As local governments spend billions in pandemic relief, some neglect to report specifics

Joplin officials say they have big plans for $13.8 million in pandemic relief funds the tornado-ravaged southwestern Missouri city received under a 2-year-old federal law. Yet the latest federal records show none of the money has been spent — or even budgeted.

In fact, about 6,300 cities and counties — nearly 1 in 4 nationwide — reported no expenditures as of this spring, according to an Associated Press analysis of data released by the U.S. Treasury Department. About 5,100 of those local governments listed no projects — either planned or underway.

So what gives? Is the money not needed? Are cities just sitting on it?

Local and federal officials told the AP in interviews that the publicly available data is misleading — pockmarked by differing interpretations over exactly what must be reported, lagging in timeliness and failing to account for some preliminary planning. Critics contend it’s an indication of a flawed pandemic response.

Federal officials estimate that governments have spending commitments for more than 80% of the money, even if that’s hard to tell from their reporting.

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Joplin, for example, plans to spend its pandemic aid on housing projects, high-speed internet, streets, a bicycle park, public safety equipment and more. The City Council approved the plan last month. But it won’t show up in federal reports until October.

The city, which was devastated in 2011 by one of deadliest tornadoes in U.S. history, took a deliberate approach with its pandemic aid to develop “really transformational projects,” said Leslie Haase, Joplin’s finance director.

Over the last couple of years, it leveraged the pandemic aid to win millions of additional dollars in state grants. With the combined funds, it plans to relaunch an expired post-tornado program that helps people make down payments on homes. The city also plans to spend millions of dollars to repair or demolish old houses.

“I think by the time 2026 rolls around, Joplin will be a better community,” Haase said.

The $1.9-trillion American Rescue Plan — passed in 2021 by a Democratic-led Congress and signed by President Biden — contained $350 billion in flexible aid for states, territories, tribes, counties, cities and towns. The Biden administration says the money was intended to provide communities immediate aid amid the health crisis as well as a longer-term boost.

Governments must obligate the money for projects by the end of 2024 and spend it by the close of 2026.

As of their April reports, more 26,500 governments collectively had spent 43% of their funds and approved plans for spending 77% of the money, according to the AP’s analysis.

The actual amount of spending commitments is probably well over 80% when accounting for lag times and differences in local governments’ reporting approaches, said Gene Sperling, White House American Rescue Plan coordinator.

“What you see across the country is that counties, cities, states overwhelmingly have committed these funds, are using them, are on track to meet their legal deadlines to have all the funds obligated by the end of 2024,” he said.

But Republicans and fiscal conservatives have questioned whether the spending is necessary, noting that most states rebounded quickly from an initial tax plunge during the pandemic to post large budget surpluses.

“Although the Left claimed their $2 trillion bill was designed to fight COVID, they wasted hundreds of billions of Americans’ hard-earned tax dollars on ridiculous things,” Rep. Jason Smith (R-Mo.), chairman of the House Ways and Means Committee, said in a statement to the AP.

Among other things, the money helped finance an upscale hotel in Florida, a minor league baseball stadium in New York and prisons in Alabama — drawing outrage from some members of Congress.

Some governments waited to do anything with the money until April 2022, when the Treasury Department finalized its rules for spending it. Details are lacking on how some governments are using their funds because the Treasury relaxed reporting requirements for any money that state or local officials categorized as a replacement for lost revenue.

According to the AP’s analysis, more than 6,000 local governments categorized their entire federal allotment as “revenue replacement” — often taking advantage of the Treasury rule allowing up to $10 million of assumed revenue loss without having to prove it.

Though they can provide more details if they choose, governments categorizing all of their federal aid as replacement revenue have to report it as only one spending item, the Treasury told the AP.

But some didn’t even do that.

The Denver suburb of Lakewood, Colo., claimed its entire $21.6-million allotment as revenue replacement, since it had dipped into reserves to pay police during the pandemic. It reported no projects.

Yet the federal aid helped the city construct sidewalks, replace computer software, upgrade the police radio system and make fire and safety improvements to a civic center, among other things, said Lakewood Chief Financial Officer Holly Bjorklund.

Those were “essential things that really needed to be done and would cost more if we waited longer to address them,” she said.

Maryland’s capital, Annapolis, also described no projects in its April report. But Annapolis has already used $1.2 million of its $7.6-million allotment as revenue replacement for its depleted public transit funds, said city spokesperson Mitchelle Stephenson. Officials expect to designate more of the federal aid for city operations in the 2024 budget.

When it comes to reporting revenue replacement for money that’s used for government services, the Treasury’s guidance isn’t very clear, said Katie Buckley, federal funding assistance program director for the Vermont League of Cities and Towns. But Buckley said she had advised local officials to report all government services as one project, and then list what those services included.

Counting the federal money as replacement funding for government services shouldn’t relieve local officials from describing what they did with it — even if it just went toward salaries or office supplies, said Sean Moulton, senior policy analyst at the nonprofit Project on Government Oversight.

“This is taxpayer money, and a lot of it,” said Moulton, adding: “There should be accountability that follows it.”

There are no particular repercussions for reporting things incorrectly. There also are no immediate penalties for not reporting at all — though the Treasury’s guidance says “a record of late reporting” could lead to the “development of a corrective action plan, or other consequences.”

Officials in Ascension Parish, La., which received $24.6 million, reported no expenses or projects as of April — though the Parish Council approved a list of projects last year.

A financial tracking document provided by the parish to the AP shows a purchase order was initiated in October for a $1-million improvement project at Youth Legacy Duplessis Park. Materials for the project were delivered in mid-March, before the Treasury’s reporting deadline. Most of the parish’s other projects weren’t underway before the April report.

“We’ve haven’t spent a lot of the money, but we’ve got a lot contracts, a lot of design work,” said Patrick Goldsmith, the parish’s chief financial officer.

He said the projects should be included in the next quarterly report.

While many governments have made “steady progress” in using pandemic relief funds, some have waited until closer to the July start of their fiscal years to approve spending plans, said Teryn Zmuda, chief economist and research officer at the National Assn. of Counties.

“We don’t want to rush these funds,” Zmuda said. “While the intent of the dollars was to respond to the pandemic, it was also to very intentionally build your community based on its specific needs.”

Lieb reported from Jefferson City, Mo. Harjai reported from Los Angeles for the Associated Press/Report for America Statehouse News Initiative.