More than 160 sprawling golf courses already dot the area around Palm Beach Gardens, Fla., a sunny hub for the sport that serves as a home base for the country’s professional league.
The spending in Florida counts among thousands of new investments nationwide, as cities and states look to spend their portions of a generous, $350 billion stimulus initiative. Democrats in Congress approved the local windfall as part of the American Rescue Plan last spring, hoping to give cash-strapped governments a boost in fighting the pandemic and bringing their economies back to life.
But federal lawmakers imposed few restrictions on the money at the time, choosing instead to allow cities and states unparalleled latitude to invest the sums as they see fit. The result has been a mélange of measures to promote vaccines, prop up businesses, safeguard schools and replenish local coffers — alongside a slew of political endeavors and pet projects whose immediate economic benefits may be in the eye of the beholder.
“What’s a good and bad use of money? It’s not really clear,” said Marc Goldwein, a senior vice president for the Committee for a Responsible Federal Budget who tracks stimulus spending.
Alabama approved $400 million to rebuild a state prison. Florida hopes to tap $1 billion in federal money to help pay for a gas-tax holiday. And Indiana lawmakers allowed the state’s economic development agency to spend $3 million on a gate-expansion program at the Fort Wayne International Airport.
In these and other cities and states, local officials often justified the decisions as outgrowths of their budgets. Many had planned to pursue the projects before the pandemic cut into their revenue, while others saw the federal funds as an opportunity to provide a unique jolt to their economies. That aligned them in spirit with Democrats and the White House, where top officials say the money was meant to make certain local downturns do not hamstring the nation’s fuller recovery — much as they had during the last major recession a decade earlier.
The Covid Money Trail
It was the largest burst of emergency spending in U.S. history: Two years, six laws and more than $5 trillion intended to break the deadly grip of the coronavirus pandemic. The money spared the U.S. economy from ruin and put vaccines into millions of arms, but it also invited unprecedented levels of fraud, abuse and opportunism.
In a yearlong investigation, The Washington Post is following the covid money trail to figure out what happened to all that cash.
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“These funds ensure that governments across the country have the flexibility they need to vaccinate their communities, keep schools open, support small businesses, prevent layoffs, and ensure a long-term recovery,” said Deputy Treasury Secretary Wally Adeyemo in a statement.
In doing so, aides to the president and the Treasury Department have heralded the $350 billion program as sufficient to help cities and states weather any future fiscal storm, including new disruptions posed by the fast-spreading omicron variant. But federal officials also have conceded they have only so much power to tell local governments how to spend their cash, a limitation that has been on display nationwide.
In Palm Beach Gardens, the flexibility meant the city may be well within its right to apportion $2.1 million to a series of projects around a new set of links. The money is slated for infrastructure improvements benefiting the planned facility, including street lighting, parking, and water, electric and sewer services, according to city officials, who note that they hope to invest millions in other projects, including a new fire station.
Writing in a local magazine last year, Ron Ferris, the city’s manager, pointed to the rising costs of materials and construction on the publicly financed project. That raised its overall price tag — a gap that the city might have been able to cover on its own if it had not “lost $2.1 million in revenue,” he said.
The mayor declined to comment, and Ferris and other top city officials did not respond to requests.
Gene Sperling, a top economic adviser to President Biden, still heralded the program overall as critical, stressing in a statement that it gave “state and localities the fiscal fire power and flexibility to deal both with immediate crisis as well as continuing disruptions and lingering impacts that could hamper a full, durable and equitable recovery.”
“With over 30,000 jurisdictions receiving direct help, there will certainly be uses of funds that are legal but sub-optimal and where those who vote for their state and local leaders will be the source of ultimate accountability,” he added. Sperling did not refer to any particular locality or project, but noted Biden “has not and will not hesitate” to push local leaders to prioritize.
The dynamic underscores the vast task facing Washington as it labors to keep close watch over a historic burst of federal spending totaling nearly $6 trillion over the past two years. Never before has the federal government spent so much, and so quickly, illustrating the dire nature of the deadly public health crisis.
Democrats and Republicans approved most of the aid beginning in 2020 on a bipartisan basis, shelling out sums starting that spring that now are widely regarded as successful in shepherding a lightning-quick economic recovery. But the rapid clip at which lawmakers authorized each successive stimulus package — and the urgency with which a usually lumbering federal bureaucracy has doled it out — also has created unique ethical and fiscal headaches that loom large to this day.
