The multiple federal stimulus checks provided ample support to Americans to extricate themselves from the economic mess following the pandemic. While the first two stimulus checks went directly to pay for immediate and essential payments, the third stimulus check, or the economic impact payment, under the American Rescue Plan Act signed by President Biden on March 2021 allowed people to save a part of the funds and either invest them or save for a rainy day.
The Rescue Plan was way more comprehensive than the previous rounds of stimulus checks and covered a lot of areas that remained outside the reach of the previous rounds of payments. For the first time, the payments were directed at not only households and individuals but also organizations and local governments.
Rescue Plan Enabled Both Direct And Indirect Support To Americans
Americans benefited both directly from the stimulus checks and also indirectly from funds that boosted the economy, took care of their medical needs, and their children’s education, and also provided funds to state, local, and tribal governments to spend on local development initiatives.
The Rescue Plan created the $350 billion Coronavirus State and Local Fiscal Recovery Funds that gave money to states, cities, counties, and tribal governments. Under the state portion, the State Fiscal Recovery Fund (SFRF), states received $195.3 billion.
The SFRF support has been given on the condition that it will be spent on projects linked to the pandemic and its effect on the economy. The funds must be obligated by 2024 and spent by 2026.
The federal packages were instrumental in providing state pandemic relief. The CRF and SFRF emergency funding packages enabled governments with financial resources to quickly and resolutely respond to the pandemic and they recovered quickly.
Without federal stimulus, the economic fallout during and after the pandemic would have left states with massive cuts in their budgets and depleted reserves.
How States Are Deploying ARPA Funds
Since the passage of the $1.9 trillion American Rescue Plan Act, states, cities, and counties have been at work to prioritize and execute investment of their share of the $350 billion in flexibility. And it has been made clear in recent guidance from the Treasury Department that local decision-makers have myriad options to deploy the resources sent under the ARPA.
They have a general and broad advisory to spend the funds to address the direct health and economic impact of the COVID-19 pandemic. they are also permitted to confront the underlying challenges that led to the exacerbation of the negative effects of the pandemic, especially on vulnerable communities, businesses, and individual families.
Communities have until 2024 to fully plan for and commit their share of the ARPA funds and two more years until 2026 to spend them. The remaining funds then revert to the federal government. The initial report of the SLFRF expenditure contains vital roadmaps on where they are headed with their ARPA funds. Larger counties and cities with a population of 250,000 and above have also put out their annual plans that outline their intended use of the funds and also their future intentions.
These reports detail thousands of projects across dozens of eligible expenditure categories and have contributed to the investment tracker of the ARPA.
These thousands of projects that have benefitted from the ARPA funds collective represent over $20 billion by the turn of the year. it is a little less than half of the total funds allocated for counties and cities.
Gross Misuse Of Stimulus Check Funds By Republican States
There have been instances of misuse of federal funds over projects that have no link to the pandemic and the economic downturn that followed. For instance, Governor Kay Ivey of Alabama announced plans to build 2 new 4,000-bed prisons that had no link to the pandemic and the economic downturn that followed.
The construction was to be financed by $400 million from the $2.1 billion that the state received as its share under the ARPA. That came to around 20% of the funds, a big misuse of resources that could have been better utilized to help communities affected by the economic crisis.
The expenditure in no way was directed towards relieving the state from the health and economic toll of the COVID-19 pandemic. The new prisons tackled neither and were a gross misuse of funds even as Alabama lay at the bottom of states that provide health care for its residents. But the plan was pushed through by the Republican majority legislature.
When Democratic Governor Tony Evers of Wisconsin put together a comprehensive spending plan to help towards the economic recovery of Wisconsin by directing $2.5 billion from the ARPA funds, the Republicans in the state opposed it. Evers allocated $600 million to support small businesses and another $50 million to support the tourism industry. $500 million was earmarked for the state’s response to the pandemic.
Another $200 million has been directed toward investing in the state’s infrastructure, a significant part of it towards expanding the broadband sector. This remains a top priority for Governor Evers during the Year of Broadband Expansion, as he declared in his budget address.
This comes to 5 times the amount that the Republicans invested in the combined budgets of 2013, 2015, and 2017. The expenditure outlay includes a comprehensive plan to expand access to broadband to underserved and unserved communities across the state of Wisconsin.
Senator Jeff Smith said that the Governor had led from the front during the pandemic and the following economic crisis. While he led to protect residents of the state and support the economy, the Republicans sat on the sidelines and only were engaged in taking political potshots at the Governor and his policies.
Most States Relying On ARPA Funds To Send Stimulus Checks To Residents
For around 37 states, Rescue Plan aid is equal to between 5% and 10% of the total spending in the last fiscal, including capital expenditures and spending from federal bonds and funds. The remaining funds have come in handy for the inflation relief stimulus checks.
While states like California have huge budget surpluses to fall back on, even Republican states like Florida are using millions from the ARPA funds to send a stimulus check to residents.
Governor Ron DeSantis, a staunch opponent of the Rescue Plan, has used the funds to give a $450 stimulus check to selected residents of the state. The 2024 presidential hopeful has said that the funds would have gone back to the federal government if he had not spent them.