Where $5 Trillion in Pandemic Stimulus Money Went

on Mar11
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At the outset of the pandemic, governments used the funds largely to cover virus-related costs.

As the months dragged on, they found themselves covering unexpected shortfalls created by the pandemic, including lost revenue from parking garages and museums where attendance dropped off. They also funded longstanding priorities like upgrading sewer systems and other infrastructure projects.

K-12 schools used early funds to transition to remote learning, and they received $122 billion from the American Rescue Plan that was intended to help them pay salaries, facilitate vaccinations and upgrade buildings and ventilation systems to reduce the virus’s spread. At least 20 percent must be spent on helping students recover academically from the pandemic.

While not all of the state and local aid has been spent, the scope of the funding has been expansive:

Utah set aside $100 million for “water conservation” as it faces historic drought conditions.

Texas has designated $100 million to “maintain” the Bob Bullock Texas State History Museum in Austin.

The San Antonio Independent School District in Texas plans to spend $9.4 million on increasing staff compensation, giving all permanent full-time employees a 2 percent pay raise and lifting minimum wages to $16 an hour, from $15.

Alabama approved $400 million to help fund 4,000-bed prisons.

Summerville, S.C., allocated more than $1.3 million for premium pay for essential workers.

What was the impact?

The aim of the money was to prevent the kind of painful budget cuts that state and local governments were forced to make in the wake of the Great Recession, when revenues plunged and costs soared, a recipe that prolonged America’s sluggish recovery and hampered some local economies for years.

Economists largely agree that the money helped local governments shoulder significant pandemic-related costs, and many governments avoided deep budget cuts. Many states have even reported surpluses.

But federal rules prevented local governments from using CARES Act funds to fill budget shortfalls, and state and local governments wound up slashing hundreds of thousands of public sector jobs anyway. Several states have sued the Biden administration over restrictions it imposed on the use of funds.

What hasn’t been spent?

A significant portion has yet to be spent, in part because more than $100 billion remains to be distributed by the Treasury Department. Only 19 states, plus Washington, D.C., received their entire allotments of American Rescue Plan funds in 2021. A second batch will be distributed this year.

Governments have until 2026 to spend the funds, and disagreements over where the money should go and who has authority to spend it have slowed planning in some communities.

School districts have until January 2025 to spend the money allocated to them. But even with several years left, schools have voiced concerns about meeting that deadline as many districts struggle with labor shortages and supply-chain delays.

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