Colorado’s cities and counties getting influx of federal cash
Over the next 13 months, nearly $2 billion will move from the federal treasury to the bank accounts of Colorado’s counties, cities and towns — a redistribution of tax dollars that experts and officials say is without parallel in modern American history.
“The sheer amount of money that is flowing is unprecedented,” said John Swartout, the executive director of Colorado Counties Inc., a membership association for city and county officials. “There’s been nothing like it.”
For Colorado’s local governments, the money represents an opportunity they have never had and may not get again soon.
It’s a chance to fill holes in budgets and bridges, to address decades-long addictions and afflictions, to build up and better their towns.
The money comes from the American Rescue Plan Act, the $1.9 trillion stimulus and COVID-19 relief package that passed Congress last month without a single Republican vote and was signed into law by President Joe Biden.
Biden believes colossal government spending is necessary now (as evidenced by another $2 trillion in proposed infrastructure upgrades), while fiscal conservatives hate it.
“I think it’s a shame,” said Ben Murrey, director of fiscal policy at the conservative think tank Independence Institute.
“I don’t think it should have happened. I don’t think the American Rescue Plan’s state and local bailout was appropriate. But here we are.”
“It’s not the same”
Over the past century, the federal government occasionally has spent massive amounts of money during economic downturns, including in the 1930s and late 2000s.
Last year Congress passed and President Donald Trump signed the $2.2 trillion CARES Act.
Biden’s stimulus package is “in the ballpark of what the New Deal was” in terms of the amount of money spent, according to Eric Rauchway, a professor of history at the University of California-Davis and an expert on the NewDeal.
But there’s a difference: New Deal spending was more targeted to specific projects, while Rauchway said, “here, they’re sending money directly to state and local governments.”
In 1933, President Franklin Roosevelt and Congress created the Federal Emergency Relief Administration, one of the first New Deal relief programs. From 1933 to 1935, it sent about $3 billion to states and localities. Adjusted for inflation, that would be about $60 billion today — “not on the scale of what you’re looking at” with Biden’s law, Rauchway said.
“That was after four solid years of depression, during which cities and local government had gotten basically tapped out. Whatever resources they had to meet the crisis were exhausted by then. So, the federal government was, to some extent, just replacing that money,” he added.
A 2009 stimulus bill included a $54 billion fund (about $67 billion in today’s dollars) to boost depleted government budgets at the state and local levels. It also had federal funding for expanding Medicaid coverage. But like New Deal dollars, those were project-specific. This year is different.
“It requires more vision”
“Congress was very specific on the first round of funding in the CARES Act,” Swartout recalls of last year’s Trump administration stimulus bill, which provided $150 billion to states, cities and counties that have 500,000 people or more.
“They told us how they wanted us to spend it, and we did it within the rules. This time it’s more flexible; it requires more vision.”
Under the new law, money must be spent one of four broad ways: responding to the pandemic and its negative economic impacts; helping essential workers; restoring lost revenue; or making investments in water, sewer and broadband infrastructure.
It cannot pay for pensions or be used to cut taxes; the latter provision has frustrated conservatives.
Fifty percent of the money must arrive by mid-May, and the other 50% must arrive within a year after that. Governments will have until the end of 2024 to spend it.
“Saving for a rainy day is never a bad thing. But if we’re going to spend the money on one-off things, I don’t think it’s a terrible thing to look at infrastructure projects,” Murrey at the Independence Institute said. “Now would be a good time to fix our roads, perhaps.”
Swartout said the incoming money represents a once-in-ageneration opportunity. Rural areas may have a chance to provide broadband or build mental health treatment centers, only pipe dreams before.
“This money is an opportunity to rethink economic development — to rethink a lot of things — and it might be the only money (rural areas) see for that,” Swartout said, suggesting that coalproducing regions in Colorado could use the cash to bring in more sustainable jobs.
“If we can get all of these pots of money to work together then 10 years from now we can say, ‘Boy, we were really effective in how we used this money, and it really made a difference in helping us build a better future,’ ” he said. “We have never seen this much money.”