Connecting state and local government leaders
Republican lawmakers in the House and Senate have been bashing projects paid for with American Rescue Plan Act dollars that they see as wasteful. It could be a sign of further scrutiny to come if they take back one or both chambers of Congress.
From hiring social media influencers to tout the tastiness of Alaskan fish, to making it easier to park or access bathrooms at South Carolina beaches, or trying to bring World Cup soccer to New Jersey, decisions by cities and states on how to use American Rescue Plan Act dollars are providing congressional Republicans with fodder to portray the coronavirus rescue law as an inflationary and reckless use of taxpayer money by the Biden administration.
“We have cataloged numerous examples of ridiculous waste of federal tax dollars from the American Rescue Plan,” Rep. Jason Smith of Missouri, the House Budget Committee’s top Republican, said during a hearing last month.
Spokespeople for Smith and Senate Republicans, who have also charged that ARPA dollars are being spent for things that are not absolutely essential to deal with the pandemic, are silent on what Republicans would do should they win control of Congress next year.
But expect greater oversight if that happens, David Ditch, a former Senate Republican budget aide, told Route Fifty. While Ditch, now a policy analyst for the conservative Heritage Foundation, wouldn’t predict exactly what Republicans would do on ARPA, one option, he said, would involve lawmakers trying to essentially take back some of the aid money by cutting other federal grants to states and localities.
Local and state officials, some of them Republicans, are pushing back at the idea that they’re wasting the relief funds, saying the projects under scrutiny are needed to help communities recover from the economic hit they took during the pandemic.
Case in point: House Republicans seized on a NJ.com report in March that New Jersey Democratic Gov. Phil Murphy—who the news site called “a self-described soccer fanatic”—was using $15 million of the billions the state received in Covid-19 aid to help pay for efforts to lure the 2026 World Cup to MetLife Stadium in East Rutherford.
The decision is one of dozens that Republicans on the House Budget Committee have highlighted on its website over the past year as wasteful. This follows President Biden in February 2021 responding to GOP complaints that the then-proposed bill was too expensive, by saying: “What would they have me cut? What would they have me leave out?”
“What does the 2026 World Cup and COVID-19 recovery have in common? Well, nothing,” House Republicans said in one post about New Jersey’s use of ARPA funds.
“As the world reopens, let’s by all means get back to enjoying sports,” the Republicans said. “But maybe let’s stop playing games with taxpayer dollars.”
Disagreement Over Usefulness of Spending
But like a lot of the jurisdictions coming under attack, Murphy’s spokeswoman Alyana Alfaro Post defended the use of the ARPA funds.
“Revitalizing and investing in industries that were negatively impacted by COVID-19 is an important part of the State Fiscal Recovery Fund,” Post told Route Fifty in an email. “The World Cup would bring millions of dollars to New Jersey’s tourism and hospitality industries, two sectors that have faced significant impacts from the pandemic.”
Brian Aberback, a spokesman for the New Jersey Sports and Exposition Authority, which runs the MetLife Stadium, said the agency has requested the money but the state’s Department of Community Affairs, which is administering the ARPA funds, hasn’t yet approved the spending.
Aberback said the authority intends to use the ARPA dollars on “providing assistance to industries impacted by the pandemic, such as travel, tourism and hospitality. For example, the funds may be used for events at NJSEA Sports Complex venues, including the 2026 FIFA World Cup, with the goal of creating jobs and restoring revenue streams to tenants, vendors and the surrounding communities.”
Criticism of ARPA spending has also come from Senate Republicans.
Fourteen Republicans on the Senate Finance Committee last month asked the Government Accountability Office to investigate how the administration is keeping track of where the dollars are going. They wrote that there has not been enough congressional oversight. They also criticized the Treasury Department for not making available detailed information as to whether states and localities are properly reporting how they’re using the money.
The Treasury Department didn’t respond to inquiries from Route Fifty asking what exactly they are doing to keep track of whether the funds are being used properly, but the department has adopted extensive reporting guidelines for state and local governments receiving Covid aid. A federal watchdog known as the Pandemic Response Accountability Committee, which is separate from Treasury, is also working to monitor spending.
Congress and Treasury gave local and state governments wide latitude on how to spend their ARPA funds. Ditch argued that this degree of discretion is now part of the problem. “Given the lack of guidance, states and local governments are spending too much on pork,” he said.
