The city of New Orleans is poised to directly receive nearly $400 million in federal coronavirus relief funds allocated in the American Rescue Plan Act, which was passed by Congress in March. On Monday, the federal government released rules on how that money can be spent, and on Wednesday, Mayor LaToya Cantrell’s administration laid out plans for where the funds will go in a presentation to the City Council’s budget committee.
The council committee also forwarded an ordinance that would appropriate the first dollars out of that lump sum — $1.3 million for the city’s Health Department to promote and distribute coronavirus vaccines and fulfill other general healthcare needs for the homeless.
“These are funds that are coming through to our healthcare for the homeless program, which runs our clinics here in the city,” said Health Department employee Brandye DeLarge. “These funds will support our COVID-19 vaccination efforts, along with assisting to provide primary care and behavioral health services to our vulnerable populations.”
City Chief Administrative Officer Gilbert Montaño said the Cantrell administration would have to make requests to the council to spend the money, and that those requests would start rolling in over the next couple months.
“I suspect over the course of the next month or two there will be a lot of requests to the council, once we level out where we’re going and where we want to go and come to terms with where we should go with these dollars and all the competing interests.”
But Montaño stressed that the money wouldn’t be spent all at once, and that the city was planning to spend it over the next five years to offset the projected long-term economic impacts of the pandemic.
For the most part, the city plans to use the money to plug revenue holes caused by the economic crisis caused by the pandemic, which the last major relief bill, the CARES Act, prohibited.
Shortfalls in recurring revenue — like taxes and fees — totaled more than $100 million in 2020, according to the presentation. But the city is projecting continued revenue losses for years to come. The Cantrell administration predicts that through 2025, actual revenues will be down $517 million from what was projected pre-pandemic. That’s more than the entire sum it’s receiving through the American Rescue Plan.
The American Rescue Plan Act appropriated $1.9 trillion to help the country recover from the coronavirus crisis. Included in that $350 billion in financial aid to local and state governments. All in all, the city of New Orleans is expecting to get $387.5 million in direct aid. The state of Louisiana, meanwhile, is expecting $3 billion in total direct payments from the American Rescue Plan.
The act also appropriates hundreds of billions in additional dollars for public health and vaccine efforts, assistance for vulnerable populations, housing assistance and other economic assistance.
“The City is working closely with local partners to ensure we can fully leverage the tens of billions of dollars available across multiple programs funded by ARPA,” the city’s powerpoint presentation said. “The City’s direct allocation will be dedicated to ensuring that services cut during the pandemic can be restored and sustained during the economic recovery period.”
Montaño said that the city was specifically expecting $9 million from the federal Department of Housing and Urban Development “to combat our homeless problem.”
The federal CARES Act, passed last year, provided the city with $59.3 million. But the city has long said that was sorely insufficient to make up for the extra costs and lost revenues caused by the pandemic.
Unlike the American Rescue Plan, the CARES Act only provided reimbursement for costs directly related to responding to the pandemic, like coronavirus testing, payroll for essential public safety personnel and extra personal protective equipment. But the city couldn’t use the money to offset lost tax revenues.
The other issue with the CARES Act money was that it was routed through the state rather than given directly to cities and parishes. The state had originally put aside $800 million for local governments, but in a controversial move, the state legislature voted to divert hundreds of millions of dollars of that total for local business grants.
According to Wednesday’s presentation, the state approved $130 million in expenses that New Orleans submitted for CARES Act reimbursement, more than double what the city has actually received.
The American Rescue Plan, on the other hand, will send the $387.5 million directly to the city of New Orleans. And the city also has a much wider latitude for how it can use the funds. Along with covering lost revenue, the city can also spend the money on economic stabilization for residents and businesses, addressing systematic disparities that led to disparate impacts from the pandemic and supporting ongoing cornvirus response efforts.
The city’s presentation also pointed to certain things the money cannot be spent on, including debt service payments, legal settlements, rainy day reserves or pension fund deposits.
Only some infrastructure investments are also allowed under the plan. According to the city’s presentation, the money can be spent on water, sewer and broadband infrastructure but not “general infrastructure.” But it appears the city can use the funds it collects to make up for lost revenue on infrastructure projects in its budget.
Montaño also discussed the possible benefits of President Joe Biden’s proposed American Jobs Plan — a $2.25 trillion infrastructure package. The bill hasn’t passed through Congress. It’s faced tough criticism from Republicans, and although Democrats hold a slim majority in both chambers of Congress, Biden has said he wants to pass something with bipartisan support. He recently said that he’s open to passing a bill that would only include the most widely popular, bipartisan portions of the plan.
The plan as currently written would not only fund roads and other transit, it also appropriated $20 billion to address historic inequities caused by infrastructure investments in the mid 19th century that bulldozed, disrupted and disconnected black neighborhoods in cities across the US. The Biden administration has specifically pointed to the Claiborne overpass as an example of an investment that “divided communities.”