Rescue plan

How local governments used their US bailout relief funding

Months after Congress set aside hundreds of billions of dollars to help state and local governments close the budget holes created by the pandemic, some have used the money to fund a wide range of initiatives that have probably little to do with the original intention of the relief.

From green jobs programs to tax breaks, the final destinations of the funds seem to validate concerns expressed by some lawmakers as President Joe Biden’s US bailout made its way to Congress: that state and local governments did not ‘just didn’t need the emergency help that the legislation provided for.

The massive US bailout provided $ 350 billion for state and local governments to help recover from the economic impacts of pandemic-era lockdowns. The jurisdictions that received the money had “great flexibility,” according to Treasury Department guidelines, to spend the money as their leaders wished.


Even some centrist Democrats had expressed skepticism earlier this year about the extent of unconditional aid to state and local governments.

For example, Senator Angus King, who is meeting with Democrats, in February expressed concerns that some Republican-controlled jurisdictions could use the aid to cut taxes.

Senator Joe Manchin said in February that the $ 350 billion in state and local aid requested by Democrats was “extremely high” and suggested the final figure should be smaller.

Republicans had pushed to divert state and local relief funds elsewhere, saying many jurisdictions did not need this level of support.

One of the reasons given by experts to explain the better-than-expected performance of national and local budgets heading into this year is that closures and closings of service sector businesses have affected low-income people much more. than those with higher incomes.

The pandemic therefore eroded national and local tax bases much less than economists initially feared, while the impact of the lockdowns remained relatively unknown.

The chief economist of Moody’s Analytics, an economic research firm cited regularly by Biden and colleagues, said earlier this year that state and local budget deficits are expected to be around $ 60 billion through 2022 – hundreds of billions of dollars less than what Democrats pushed to secure.

Some Republican beneficiaries of the massive aid bill have indeed granted tax relief with the money.

The GOP-controlled Texas legislature voted in the fall to advance proposals that would use $ 3 billion of its US bailout funding to cut homeowners’ checks in a bid to provide tax relief land.

Arizona Republican Governor Doug Ducey spent $ 163 million of the money the state government received for an education program that provided grants only to schools that have pledged not to close their doors or to implement mask mandates during the remainder of the school year.

The Blue and Red jurisdictions have spent relief funds on projects the respective parties wanted long before the coronavirus started to spread.

In Austin, Texas, a city controlled by Democrats, leaders have set aside $ 7.5 million in city relief funds for child care programs – a liberal wishlist item that Democrats want to expand nationwide in Biden’s latest law suit, the Build Back Better Act.

Los Angeles used $ 12.5 million of its relief funds to provide legal representation and financial assistance to immigrants, among other benefits.

Boston spent $ 8 million on a pilot program that provides free bus services along some of the city’s highways.

Boston executives also invested in a tourism program called “All Inclusive Boston,” a public relations campaign that created content that “highlights local attractions and eclectic neighborhood offerings across the city” and diversity in industry.

Authorities have invested an additional $ 3 million from the US bailout in a “green jobs for young people” program focused on climate change projects

Chicago has set aside $ 10 million of its relief funding for a “food equity” program that includes an “urban agriculture initiative” and is designed to bring healthy food to different communities.

Chicago officials have also offered to use $ 9 million of its relief funds for an “environmental justice” program.


Some cities have used their relief funds for liberal criminal justice reforms, despite a recent increase in nationwide violence.

Los Angeles, for example, has invested more than $ 47 million of its COVID-19 relief money in a program called “Care First, Jails Last” which aims to put fewer people behind bars by focusing on alternatives to incarceration and “racial justice”.

Chicago has decided to devote $ 85 million of its US bailout funding to several social “violence prevention” programs outside the scope of the law, including a marketing program to encourage less violence. violence.