City and county governments are starting to decide what to do with $110.7 billion in State and Local Fiscal Recovery Funds allocated to them under the American Rescue Plan Act (ARPA). They have until the end of 2024 to allocate the money, which is intended to help them emerge from the COVID-19 pandemic.
Given the relative magnitude of aid, the funding is seen in some quarters as an opportunity to invest in potentially transformative infrastructure and other new projects, and in others as providing a lifeline to help services return to or maintain pre-pandemic levels. The choices that cities make could have long-lasting impacts—and are, in part, dictated by the severity of their financial challenges. This brief examines the amount of money that Philadelphia has received, its initial plans for how to spend the funds, and how its allocation and plans compare with those of other major cities.
The amount of ARPA funding that cities receive varies, in part, on their size and structure. As a large city-county, Philadelphia gets funding both as a “metropolitan city,” defined as the principal city of a metropolitan area or another city within the area with at least 50,000 residents,1 and as a county.
For metropolitan cities, the allocation is based on a version of the formula used to allocate funds under the Community Development Block Grant program,2 run by the U.S. Department of Housing and Urban Development. The formula measures a city’s socioeconomic challenges, including factors such as poverty, housing overcrowding, and the age of housing, while the size of counties’ aid depends primarily on population.3
ARPA dollars’ relative impacts
Philadelphia is set to receive nearly $1.4 billion in State and Local Fiscal Recovery Funds in total, roughly $1.1 billion as a metropolitan city, and $300 million as a county. (Cities are allocated additional ARPA funds for other uses; Philadelphia, for example, received $58 million for rental assistance, $48 million for COVID-19 testing, and $14 million for vaccination efforts.)4 Governments, including Philadelphia, received the first tranche of aid in May 2021 and will receive the remaining amount in May 2022.
There are several ways to compare Philadelphia’s share of the State and Local Fiscal Recovery Funds with what other cities are getting.
One is to look at the aid in relation to each city’s budget for the fiscal year when the pandemic arrived. In Philadelphia’s case, $1.4 billion amounts to 29.4% of fiscal year 2020 general fund expenditures. Among the comparison cities shown in Figure 1, the percentage ranges from more than 92% for Detroit to less than 7% for New York. Philadelphia’s package is close to the median for the group.5
Those at the lower end of the bar graph have relatively larger city budgets or spend more per capita; New York, Boston, and San Francisco, for example, spent more than $5,000 per capita in fiscal 2020, compared with Detroit’s $1,400 and Philadelphia’s $2,950. General fund budgets in cities with higher spending often include broader functions than other cities’ budgets do; Boston’s, for example, includes the public school system.