUs also have to get the money from their respective state governments. Governments did, however, have to submit an interim report to the Treasury Department on expenditures incurred and planned thus far at the end of July.

While we don’t have a complete picture we do have some information thanks to the National League of Cities (NLC). As of August 4, 2021 (when I downloaded it…for a second time), NLC’s tracker included ARPA spending plans for 178 cities located in 45 states. Of those 178 cities, 138 (or 78%) are metropolitan cities while 40 are NEUs. This means that the NLC tracker is capturing a small fraction of all the cities that will receive ARPA funds, and is skewed towards places with larger populations (those with 50,000+ residents). The cities captured in the tracker range widely  in population size–from 10 (Waldron, Kansas) to 8.3 million (New York City). The map below shows the cities included in the tracker (excluding ones in Alaska and Hawaii)–each city is represented by a point, which are scaled based on population.

NLC’s tracker captures press releases, official budget resolutions and news stories about spending plans as they come out. Some cities are included multiple times in the tracker as their spending plans roll out. For example there are three entries for Phoenix, AZ in the tracker; these include, the City Council’s June 9th strategic plan for how to use $198 million (the first tranche of aid the city will receive), and news stories from the end of June about how the city plans to use $2.5 million for a temporary structure to provide “heat relief for people living on the streets” and another $5 million for the “Phoenix Arts and Culture Recovery Program.” 

Helpfully, the NLC tracker includes a variable to differentiate policy recommendations/proposals from administrative actions/procedures (thanks NLC!), with the latter being spending plans that have been authorized by a city council or relevant body for approving spending.

APRA Aid + Police Departments?

Some Takeaway Thoughts…for Now

In working with NLC’s dataset my biggest takeaway was that it is going to be challenging to track comprehensively how local governments spend the ARPA aid and trends within spending patterns. NLC has collected a lot of rich information, but there are 30,000+ communities eligible to receive the fiscal recovery funds and a very small subset of these places (just 178) are in the tracker (at least as of the start of August). The Treasury Department will be collecting information from communities, so in theory it may produce a dataset that captures how all cities use the money. Even so, I still think it’ll be difficult to make sense of the flow of funds and evaluate the fiscal impact for a few reasons. First, many governments plan to use the money for a variety of initiatives and programs rather than one single thing. Second, the policy descriptions of spending plans are not the same as budget line items (what does using the aid for “small business recovery” look like in the budget?). Third, the fiscal recovery funds may be one revenue source for a program or initiative and it may be difficult to tease out how much of an expenditure for a particular budget area or program is from the ARPA aid versus other revenue sources if the fiscal recovery funds are commingled into a general fund. Last, governments can use different accounting approaches, including cash basis and modified accrual.

Assessing  whether the fiscal recovery funds are used in ways that “build back better” is challenging given that we’re talking about 30,000+ communities that vary in their fiscal policy space (that is, their state-local policy environment, economic and fiscal tax base, and the local demand for services). More fundamentally, however, what “build back better” means is subjective. From guidance on the fiscal recovery funds, as well as subsequent statements and documents from the Biden administration and the Treasury Department, it doesn’t seem like even within the administration (or among Democrats more broadly) there’s a universal definition of what the phrase means that could be used for a post-mortem evaluation of the fiscal recovery funds program.

A Note About My Analysis

* I downloaded the NLC dataset as an excel file and then imported it and combined it with the Treasury Department’s list of metropolitan cities using STATA. I also analyzed the dataset in STATA. More specifically, to identify cities using ARPA funds on policing and/or programs tied to violence and crime prevention I created a new variable that tagged observations in which the policy description included the words “police”, “violence” and/or “crime.” I’m happy to share more details or my do-file (just email me).