Tracking the money remains difficult. Ensuring it swiftly reaches those who need it most at times has vexed Democrats and Republicans alike. And stopping it from landing in the hands of criminals and other malicious actors has proved to be a persistent challenge, resulting in investigations and charges that continue two years into the crisis. A federal grand jury indicted a woman from Baltimore on Thursday for allegedly obtaining $1.6 million in federal aid funds she should not have received.
The relief program targeting cities, counties and states had been one of the most contentious elements of the American Rescue Plan last spring. The idea grew out of a belief that local governments needed a rapid influx of aid, since business closures and other coronavirus mitigation measures had deprived them from collecting much-needed tax revenue. Absent that, state and municipal leaders feared they would be forced to make dramatic cuts to local services or lay off droves of government workers.
“These funds were meant to ensure that unlike the post-Great Recession recovery — where Congress later refused to add more state and local resources — we would see state and local governments adding to growth and jobs, instead of being a major source of austerity, job loss and barrier to stronger growth,” Sperling said.
Democrats ultimately settled on a $350 billion fund with few restrictions, chiefly that the money could not be used to offset public pension losses or finance new tax cuts that local officials otherwise could not afford. Republicans unanimously voted against the whole of the American Rescue Plan, even as some GOP lawmakers later would tout to voters the benefits of its programs, including the provision of state and local aid.
Republican governors and city officials, meanwhile, joined with their Democratic colleagues in eagerly approving a flurry of measures over the past year that put the first tranche of money into use.
Officials in Broward County, Fla., and Polk County, Iowa, devoted some of their funding to rewarding residents who received their vaccines. Others like Northampton County, Pa., and Kansas City, Mo., set up drive-through testing and contact tracing operations in the earlier months of the pandemic. The Treasury Department heralded these efforts in a report issued in late 2021, describing the investments as a “massive nationwide mobilization around vaccinations as well as a response to the highly contagious Delta variant.”
Many states also set up programs to boost local businesses: Wisconsin approved $50 million to assist financially harmed farmers, for example, and Virginia committed $250 million to assist restaurants, entertainment venues and other small businesses, particularly those that struggled to obtain other federal aid. Some Republican-led governments in particular commissioned return-to-work bonuses, hoping to encourage those worried about the coronavirus to reenter the labor force anyway.
Addressing the nation’s mayors on Wednesday, Treasury Secretary Janet L. Yellen heralded the local response — and the power of federal aid — as forces that pulled the economy back from the brink.
“There’s a good argument that without your work thus far — and without the Biden administration’s relief funding — we would be reliving something approximating the early days of the pandemic. And not just now, but for some time to come,” she said in her speech.
But the unrestricted nature of the stimulus program also ushered in a wide array of spending beyond immediate pandemic response. In its final rules, issued after billions of dollars already had been shelled out, the Treasury Department in January affirmed its flexibility. The guidance said cities and states had to show their investments stemmed from a negative consequence of the coronavirus — resulting in some projects that were more relevant or controversial than others.
In Arizona, Republicans led by Gov. Doug Ducey committed $170 million to two school-related measures that essentially discouraged mask usage and distance learning. One of the initiatives specifically denied federal aid to school districts that sought to require facial coverings, even though public health officials universally see it as an effective measure to prevent the pathogen from spreading.
The approach, which later triggered a local court battle, prompted the Biden administration to issue a series of rare legal warnings — culminating in a letter last week threatening to claw back the funds within 60 days unless Arizona uses the money in a way befitting its purpose promote public health. That prompted a sharp rebuke from Ducey, who took to Twitter to blast Biden as “completely out of touch with the American people.”
The state’s GOP attorney general, Mark Brnovich, soon after issued a legal threat of his own: He pledged on Wednesday that Arizona would “take appropriate action in the courtroom to defend our state from this blatant federal encroachment.” If such a lawsuit is filed, it would mark Arizona’s second against the Treasury Department, after it joined other GOP-led states in challenging rules that they say restrict their ability to implement tax cuts.
