News & Politics

Remember that 'Emergency Funding' the States Needed Last March? Here's What Happened to It

AP Photo/Mark Lennihan

Last March, Joe Biden signed a $1.9 trillion pandemic relief bill. It had cash for taxpayers, for businesses, and — most controversially — $350 billion for state and local governments.

Republicans objected because Democrats at the state level were going to spend the money on non-pandemic-related issues. Most notably, some states like Illinois wanted the cash to bail out their state and local employee pension plans that had been robbed for years by Democrats and now threatened to explode in a massive “pension bomb” that would put taxpayers on the hook for billions of dollars.

Republicans wanted more strings attached to the funding, but Democrats said there was no time, that the states would run out of money otherwise.

But now, an analysis by the Associated Press has found that nearly 7 months after Joe Biden signed the American Rescue Plan, precious little of that $350 billion for state and local governments has been spent.

As of this summer, a majority of large cities and states hadn’t spent a penny from the American Rescue Plan championed by Democrats and President Joe Biden, according to an Associated Press review of the first financial reports due under the law. States had spent just 2.5% of their initial allotment while large cities spent 8.5%, according to the AP analysis.

Many state and local governments reported they were still working on plans for their share of the $350 billion, which can be spent on a wide array of programs.

Though Biden signed the law in March, the Treasury Department didn’t release the money and spending guidelines until May. By then, some state legislatures already had wrapped up their budget work for the next year, leaving governors with no authority to spend the new money. Some states waited several more months to ask the federal government for their share.

So, not quite the emergency we were led to believe by Democrats and the president.

Recall that the $1.9 trillion Biden plan followed a $900 billion pandemic relief measure signed by Donald Trump in December of 2020 and the first coronavirus stimulus bill worth $2 trillion — the CARES Act signed in March of 2020. That’s nearly $5 trillion in assistance during the pandemic.

And nearly a trillion dollars remain unspent from the CARES Act.

Wall Street Journal:

The biggest cache is grants to states, cities and territories, of which $210 billion remains unspent. That’s no surprise given the $500 billion showered on states and cities between the March 2020 Cares Act and President Biden’s follow-up in March 2021.

The bailout came despite a mere 0.2% drop in state revenue from 2019 to 2020, according to the Tax Foundation. Few strings are attached to the funds so state and local lawmakers are taking their time. New York, California and others have passed record budgets while tapping only a portion of their federal aid.

Some of that unspent money was tapped to fund the $1.2 trillion bipartisan infrastructure bill. “New” spending in that bill totaled $550 billion. Considering the tens of billions of dollars floating around in Washington, it’s good that someone somewhere is trying to use a portion of it.

We could complain about the massive waste of taxpayer funds except that taxpayers never saw the money in the first place. It’s all borrowed money, borrowed from Americans yet to be born.

Is this a great country, or what?