“A wide variety of fiscal policy experts believe [the $1.9 trillion package] was overkill,” Ditch added. Instead, he argued Congress should have come up with an amount of funding after figuring out “the genuine short-term needs that merit a federal response.”
“That would have limited state and local aid to the tens of millions instead of the hundreds of billions,” he said.
A joint effort by Brookings Metro, the National Association of Counties and the National League of Cities to track how 150 larger local governments are spending ARPA dollars found earlier this year that the greatest sums—$4.3 billion for cities and $1.5 billion for counties—were going toward government operations. Much of that, the research showed, was backfilling revenues they were expected but that were reduced or eliminated because of the pandemic.
The figures also indicated that while cities and counties were planning to spend 37% of their ARPA dollars on operations costs, only 11.1% of the funding was headed toward economic and workforce development, the kinds of projects that have most often come under scrutiny.
Democrats on the House Budget Committee are rejecting the criticism, saying during a recent hearing and in a subsequent report that ARPA has been “transformational legislation,” that has strengthened the nation’s economic recovery from the pandemic.
The funding has “saved lives by helping to slow the spread of Covid,” the report said. “Funding in the bill expanded vaccination efforts and provided personal protective equipment.” Democrats are also contesting GOP claims that the relief package is worsening inflation.
In Horry County, South Carolina—which includes Myrtle Beach—officials were worried the pandemic would keep tourists from going to beaches, an important economic engine for not only the county but the entire state.
Documents the county filed with the Treasury Department describing how it intends to spend ARPA dollars noted the local area had 20.6 million visitors in 2019 and that spending by tourists is an important revenue source for the local government.
The county cited a Brookings Institute study that placed Myrtle Beach as the ninth most vulnerable place among all metro areas in the country in facing an economic downturn due to the pandemic. “About 29% of all jobs in the area fall in sectors considered ‘at risk,’ with the vast majority of those in the leisure and hospitality category,” the county said.
As a result, the county decided to use $2.5 million, or 3.6%, of its roughly $68.8 million in ARPA funding to increase parking at beaches. The county is spending another $1.5 million or 2.2% of its aid to expand bathrooms at the beaches.
Improving bathroom and parking access at beaches is part of a “larger span of projects designed to enhance economic development and recovery in the wake of COVID-19 impacts in our area,” Horry County spokeswoman Kelly Moore said in an email.
House Republicans, though, called the spending an example of how “one turns a massive wave of federal taxpayer dollars into a day at the beach…literally.”
Similarly, local officials around the country defended to Route Fifty in March their use of ARPA dollars to build monuments, create museums, tear down at least one abandoned university dormitory, and to carry out construction on courthouse buildings.
The projects, the officials said, would help their economies recover or make up for projects that could not be funded due to revenue governments lost during the pandemic.
Another project criticized by Republicans as unrelated to coronavirus, but seen locally as a way to boost the economy, is the roughly$45 million North Carolina is directing towards motorsports venues, including NASCAR tracks. House Republicans blasted this spending as well.
But Sam Chan, spokesperson for North Carolina’s Democratic Gov. Roy Cooper, defended the decision, which was approved by the state’s Republican legislature.
“Investing in local speedways across the state will create good jobs as communities work to bolster an industry that struggled during the pandemic. Motorsports have long been an economic engine for North Carolina, especially local speedways in our rural areas,” Chan said in an email. “It’s disappointing that Republicans in Washington are attacking investments in rural communities that were hit hard by the pandemic.”
House Republicans also mocked Alaska’s plans to send $7 million in ARPA dollars to the Alaska Seafood Marketing Institute, which among other things hires social media influencers to promote the state’s salmon.
A spokesman for the state’s Republican Gov. Mike Dunleavy referred questions to the institute, a public-private partnership between the state and its seafood industry. The institute did not return inquiries, but its spokeswoman, Ashley Heimbigner, also defended the use of ARPA dollars to Bloomberg, saying the spending helped the state recover from the pandemic.
“The supplemental ARPA funds allowed ASMI to build brand awareness and sales opportunities for Alaska seafood at a crucial time,” she said.
Kery Murakami is a senior reporter for Route Fifty.