New York City is using the federal funds it received in the wake of the COVID-19 pandemic to replace revenue losses and mitigate negative economic impacts, similar to other major cities in the country, but it has used them at a faster pace than its peer cities, which leaves less available to address future uncertainties, according to a report released today by State Comptroller Thomas P. DiNapoli.

“New York City acted quickly to use federal dollars to shore up its finances and keep vital services going during the pandemic,” DiNapoli said. “As state and local governments now face new fiscal uncertainties from rising inflation and a potential recession, the city must closely monitor the shifting fiscal environment to use any remaining funds in ways that continue to boost recovery and avoid spending choices that increase budgetary gaps.”

The American Rescue Plan Act of 2021 (ARPA) provided $350 billion in Coronavirus State and Local Fiscal Recovery Funds (SLFRF) for states, local and tribal governments with resources to respond to the pandemic and its economic effects and to build stronger, more equitable economies. DiNapoli’s report examined how New York City and other local governments across the country used the first of two partial payments of these funds, totaling nearly $224 billion.

The U.S. Treasury Department has praised recipients for recovery strategies that prioritize urgent needs but has also encouraged recipients to make long-term investments. Some of those investments have already begun and there is still time for recipients who have not already spent all of their funds to fully implement their recovery plans over the next two years.

DiNapoli’s report found that New York City obligated about $2.5 billion (86%) of the $2.9 billion in SLFRF funds it received through March 2022. That is among the fastest rates among the nation’s 10 largest cities and is higher than the average for the more than 14,000 local government recipients (55.6%) reviewed. Five of the country’s 10 biggest cities had not yet obligated 50% of the first round of funds as of March 2022.

Many of the largest cities (six out of 10) chose to allocate more than 80% of their funds towards general operating expenses to offset revenue losses, exceeding the average among local governments (69.5%). Only three cities (Dallas, Phoenix and San Jose) devoted less than 40% of their obligations to date towards revenue replacement.

More than half of New York City’s relief funds received to date were devoted to revenue replacement, mostly for personal services at the four uniformed agencies (Correction, Fire, Police and Sanitation) and the Department of Education, as well as for waste collection and removal services. Another 27% were directed to help businesses and nonprofits, as well as household and worker assistance. Public health services were allocated 16% of the funds, mostly for mitigation and prevention activities.

As noted in the Biden Administration’s May 2022 American Rescue Plan Equity Report, the prior COVID-19 relief programs for state and local governments had predominantly responded to emergency health and economic needs and had not emphasized responding to underlying disparities in underserved communities. In May 2022, the Treasury Department renewed calls for recipients to continue to use their SLFRF for transformative investments in their communities.

Of New York City’s nearly $3 billion in unobligated SLFRF as of April 1, 2022, most will be allocated to revenue replacement for salaries and contractual services as well as supporting school-based public health services,and certain other ongoing costs of the public health emergency. Other than for revenue replacement, the balance of SLFRF will be dedicated to expansions of various public health services along with housing, legal and employment assistance targeted to low-income residents. At this time, the city does not plan to use any of its funds for infrastructure projects, including broadband.

As shown in DiNapoli’s fiscal cliffs tracker, some of the city’s initiatives funded with SLFRF and other new programs could create additional spending obligations going forward. If they prove popular, elected officials will be under pressure to renew funding beyond fiscal year 2025 when the temporary federal relief will be exhausted.

DiNapoli’s report also found:

• Nationally, local governments have claimed revenue losses stemming from the pandemic totaling $92.7 billion.
• New York City experienced an estimated revenue loss of 8.3%, equivalent to approximately $5.9 billion over two years, which is roughly the amount in SLFRF disbursements provided to the city.
• Many of the largest cities are expected to continue to rely on funds allocated to revenue replacement to provide budgetary stability over the remainder of the program’s performance period.

Report
A Comparison of Fiscal Funds Utilization: NYC and Peers

Track state and local government spending at Open Book New York. Under State Comptroller DiNapoli’s open data initiative, search millions of state and local government financial records, track state contracts, and find commonly requested data.