Once fearing fiscal disaster, governments are suddenly awash in their share of $350 billion available for projects and needs that previously seemed out of reach.
Richard F. Cortez, the top elected official in Hidalgo County, at the southern tip of Texas, is so full of anticipation for the federal stimulus money that is about to flow into his county that he has memorized the precise amount and happily recites it: “$212,702,647.” Over the past year, Hidalgo, a border community that is one of the country’s poorest counties, has lurched from one disaster to another. The coronavirus pandemic hit, unemployment skyrocketed, a hurricane swept through, and then came the winter freeze. So the money, Mr. Cortez said, could not have come at a better time. “The American Rescue Plan — that’s a proper term for the situation that we’re in,” said Mr. Cortez, a retired C.P.A. “It’s pretty amazing that we’re still standing up.” The biggest infusion of funds in decades will soon start, putting state, local and tribal governments in a situation they have not experienced in years: Items that had long seemed totally unaffordable are now well within reach. Mr. Cortez says it is too early to know precisely how Hidalgo County will allocate its money, but states can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects. The $350 billion that was earmarked for state, local and tribal governments and U.S. territories “was one of the largest spending items in the entire bill,” said Dan White, director of fiscal policy research at Moody’s Analytics, a financial analysis firm. He said the total was more than quadruple what is needed to plug state and local budget holes through next summer. Democrats in Congress and local governments who supported the bill said that helping America’s states, cities and counties recover from a historic pandemic was about more than simply covering shortfalls and that they were worried about Congress doing too little instead of too much. They note that most of the aid will be available through the end of 2024. “This bill is a historic investment in local government,” said Mark Ritacco, director of government affairs for the National Association of Counties. Republicans and conservatives in Washington called it wasteful overkill. “Increasingly, federal proposals to provide a cash infusion for state and local governments has become a solution in search of a problem,” said the Tax Foundation, a right-leaning nonprofit in Washington, D.C. It is a very different picture from one year ago, when state and local governments predicted collapses in revenue and slashed their spending accordingly, laying off park workers, teachers and sheriff’s deputies. But in an unexpected twist, revenue in most states did not drop nearly as much as was predicted, and now governments are going into their budget-making season with a markedly brighter sets of numbers. According to Mr. White,31 states now have enough cash to fully absorb the economic stress of the pandemic recession on their own. “The surprises keep on coming,” he said. The cash is coming over the objection of Republicans in Congress, none of whom voted for the bill.
