Time to set politics aside
Hundreds of millions are available for state and local governments
In March, Congress enacted the CARES Act, a $3 trillion rescue measure designed to stave off complete economic collapse. In addition to sending $1,200 checks to most Americans, the CARES Act gave an extra $600 a week to unemployed workers and hundreds of billions to hospitals, research centers and small businesses.
But the CARES Act went even further, providing nearly half a trillion dollars to states and municipalities. It has not been reported much until recently, but billions of dollars were sent to state and local health organizations, public schools and transit systems, state-run Medicaid programs and Community Development Block Grant recipients (i.e., local governments). But the funding did not stop there.
The CARES Act established the Coronavirus Relief Fund, which sent another $150 billion to states and large municipalities.
Pennsylvania received about $5 billion from this account with the state receiving over $3 billion and the remainder split among the most populous counties, including Allegheny. These funds can be used for COVID-19 related costs and can also be used to cover the payroll of a police department.
This $150 billion in emergency payments from the federal government to states and municipalities is unprecedented. Moreover, some in Congress want the next relief bill to lift restrictions that limit how unspent Coronavirus Relief Fund dollars can be used. This means that backfilling revenue shortfalls may soon be permissible.
As for how much available money still exists, the U.S. Treasury recently reported that states and municipalities have spent just one-quarter of the Coronavirus Relief Fund. Indeed, Pennsylvania Gov. Tom Wolf recently admitted on KDKA that the state is still sitting on over $1 billion. Allegheny County alone has about $200 million unused. Even with hundreds of millions in taxpayer money still unspent, some politicians are demanding billions more. Pittsburgh Mayor Bill Peduto, for example, has said cities will be “left to die,” and he will lay off police officers and firefighters, if Congress does not pass a new trillion-dollar package.
Rather than attacking Republicans — and Sen. Pat Toomey, RPa., in particular — over the issue, Mr. Peduto should be working with Mr. Wolf, the General Assembly, Allegheny County Executive Rich Fitzgerald and Allegheny County Council to free up a greater amount of the existing Coronavirus Relief Fund. With Pennsylvania and Allegheny County sitting on over $1.2 billion in unspent funds, and the likelihood that the modest restrictions on such funds will be lifted, there is no reason that Mr. Peduto should not be focusing his efforts on local and state elected officials. He would have a strong argument to make, as Pittsburgh is Pennsylvania’s second-largest city, the economic driver for Allegheny County, and is home to about 25% of the county’s population.
Mr. Peduto has a close working relationship with both Mr. Wolf and Mr. Fitzgerald. I have no doubt they are capable of addressing Pittsburgh’s budget shortfall. One surefire way that Mr. Fitzgerald and Mr. Peduto could provide an immediate jumpstart to Pittsburgh’s bank account would be to allow businesses that can safely reopen to do so. Thereafter, as the Coronavirus Relief Fund runs low, the mayor should work with the congressional delegation to address remaining needs.
As Congress works on the next COVID-19 bill, it is important to remember that federal money is not free and the U.S. Treasury certainly does not have it sitting in a vault waiting to be spent. Every dollar to be spent on COVID-19 relief is being borrowed. The more we borrow, the more we need to prepare for the ramifications of such, including higher interest rates and inflation. While the COVID-19 crisis has required additional funds to be spent, there is another crisis looming in regard to our skyrocketing debt. Now, more than any time in recent history, the nation needs to turn its attention to that crisis as well.