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U.S. COVID local aid emerges as key social policy tool as Biden spending plans stall

U.S. COVID local aid emerges as key social policy tool as Biden spending plans stall

To prevent layoffs and the closure of swimming pools, the city of Philadelphia is filling a big financial hole that was created by COVID-19. The city of St. Louis is distributing $500 cheques to 10,000 low-income households. In the face of rising rental rates, the city of Denver has set aside $28 million for affordable housing units.

Due to a $350 billion pot of coronavirus assistance money for state and local governments that was established a year ago Friday, these U.S. communities may support such projects even if their revenues are still being impacted by COVID-19.

Despite the fact that President Joe Biden’s ambitious social and climate spending plans have been stalled due to congressional opposition and Washington’s shifting attention to the war in Ukraine, the American Rescue Plan’s State and Local Fiscal Recovery Fund is emerging as his administration’s most effective poverty-fighting tool.

According to population, income, and unemployment levels, around 70% of the money has already been allocated and is in the possession of local governments. However, many state and municipal governments are just now beginning to spend the money.

“It will help us to avoid having to lay people off,” said Ashley Del Bianco, Chief Grants Officer for the City of Philadelphia. “As a result, we will be able to continue providing certain really important municipal services. Parks, libraries, and leisure facilities have all suffered significant financial reductions.”

Del Bianco said Philadelphia would use its whole $1.4 billion allotments to make up for income lost as a result of suburban people refusing to pay the city’s 3.45 percent wage tax during the epidemic because they worked from home instead of going to city offices.

Over the course of five years, the monies will add more than $250 million each year to the city’s $5.3 billion yearly budget. She went on to say that if income recovers more rapidly, the city would look at other options.

FALLING WINDFALL OVER A DECADE

Many mayors and county leaders have never experienced anything like this type of financial bonanza before.

In the words of Alan Berube, a senior fellow at Brookings Metro, an urban policy think tank in Washington, “this is a once-in-a-generation level of investment in state and municipal governments.”

Final guidelines provided by the Treasury Department in January extended the types of expenditures that might be made, including premium pay for public sector employees, childcare and preschool programs, and affordable housing projects in pandemic-affected areas of the country.

As a part of Biden’s $2 trillion “Build Back Better” spending program, which included funds for childcare subsidies, education, job training, and tax credits for green energy technology, such requirements were intended to be met.

Despite the fact that the plan was halted due to opposition from Democratic Senator Joe Manchin, the Biden administration is still pushing for major aspects of the plan, which is being promoted as “Building a Better America.” However, with the impending mid-term congressional elections and Russia’s invasion of Ukraine diverting focus, this is also a source of concern.

MONEY IN HAND

“The American Rescue Plan becomes an even more significant vehicle for poverty reduction in the absence of long-term national social financing programs,” stated Berube, referring to the lack of long-term national social funding programs.

Some communities started using ARP money late last year to establish cash transfer programs for low-income people, but it is unclear whether or not these will be able to be maintained in the absence of longer-term support.

Deputy Treasury Secretary Wally Adeyemo said the money is intended to be a supplement to Vice President Joe Biden’s social investment plan rather than a replacement.

According to Adeyemo, in an interview with Dailion, “they’re both attempting to solve a similar set of concerns – a classic underinvestment in our human capital and the infrastructure that keeps our communities running smoothly.”

He said that although the ARP cash would help fill a gap during COVID-19, the government will “attempt to make longer-term expenditures that would deal with this difficulty over time.”

NEW RULES, NEW SPENDING

A lack of clarity on allowable spending and a desire to see what they might get from Vice President Biden’s $1.2 trillion infrastructure package and the social spending bill had caused many local governments, particularly in smaller communities, to put off committing funds, according to Vicki Vogel Hellenbrand, public sector practice leader at consulting firm Baker Tilly.

“According to our customer base, unless they were planning to invest the money on a really obvious water project, many were holding off until they saw the final standards,” Hellenbrand said.

Her administration claims that the new regulations reduce the paperwork burden on smaller municipalities by offering them an automatic “allowance” of up to $10 million – which is typically more than their whole allocation – that may be used for income replacement.

Small businesses in Bethlehem, Pennsylvania, ranging from barbershops to daycare providers, are benefiting from ARP-funded incentives provided by Northampton County.

Michelle Thorpe, the owner of the Above and Beyond Learning Center, said she used her $10,000 scholarship to purchase a vehicle to transport students to parks and libraries on the weekends and holidays. Later this year, she intends to begin searching for a bigger place to rent.

“Because there are only 19 children in this school, I wish to expand my horizons. Planned activities and aspirations are on my list ” she said.

Hong Kong leader Lam thinks the city has not yet passed its prime.

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