Who thought spending free money would be so difficult?

Christmas came early this year to states and local governments throughout the United States.  The American Rescue Plan that President Joe Biden proposed and Congress enacted in March provides $350 billion to fill government bank accounts depleted by pandemic-related drops in revenues and to fund a wide variety of public works projects.

On the government coffers side of the picture it has turned out that the revenue hits that occurred in 2020 were not as bad as originally anticipated.  In particular the opportunity to collect sales taxes on internet sales came along at the right time, compensating to a degree for drops in locally produced sales.

In New York State many counties, cities and towns were proactive last year in addressing revenue issues.  Many of them reduced payrolls and other spending and were able to produce 2021 budgets that were balanced with a minimal effect on taxpayers.

Such planning and foresight did not apply to the City of Buffalo, which approved a 2020-2021 budget last summer that factored in more than $76 million of illusionary revenues including $65 million of federal relief funds.  While the Byron Brown administration claimed to be all-wise and knowing when federal relief was actually approved in March they chose to ignore the fact that the money only became available through an amazing series of political events between November 2020 and January 2021 that put Democrats in charge of the White House and both houses of Congress.

For the most part federal cash assistance to states and locals will only bail out revenue shortfalls left over from 2020 and continuing into 2021.  Unless the governments can demonstrate continuing revenue losses related to the pandemic the cash spigot to cover operating expenses will be turned off after this year.

That nonetheless leaves very large pots of money available for public works activity which in the long run will consume the majority of the American Rescue Plan funds.  The question is, how does that money get spent and who makes those decisions?

In some cases local governments are soliciting public opinion through online surveys and public meetings.  All well and good.  At the end of the day, however, it will be the executives and legislators of those governments who will make the final decisions on where the money goes.

In most cases, it appears, the decisions in 2021 are heading toward your basic garden variety projects such as street repair, parks improvements and some building updates.  It’s hardly sexy stuff, but such work is the type that usually gets deferred indefinitely to the bottom of the things-to-do pile.

The Buffalo News’ Stephen Watson and Thomas Prohaska recently provided a detailed summary of what local governments are looking to do.  Projects include sewer and water line renovations, new street lighting and aid to small businesses.

Rasheed Wyatt, Chair of Buffalo Common Council’s Finance Committee, recently noted that the Council had not “heard a single thing” about how Mayor Brown is planning to spend the city’s initial allotment of federal funds.  Majority Leader David Rivera told the News “I am and I think many of the Council members are frustrated with the lack of information that’s coming from the administration with regard to the stimulus money.”  The Mayor’s spokesman said that the administration will “look at this process similar to the city budget process.”   That is probably true, since history shows that the mayor’s office often operates on the theory that the Common Council’s financial approvals are only a technical requirement for running the city.

In Erie County Hall members of the Legislature last week approved plans for the use of $123.7 million in federal funds.  County Executive Mark Poloncarz had proposed the original plan which Democratic legislators amended.  The total package includes a variety of infrastructure and community improvement projects such as sewer system improvements, parks and building improvements.

Minority party members of the Legislature protested the Poloncarz-Democratic legislators list and came up with their own “transformational” project, borrowing the headline and general direction of their proposals from a recent Buffalo News editorial.  The three Republican and one Conservative legislators suggested such non-Republican/Conservative projects as a Great Lakes cruise ship port; a high-speed rail connection between Niagara Falls and Ellicottville; and some undefined work to transform Erie Community College.  Many of their projects would run into the hundreds of millions of dollars and take many years to plan and build, ignoring the facts that the amount of available funds could not accommodate even one of the largest suggestions and that the federal money must be used up by 2024.

But wait, there’s more.  Literally, there will be tens of millions of dollars more available in 2022 under the American Rescue Plan.  The state and local governments will get the remainder of their original federal Rescue Plan allocation next year.  Poloncarz is looking to focus on expanded broadband development.  Decisions on the use of the 2022 money, however, are months away.

The same restrictions on how the money can be used will be in place, but if the 2021 spending addresses some of the most important and pressing needs, governments might be able to think more creatively in next year’s round of spending.

Stay tuned.

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