After pushing for billions in COVID relief, mayors take time spending federal dollars

Washington — In the face of waning revenues due to the COVID-19 pandemic, the nation's mayors emerged as key fighters in congressional Democrats' corner as they pushed for billions of dollars in federal funds to be included in a $1.9 trillion coronavirus relief package signed into law in March.

The mayors, from both sides of the aisle, were ultimately successful in their efforts, as President Biden's sprawling coronavirus legislation, called the American Rescue Plan Act, contained $350 billion for state and local governments, many of which were left out of an earlier round of aid.

Now, seven months after Mr. Biden signed the $1.9 trillion package into law and five months after getting their first tranche of aid, mayors in some cities are taking their time to spend the money they received, instead waiting to examine the long-term impacts of the pandemic on their cities.

"This funding helps us to be prepared for the structural changes" spurred by the pandemic, Nan Whaley, the mayor of Dayton, Ohio, and president of the U.S. Conference of Mayors, told CBS News. "What can we do to really change how we're providing services and differentiate services because of these enormous changes that COVID has brought our way? That is what makes this money so helpful, because it allows that flexibility."

Dayton will receive a total of $138 million through the state and local funding included in the relief package enacted in March, which Whaley said is the most money the city has ever been awarded in a federal grant. 

Whaley, a Democrat who is running for governor of Ohio, said the city solicited input from residents about where to direct the aid and passed a resolution outlining six investment areas: neighborhoods, amenities, major "catalytic" projects, city projects, community investment and external awards to support vulnerable economic sectors.

Still, very little of the money has been committed so far, Whaley said, though city officials are aiming to have the aid allocated by the end of the year. The city wants to use some of its federal assistance to demolish blighted property and redesign neglected neighborhoods, but is waiting for final guidance from the Treasury Department to ensure that's allowed.

"We want to make sure that money is transformational, and the discussion we've had is we don't want to go back to the way everything was," Whaley said.

The city initially planned not to have a class of new fire and police recruits this year in response to budget woes, but corporate earnings unexpectedly soared, leading to an increase in tax collection. As a result, Dayton moved forward with a new class of police officers and firefighters, freeing up its federal COVID relief funds for other priorities.

Whaley and city officials, though, are bracing for a dip in income tax revenue over the next five years as people who previously worked in the city continue working from home and paying income taxes where they are working remotely.

The Treasury Department began disbursing the state and local aid to jurisdictions in May, and cities will receive the money in two tranches, with the second half coming in May 2022. Cities are required to have all the money obligated by the end of 2024.

Recipients with populations of at least 250,000 had to tell the Treasury Department in September how they spent the money they received so far, but an analysis by the Brookings Institute found that many cities haven't yet decided what they'll use the money for.

The Brookings examination of plans from 20 large cities found that of the combined $7.4 billion they'll receive, only 18% had been committed. Of the money that has been reserved, most is being used by cities to make up for revenue shortfalls, while other funds are being directed to help low-income communities or those disproportionately impacted by the pandemic.

"The overall signal from many big cities seems to be that they do not feel under immediate pressure to commit and spend the first tranche of flexible federal dollars," Brookings researchers said.

In Mesa, Arizona, which was awarded nearly $106 million in total, $14 million is unallocated, Mayor John Giles said. The city plans, though, to have the full amount obligated by the end of 2024 and spent by 2026.

"We still have 50 pounds of flour in a 10-pound sack. The needs of our community are still more than we have the resources to address," Giles, a Republican, told CBS News. "We are still setting money aside as unallocated to give us a little flexibility, so a year from now or two years from now if there are pressing things upon us we haven't noticed, hopefully the piggy bank is not empty."

Between federal aid Mesa received from the CARES Act last year and the American Rescue Plan in May, Giles estimates at least $26 million has been used for rental assistance, utility assistance and mortgage assistance for residents.

"We were already facing a housing crunch here. Homelessness was becoming a more and more obvious problem in our community," he said. "Some of the funding we've been able to direct to housing will have a legacy effect going forward on helping us to be better at addressing homelessness and affordable housing concerns."

The city also plans to use some of its federal funds to repair its convention center, which was converted to a food warehouse during the height of the pandemic, and is exploring purchasing property to expand its food bank capacity.

The first half of the money Mesa received will also be used for hazard pay for police officers and firefighters, and $3.3 million will help build a real-time crime center, which will allow police officers in the city to monitor surveillance cameras and respond to incidents quicker. Another $2.5 million is allocated for behavioral health services, and $1.8 million for a new ambulance.

"We are using this as an opportunity to change the paradigm on how we respond to some of these emergency calls," Giles said.