“As our office has previously pointed out to the U.S. Department of the Treasury, as well as to a handful of other federal departments, we will not be intimidated by the heavy-hand of the Biden administration forcing Arizona to comply with ambiguous and unrealistic national standards created and ‘enforced’ by federal bureaucrats,” Brnovich told Yellen in the letter.
In a less contentious move, scores of additional local governments opted to focus significant sums toward infrastructure. States alone invested roughly $20 billion of the roughly $100 billion they have already received on boosting broadband access, improving water and sewage systems and completing other capital projects, according to the Center on Budget and Policy Priorities (CBPP), a left-leaning think tank that analyzed the data in December.
The spending had been expressly permitted under the stimulus law. But it also came just as Democrats and Republicans labored to craft a roughly $1.2 trillion bill specifically focused on some of the same infrastructure upgrades, which Biden signed into law later in the year.
The public-works investments in some cases reflected a tough choice confronting state and local officials — between delivering aid to businesses and workers facing urgent need as a result of a new variant, or focusing finite dollars on more long-term economic ambitions.
In North Dakota, for example, Republicans set aside $150 million in federal stimulus aid for the construction of a long-sought gas pipeline sluicing the state. The infrastructure project marked the largest single investment approved by the Republican-dominated legislature, which also set aside $10 million as part of its plans to launch a space education and research initiative at a state university.
The pipeline marked an attempt to “facilitate growth in value-added industries,” said Sen. Ray Holmberg, a top state lawmaker who helped spearhead the plan, as he pitched his colleagues during floor debate last November. He did not respond to a request for comment.
Holmberg and his GOP allies did put aside additional sums to help workers and families directly impacted by the pandemic, including $17 million to boost child care services. But advocates in North Dakota soon felt spurned nonetheless. The adoption of the budget measure — just days before the omicron variant began coursing through the state, one of the least vaccinated in the country — led some to wonder whether they should have done more to help those in greatest need.
“We were hoping to see more money for child care and school meals, and things like that,” said Landis Larson, the head of the local chapter of the AFL-CIO, which joined with other organizations in pushing for such aid unsuccessfully.
By contrast, the decision to channel federal money toward a gas pipeline offered few short-term benefits, added Landis, who described it as a “drop in the bucket in terms of what it’s going to cost.”
In Texas, local lawmakers approved more than $15 million for a customs inspection station in the city of Presidio near the Mexican border. And Delaware in October authorized more than $20 million to improve the digital system that handles court case filings. The investment sought to remedy technical deficiencies that resulted in a backlog of thousands of criminal cases earlier in the pandemic, according to Claire DeMatteis, a special assistant to Delaware Gov. John Carney (D).
Even the White House at one point encouraged local governments to direct their covid aid to projects beyond the immediate aftermath of the pandemic. In July, the Biden administration issued explicit guidelines showing how cities and states could tap the funds to advance the president’s plans to reduce gun violence, hire more law enforcement officials and improve policing technology.
State policymakers redirected more than $2.5 billion toward criminal justice reforms, the CBPP analysis last month found, including efforts to improve mental health services, respond to sexual assault and reform local policing. Similar data is not tracked nationally for cities, though some, such as Tulsa, spent millions on police body cameras and other new tools and fixes.
“The point of this funding, and the only way for it to be effective for fiscal recovery in particular, was for it to be flexible,” said Ed Lazere, a senior fellow on the state fiscal policy team at the CBPP. He stressed the investments in many ways had achieved that goal, improving public health and keeping municipal finances afloat.
But, Lazere acknowledged, the program also hasn’t been without its hiccups. “The important goal was to get the money in the hands of states and localities in a way that made sense, and that’s bound to have some decisions that make you scratch [your head].”
So it was the case that Palm Beach Gardens, a city of 50,000 along Florida’s eastern coast, ended up last fall devoting roughly $2 million in stimulus cash toward its latest golf course. Not a single member of the community objected in September, when local leaders convened to give the green light to their spending plans for the year ahead.
Facing questions about the spending, Rachelle A. Litt, the mayor of Palm Beach Gardens, defended the investment to the Palm Beach Post at the time — pointing out that it wasn’t too unlike what every other city and state was doing with its aid anyway.
“This infrastructure spending would have to occur on this property if we were putting in any other type of recreational facility, park or playground,” she said, “as other municipalities are doing with their funds.”