Congress Sends Mixed Signals to Cities on Stimulus


After receiving funding from the CARES Act last spring, cities across the country have largely been left out of subsequent relief packages from the federal government. As public health resources continue to be stretched thin, mayors say they need more help, while economists say giving out such funds could put the federal government in a weak financial position.

Each state received at least $1.25 billion from the CARES Act in March 2020, with more heavily-populated states receiving more money. Cities received a portion of those funds depending on their populations and several other factors, according to the Tax Policy Foundation. 

These funds helped cities provide COVID-19 testing, PPE, and related services, as well as supporting businesses and nonprofits impacted by the pandemic. Those funds began to run out as summer turned to fall and mayors began calling for additional aid as the cases surged across the country. 

A survey conducted by the National League of Cities found that cities have seen a 21% revenue decline since the start of the pandemic and a 17% increase in Covid-related expenses.

“Every city has been impacted by this, and their revenues are going to be down,” Mike Wallace, legislative director at the National League of Cities, told Stateline. “It’s possible for the federal government to allocate money to every local government, regardless of size. That’s what we’re asking Congress to do.”

However, the $900 billion stimulus passed by Congress in December did not include any funding for cities or states, a move that prompted Seattle Mayor Jenny Durkan to accuse Republicans in Congress of holding the country hostage.

“While Congress has acted on common sense unemployment measures and continuing small business loans, it has failed to address so many aspects of this crisis and scale to the desperate needs of our residents, small businesses, cities, and states who have been on the frontlines,” Durkan told SmartCities.

Ultimately, legislators sacrificed additional funds for states and cities to pass the overall stimulus package. Economists and conservative lawmakers were concerned about overutilizing the federal government’s resources and putting largely liberal cities ahead of more conservative rural areas. 

“When you have less money, it makes you do reforms to reduce spending,” Grover Norquist, president of Americans for Tax Reform, told the New York Times. “Don’t bail them out,” he said, “or there will be no normal budget discipline.”

Senator Rick Scott (R-FL) said he preferred to give federal funds directly to individuals and small businesses, rather than to city and state government officials who might mismanage the funds and engage in corruption.

“What Democrats really want is for Congress to just send money to liberal politicians who have already shown they can’t be trusted with it. If these politicians have budget shortfalls, it’s because they did not prioritize their struggling constituents in the first place, and instead wasted money on other things,” Scott wrote in an op-ed for the National Review. “New York and California are, of course, free to burn tax dollars for fun. But they shouldn’t expect Florida and the rest of the country to pay when the bill comes due.”

The Biden administration has been pushing for another stimulus package, but it’s unclear how much, if any, aid will be available to cities as part of it.

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

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