US bailout not only plugging budget holes

As a winter wave of COVID-19 and a new variant raises concerns across the country, cities and counties grapple with health and economic disparities made worse by the pandemic. Communities hardest hit by the virus are now grappling with an accelerating rate of evictions, a growing education gap and widespread food insecurity.

Fortunately, local communities on the front lines of this ongoing crisis have resources they lacked during the Great Recession: $ 350 billion in direct federal aid from the US bailout. This lifeline for revenue-strapped state, local and tribal governments has also come with a boost: the US Treasury Department, in advice released earlier this year, urged policymakers to invest in evidence-based solutions, track the results of their spending, and assess what is working to help residents recover.

Many tax experts predicted that local governments would use the clawback funds primarily to avoid employee layoffs or prevent cuts to local services, thereby making up for lost revenue during the pandemic. But a new analysis that we just carried out how 150 cities, counties and tribal nations are spending their US bailout dollars tells a more interesting story: Many local governments are seizing the opportunity to go beyond filling budget gaps by prioritizing investments that will leave a lasting impact.

Based on the spending plans filed with the U.S. Treasury that we reviewed, 61% indicated that they are investing or planning to invest recovery funds to replace lost income. It is not a surprise. In a recent survey According to the National League of Cities, eight of ten municipal finance leaders cited federal aid as the main factor in closing budget gaps during the fiscal year.

But the new analysis, a join the project results for America and Mathematica, also found that 72% of jurisdictions invest in public health, 69% invest in extended services to disproportionately affected communities, 56% invest in housing, 56% invest in infrastructure and 43% invest in labor.

In Boston, where there is a shortage of child care workers, the city will use US bailout funds to help child care centers bring back skilled caregivers and retain key staff with better pay. In San Antonio, authorities are using an interactive equity tool to expedite assistance to prevent evictions.

Other communities are finding innovative solutions to stubborn challenges that have only worsened during the pandemic, such as learning gaps. In California, the city of San Jose is piloting a Resilience Corps, which matches low-income students with local learning programs. In Buffalo, NY, the city is developing a new pilot program that will use video playback and license plate technology to reduce potentially dangerous interactions between police and residents. Our analysis found that more than a third of jurisdictions are testing new programs, while 13% plan to use the stimulus funds to invest in a guaranteed basic income, proving that local governments are serving as new laboratories for the democracy.

What’s more encouraging is that many communities are using data, community contributions, and the focus on equity to drive their investments. For example, 77% of the jurisdictions we looked at target at least some of their funding to ensure equitable outcomes – including King County, Washington, which uses an Equity Impact Review tool, a strategic plan and an equity dashboard to guarantee its investments in the federal recovery. dollars lead to better outcomes for all of its residents. More than three-quarters of communities engage with residents on how to spend recovery funds – including Cook County, Ill., Which has partnered with community organizations from marginalized communities to ensure that their financing plan was informed by those who do not traditionally participate. .

More than half of communities actively use evidence and data to guide their investments. In Gilbert, Arizona, for example, a review of local crime data showed an increase in sex crime offenses between 2015 and 2020, prompting city leaders to dedicate recovery funds to support a family advocacy center that will provide services to victims. Local governments can still improve: less than half of jurisdictions show clear and promising investments in evaluating the effectiveness of their investments.

With the US bailout, the federal government moved quickly to stem a recession and get money to residents and communities as quickly as possible. Despite their exhaustion after two years of responding to the pandemic, local government leaders are using this unique funding opportunity to build governments that are more data-driven, more equitable and more responsive to the needs of residents.

Zachary Markovits is Vice President of Local Government and Managing Director of the What Works Cities Initiative at Results for America.

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