How Will Baltimore Spend $670 Million In American Rescue Plan Funding?
When Congress passed the American Rescue Plan in mid-March, Mayor Brandon Scott called the $670 million in federal relief money the law earmarked for the city “a historic investment in Baltimore’s future.” The first wave of the largest fiscal jolt to city coffers in decades is due to arrive this spring — and how exactly it will be spent remains to be seen.
“My focus right now is building that robust and ambitious process that allows us to maximize the impact of these historic dollars and be transparent about how we're spending them,” Scott said on WYPR’s Midday program on Thursday, adding that the public can expect to hear more in the coming weeks.
The Democrat identified three priorities for the money at his State of the City address: “get Baltimoreans working again, help our businesses recover and invest in our people and places that have been left out due to the inequitable policies of the past.”
On Midday, Scott expanded somewhat, saying that he’s interested in “projects that invest in our neighborhoods that have been left behind” as well as opportunities for “our local Black, brown and women-owned businesses that have struggled to get investment opportunities.”
Baltimore can use ARP money more broadly than previous federal relief programs, though it may not be used to supplant tax revenue — meaning city officials cannot use it to lower property taxes or pay down debt.
On Monday, the U.S. Treasury announced updated guidelines for how the money may be spent: localities can pay for health care, rehire employees, bolster housing and food insecurity programming, aid small businesses and invest in some infrastructure projects, among other projects.
Cal Harris, a spokesman for Scott, said after the new guidance was released that Scott will explore expanding equitable access to broadband and making capital investments in public facilities to meet pandemic operational needs.
“The American Rescue Plan is a lifeline for Baltimore families and small businesses navigating the ongoing challenges of COVID-19,” Harris said.
Roger Hartley, the Dean of the University of Baltimore’s College of Public Affairs, said it’s not a bad thing that Scott hasn’t proposed a firm plan for the funding yet, because the stakes are high: the mayor’s spending plan will determine whether Baltimore simply enjoys a short influx of cash or builds a lasting trajectory of equitable, socioeconomic growth.
“Just because you get $670 million doesn't mean it's easy to give away,” he said. “Our government leaders need to be really careful, really precise in making the plan for this money.”
The challenge at hand, Hartley said, is striking a careful balance between dousing the flames of the most severe financial distress in a generation while funding long-term projects that can lead to lasting positive economic impacts.
“There's a real opportunity here for them to do some things that they've been trying to do for a long time,” he said, but there’s also a budget gap that must be filled.
And while $670 million is a historic amount of money, it’s less than 20% of the city’s proposed fiscal year 2022 budget, which was written before the ARP passed. It’s a pile of cash that’s big enough to make a dent in systemic problems, but only if used precisely, Hartley said.
Last year’s Coronavirus Aid, Relief, and Economic Security Act or, CARES Act, sent $103 million to Baltimore. Former Mayor Jack Young had from March to Dec. 2020 to spend a sum with far more restrictions; he diverted it to eviction prevention programs, health department operations and PPE, among other things.
“The money hit them really fast,” Hartley said. “There was a massive crisis, an interest in trying to get the funds spent as quickly as possible so that it could have an impact.”
That quick turnaround came at a cost, he added: the city didn’t have time for “longer term planning, in terms of, how could this benefit the city's economy and the lives of citizens for the longer term, not just simply as a quick relief bill?”
The ARP money must be spent by December 2024. Hartley said he is hopeful this extended timeline will allow Scott to be more strategic.
As the administration works to identify projects for the ARP funds, they also need to develop a strategy for communicating their ideas to the public, Hartley said.
“When they're investing in some of the bigger, longer term strategies, showing that project off but also being able to show what that means for the future is important,” he said. “That means being able to say, ‘This is how these funds will be invested. We will save this many thousands of people from being evicted.’ And then, going one step further, explaining the impact that every dollar of that project will have on the neighborhood, the economy, the stability of families, the whole city.”
Scott will likely wind up presenting his spending plan for the ARP funds as a supplemental budget package. Baltimore’s strong mayor system means that Scott, not the City Council or Comptroller, has the most authority over the money. But other officials have approached him with ideas of how each penny can be stretched to make the fullest impact, including Comptroller Bill Henry and City Council President Nick Mosby. Both Democrats want the money to fix systemic issues, not simply address them.
“We can fight alligators forever, but if we don't drain the swamp, we'll never be done,” Henry said.
Take the $20 million of CARES Act funding that former Mayor Young put toward eviction prevention programs. That money helped low-income Baltimoreans avoid eviction and the socioeconomic upheavals that come with it. But after the funding was exhausted, the renters who used it to pay landlords were left with their original problem: an inability to pay rent.
That money went toward “paying people who already have homes and already have money to house people who don't have homes and don't have money,” Henry said. “It's a never ending cycle of the federal government pouring money out to not solve a problem, but address it for the moment.”
He’s proposed a rent-to-own program, where the city buys homes and rents them to residents who use federal Section 8 housing vouchers. Then, after selling residents the homes they live in, the city can use the proceeds to buy another round of homes and continue the program.
“People would eventually own the homes that they're renting with the assistance from the federal government,” Henry said. “Once they owned their homes, they would have wealth with which they could pass down from generation to generation instead of having generation after generation relying on public housing.”
Henry has also suggested the city use portions of the ARP funding to begin the arduous process of creating its own municipal internet provider or a small business loan fund with zero percent interest for local businesses, as well as ensure a YouthWorks job for every city teen that wants one.
“I'm not sure if there is a best practice ratio out there for, ‘How much money do you spend killing individual alligators and how much money do you spend draining the swamp?’” he said. “But it's got to be a balance that takes us to not having any more alligators.”
Council President Nick Mosby agrees with Henry’s emphasis on directing ARP funding to enormous socioeconomic problems — and wants to go even further. He thinks the money should be allocated to one, maybe two, initiatives, arguing that Baltimore’s current strategy of doling out resources to treat symptoms of societal issues rather than spending more on the issues themselves hasn’t been successful.
“Take really, really big things that have a hold on growth in our communities and growth to our most vulnerable residents in the Black Butterfly, and just completely eradicate it,” he said. “We’ll never get that by going after a multitude of different items.”
As for what that single issue should be? Mosby pointed to a slew of issues that have spiraling negative effects throughout Baltimore — educational disparities, environmental injustice, the digital divide — but added that Scott should let Baltimoreans decide through extensive community outreach.
“This has got to be Baltimore's New Deal, where we're able to look back in five years and 10 years, in 20 years and see substantial change of something that's been around for far too long,” he said. “If we throw money around the entire city, we’ll look up in three years and see it didn't effectuate any real change.”