When Joe Biden took office early this year, one of his first initiatives was to get Congress to appropriate another $1.9 trillion in coronavirus relief funds on top of the nearly $1 trillion appropriated in the month before he was sworn in.
He had the full-throated backing of most state and local governments, which urged Congress to act quickly, claiming what was approved in the final weeks of the Trump administration was not going to be enough.
Once these same state and local governments got the money, however, they seemed to be in no hurry to spend it. It makes one wonder whether the American Rescue Plan was really necessary at all.
The Associated Press found, when it analyzed the first financial reports due under the law, that states had spent only 2.5% of their initial allotment while large cities spent just 8.5%. The AP didn’t say anything about small cities and counties, but we suspect the same would be true. For example, Leflore County has not spent any of the $2.7 million it received and it’s still arguing over whether the one project that was approved in August is an appropriate use of the money.
Several reasons have been suggested by the AP article for the slow expenditure of the funding nationwide.
Foremost were the questions about what expenditures would fly under the American Rescue Plan’s guidelines. That took a while to sort out.
Also, the timing was a factor. The U.S. Treasury Department didn’t release the money and spending guidelines until May of this year, after many state legislatures, including Mississippi’s, had either adjourned or finished their budget work. In this state, unless the governor calls a special session and adds coronavirus relief spending to the call, the Legislature really can’t do anything with the state’s share until next year.
Plus, some deliberation is a good thing. Mississippi has talked about not squandering this windfall and concentrating most of it into long-term capital investments, such as water and sewer infrastructure or broadband access. There are a lot of ratholes in which the money could be wasted. If going slow will reduce how much of that happens, then this may be a case where it’s better to be the tortoise than the hare.
There’s probably at least one other reason for the delays. Local and state governments may have received more stimulus money than they knew what to do with. The AP reports that in some places, the first rounds of relief funding had not been exhausted before Congress threw another huge scoop of mostly borrowed money on top.
In hindsight, Congress probably should have been more frugal, both appropriating and borrowing less as it became clear that the nation’s economy was already well past the worst of the pandemic’s effects. If it had been, perhaps there would not be such a tizzy right now over raising the nation’s debt ceiling.