The $1.9 trillion COVID-19 relief bill doesn’t just put money into the pockets of Americans or prime the pump of the broader economy.
It empowers bureaucrats and puts pressure on local officials who will make the crucial, boots-on-the-ground decisions that determine whether the American Rescue Plan goes down in history as a lifesaver or a boondoggle.
The track record, so far, is not so great. Significant funding from past relief measures remains unspent. For instance, Congress authorized $15 billion in emergency assistance in December for independent entertainment venues. The Small Business Administration has not even issued grant applications.
No wonder Congress prefers to get assistance straight into the bank accounts of individual Americans, rather than rely on a bureaucracy that can get overwhelmed and create complicated rules that slow the process of providing assistance.
Nevertheless, the success of the American Rescue Plan will depend on government agencies like the Internal Revenue Service. That’s right, you need them now. The IRS is not only in charge of distributing stimulus checks, it also needs to develop rules for advance payment of the expanded child tax credit and process new requirements that complicate tax filing season, like one provision that makes the first $10,200 in unemployment benefits tax-free.
On the local level, it will be critical for governments, including St. Joseph and Buchanan County, to avoid using stimulus money as a slush fund. The stimulus package includes $360 billion in relief to state and local governments, including about $39 million for St. Joseph and $17 million for Buchanan County, according to estimates from the Missouri Budget Project.
For local governments, the first half of stimulus funding is supposed to come in 60 days. The remainder arrives 12 months from now.
This federal money can’t be used to offset revenue from a tax cut, but other than that the American Rescue Plan provides fairly wide latitude. Local governments can use the funding for COVID-related costs, investments in infrastructure or to provide services up to the level of revenue lost during the pandemic.
Local governments also have authorization to issue “premium pay increases” of $25,000 for each essential worker. That would be an ill-advised expenditure because the local budget would have to absorb the cost in future years, if it becomes an expectation.
Both parties in Congress have proven adept in recent years at spending large amounts of money. That’s the easy part. The real work comes from those who have to make sure this federal relief is used for its intended purposes.