Cities with Plans to Use Some APRA Aid on Policing and/or Crime/Violence Prevention and Mitigation

City, State	Date of Action	Proposal or Budget Action	Policy Description (Emphasis Added)
Akron, Ohio	5/14/2021	Proposal	City leaders say they plan on using the money in six key areas including housing and utility programs, local economic and small business recovery, community and youth violence prevention and I-T and budget stabilization. Right now, the most money would go towards parks and public facilities.
Albuquerque, New Mexico	6/1/2021	Budget Action	“Through our operating budget and the Albuquerque Rescue Plan, we are focused on addressing fundamental priorities, making Albuquerque a safer, healthier, and more resilient city,” said Mayor Keller. “With this legislation signed today, we aim to take full advantage of the opportunity to rebound from the pandemic, address crime from all sides, provide direct relief to local businesses, create good jobs while building the city’s infrastructure, and make the largest investment in public health and solutions for the unhoused the city has ever seen.”
Atlanta, Georgia	6/21/2021	Budget Action	The Atlanta City Council divvied up $170 million in federal coronavirus relief funds Monday. Of the $170.9 million, which will be sent to the city in two batches, $123 million will help Atlanta offset the pandemic’s fiscal impact on the city’s budget following revenue reductions. Almost $16 million will go toward the city’s COVID-19 response, including $3.25 million for IT, procurement and grants and $7.5 million for public safety and violence prevention. The remainder of the funds, $42.2 million, will be directed toward addressing the economic impacts of the pandemic. According to the city, $20 million will go to small businesses and nonprofits, $3.5 toward affordable housing and $2 million to fight food insecurity.
Bartlesville, Oklahoma	6/8/2021	Budget Action	The budget also allocates funding from the CARES Act and American Rescue Plan to provide raises to 242 city employees, including 68 in the fire department, 64 in the police department, 47 maintenance and operations workers and 26 sanitation workers. City Manager Mike Bailey said the raises bring salaries closer to market value, which is needed to ease difficulty recruiting and retaining employees.
Columbus, Ohio	6/16/2021	Proposal	Columbus city leaders have announced plans to allocate nearly $20 million of American Rescue Plan funding toward youth engagement programs and efforts to prevent violence in the city.
Dallas, Texas	7/20/2021	Proposal	As part of his “Back to Basics Plan,” Dallas Mayor Eric Johnson is asking City Manager T.C. Broadnax to hire 275 police officers in next year’s budget that begins October 1. It’s 125 more officers than the city’s original plan for next year and is 70 more officers than the expected attrition.
Detroit, Michigan	6/22/2021	Proposal	Dubbed the Detroit Future Fund, the proposal includes: grants for home repairs, vacant property cleanup, home down payment assistance, more police vehicles, issuing free laptops, high-speed internet; technical support to seniors and students; and tracking affordable housing for residents. The city’s proposal to use federal funding allocates $105 million for job creation and $40 million for small business assistance.
El Cajon, California	6/13/2021	Budget Action	The council also approved a suggestion by City Manager Graham Mitchell to earmark $500,000 of federal American Rescue Plan Act funds for a pilot program where social workers would respond to calls involving people in crisis, freeing up police to respond to other calls.
Houston, Texas	6/2/2021	Budget Action	Houston City Council on Wednesday approved a $5.1 billion city budget for Fiscal Year 2022 that includes pay increases for firefighters and an additional $30 million for the police department, thanks to more than $600 million in federal COVID-19 relief.  In past years, the budget cycle has focused on closing significant funding gaps, but this year cuts or layoffs weren’t on the table, thanks to $604 million from the American Rescue Plan Act
Little Rock, Arkansas	7/19/2021	Proposal	Mayor Scott said in the statement that he will be proposing to the Little Rock Board of Directors that the city use at least $1 million of the American Rescue Plan Act funds for community violence intervention.
Madison, Wisconsin	6/21/2021	Proposal	Committee members signed off on Mayor Rhodes-Conway’s proposal to spend $47.2 million in federal pandemic aid. Her plan includes spending $22.8 million on community services like affordable housing, homelessness, violence prevention and youth engagement, resources for undocumented residents and seniors, and supports for small businesses.
Manchester, New Hampshire	7/6/2021	Proposal	Mayor Joyce Craig will present Manchester’s proposal for use of $43.2 million in federal funds from the American Rescue Plan to city aldermen this week, plans ranging from an affordable housing trust fund to a community health and violent crime reduction program. Included in the recommendations is a community health and violent crime reduction program ($13,581,547 over five years), which would fund 13 community health workers (CHWs) to work with Manchester police to take over check condition calls typically handled by officers and act as a hub for addressing neighborhood-level health concerns.
