Cities Deem Federal Assistance Crucial in Withstanding Pandemic’s Economic Impacts
When the COVID-19 pandemic gripped America in March 2020, the federal government sought to assist those in need by providing emergency relief funding, as Congress has passed various legislation since then such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136) and the American Rescue Plan Act (ARPA) (Pub. L. 117-2). A recent report released by the National League of Cities (NLC) finds that these funds have been “instrumental in helping communities large and small begin to recover from the economic shock” of the pandemic.
The report, entitled “City Fiscal Conditions 2021,” concludes that 81% of city financial officers cited federal assistance, including grant programs, as having the most positive impact on federal fiscal year 2021 budgets, contributing to a more positive economic outlook. “Municipal finances are on the mend, and the economic outlook is improving as a result of direct, flexible federal relief, such as those from investments in the American Rescue Plan,” said Clarence Anthony, NLC chief executive officer and executive director. “The data is clear ― the nation’s economic recovery begins on the main streets of our cities, towns and villages.”
When asked about top, immediate priorities for ARPA funds, two-thirds of cities have or will replace lost revenue, and 54% will use funds to directly support residents and small businesses. Other spending priorities, from enhancing public safety to addressing homelessness, will also allow cities to make lasting investments in their communities.
The report, conducted this summer by sending surveys to finance officers from 443 cities with populations greater than 10,000 nationwide, notes that cities saw general fund revenues decline about 1% in FY2020, with cities anticipating a further year-over-year decline of 2% for FY2021. However, its stresses that these losses are much lower than the cities would have experienced without federal intervention. However, many cities were forced to pause infrastructure projects during the COVID-19 pandemic due to budgetary constraints, and cities continue to face challenges in funding infrastructure maintenance, as well as new projects.
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