Memphis, Tennessee	6/23/2021	Proposal	New guidance from the White House means the city of Memphis may use a windfall of federal money for its ongoing fight against violent crime, including for purposes such as hiring new police officers, Mayor Jim Strickland announced Wednesday. The city had already announced plans to spend $16 million of the new federal money on bonuses for city employees.
Minneapolis, Minnesota	6/4/2021	Proposal	American Rescue Plan Act Proposals in the first phase will focus on solving the following problems: Housing instability; Small business closures and financial stress; Business, non-profit, and public organization’s capacity and preparation for the lifting of social distancing measures; and Responding to the nationwide increase in violent crime.
Noblesville, Indiana	6/28/2021	Proposal	Noblesville plans to give police officers and firefighters bonuses of $2,000 and other city employees $1,000 with its haul of federal coronavirus economic aid. The city plans to use $4.5 million on storm water and drainage improvements for its Pleasant Street road reconstruction project and $800,000 on sewers in Wayne Township.
Norwich, Connecticut	7/7/2021	Budget Action	The biggest share of ARP funds are allocations to complete the Uncas Leap Master Plan. Another $2.1 million is going towards Norwich Human Services to support community health, mental health, employment support, recreation assistance and the largest portion going to basic needs for families. The Norwich Community Development Corporation received $2 million for code correction, to help bring vacant properties back to building code standards and make it more likely for someone to take on the property. Other programs listed in the city’s American Rescue Plan Funding include $1.2 million for helping to rehabilitate vacant houses through an effort with habitat for humanity, $800,000 for extending the water main, $500,000 to support the arts, and $300,000 for Norwich Police to support programs to stop gun violence.
Orange, California	6/8/2021	Budget Action	Orange California allocated over $27 million of their ARP funds towards Police and Fire Salaries.
Philadelphia, Pennsylvania	6/2/2021	Proposal	Philly council members and advocates push new $50 million and up agenda to combat violence among city youth. The Youth Powered Anti-Violence Agenda calls for the funds to be allocated from Philly’s share of the American Rescue Plan Act.
Providence, Rhode Island	7/14/2021	Budget Action	Tonight, the Providence City Council voted to approve a $539 million FY 2022 City Budget. The city is utilizing $42 million in ARPA funds to invest in summer programming for our youth, early learning programs, free public internet access at parks and recreation centers, anti-violence programs, homeless interventions, street sweeping and sewer repairs, our public libraries, and relief for our small businesses.
St. Louis, Missouri	6/29/2021	Proposal	Mayor Jones has also made youth programming and jobs a key focus of her plan to address the root causes of crime, like poverty and housing instability. Her $80 million American Rescue Plan Act (ARPA) direct relief proposal calls for $11.5 million to improve public safety, which includes an expansion of youth jobs and programming.
Utica, New York	6/28/2021	Budget Action	The majority of Phase I projects and initiatives will be funded through the American Rescue Plan Act (ARPA). The Phase I projects include (but are not limited to) the following:, Additional street paving & sewer infrastructure improvements; Enhancements of city parks; Small Business Assistance Programs; Child-care expansion; Residential Rehabilitation Program; Gun violence prevention and law enforcement career recruiting efforts, New James Street Marketplace with Loft Apartments, Upgrade of city’s website & electronic services, Necessary repairs to public facilities (including police and fire stations).
Walla Walla, Washington	6/27/2021	Budget Action	American Rescue Plan will fund new police hires, fire equipment and infrastructure needs in Walla Walla
Worcester, Massachusetts	7/19/2021	Proposal	Worcester’s proposal prioritizes- Public Health- This slice would fund a wide range of initiatives, from setting up library book vending machines to buying a generator for a COVID-19 vaccine freezer. The city would also spend $300,000 on virtual programming for the senior center, $1.2 million on job training, $900,000 on youth violence prevention and $3 million on mental health services. Infrastructure- The largest chunks of this category would go toward upgrading the water and sewer system (about $21 million) and upgrading public parks ($10 million). Worcester would also use about $3 million to upgrade HVAC systems in public buildings and ensure that the DCU Center would have a field hospital ready for future emergencies. Technology Improvements- Worcester would use about $16 million to create an Enterprise Resource Planning System (ERP) — basically a way to run local government remotely during an emergency. Another $12 million would be devoted to studying whether Worcester could set up its own municipal broadband system, which could offer residents more reliable and cheaper internet service compared to private companies. Revenue Recovery- Worcester would put $5 million into the city’s general fund, $7.5 million into the DCU Center, which wasn’t allowed to host events during the pandemic, and $2.5 million into the municipal parking system.