The American Rescue Plan that President Biden will sign into law has a combination of one-time, short-term, and long-term measures that will turbocharge economic growth this year.
The House voted 220-211 to approve Senate-passed amendments midday Wednesday, sending it to the White House.
No Republicans joined in support of the overwhelmingly party-line vote for the legislation that has many economists forecasting the fastest economic growth in decades. A single Democrat voted against the bill.
The provisions include $30.5 billion in transit aid that the Transit Center predicts will fund operations for all major systems at least through 2022 and into 2023.
“It removes a lot of uncertainty for transit agencies,” said Transit Center spokesman Ben Fried. “Several big agencies would have had to consider substantial cuts before the end of this year if not for this relief.”
Fried said the aid will cover “a significant period because sometime this year the fiscal crisis for transit agencies should start to ease as people resume activities and make the trips they used to on transit.”
The aid to transit systems is the third tranche of emergency federal aid approved by Congress.
The Senate added an amendment to the $350 billion in direct aid to local and state governments that requires it to be spent by the end of the 2024 calendar year.
Meanwhile, an additional $10 billion has been set aside for capital projects. The National Association of State Treasurers estimates the capital grants will include $550 million for California, $484 million for Texas, $364 million for Florida, and $353 million for New York.
Forty percent of the $350 billion will go to counties and local governments.
Governmental units will be permitted to use the federal aid for premium pay of up to $13 an hour above regular wages for eligible workers performing essential work.
Direct aid also can be used for water, sewer, and broadband infrastructure.
All government units must provide periodic reports to the U.S. Treasury with a detailed accounting of how the money is spent.
The use of the money to fund pensions or to offset a tax cut is prohibited. To enforce those requirements, the Treasury has the authority to recover any money spent on ineligible uses.
NAST has estimated the grants to every governmental unit.
Among small cities that were left out of direct federal aid last year, Anniston, Alabama will receive $13.81 million while Wausau, Wisconsin will get $15.75 million.
Small rural counties like Calhoun County, Arkansas; Miller County, Georgia.; and Gray County, Kansas will get just over $1 million.
Even tinier counties will receive under $1 million. Robertson County, Kentucky will get an estimated $480,000, and Daniels County, Montana will receive $330,000, according to the NAST estimate.
An additional $170 billion in federal emergency aid for education will be split between K through 12 schools, which would get $130 billion, and colleges and universities, which will receive $35 billion to implement online classes as well as public health protocols and provide emergency grants to students in need. The remaining $5 billion would go to governors for a hardest-hit education fund.
Mark Zandi, the chief economist for Moody’s Analytics, praised the fact the new legislation includes direct aid to local governments rather than just states.
“Local governments are key to the fabric of a well-functioning economy,” Zandi said during a webcast National League of Cities conference interview.
Zandi said that the latest jobs report for February found that the economy remained 9.5 million jobs below where it was before the onset of the pandemic.
Although the official unemployment rate in February was 6.2%, Zandi said that factoring in the people who dropped out of the labor force over the last year pushes the effective underemployment rate to around 8 or 8.5%.
“The pandemic is going to have a long tail in many, many, many longer-term implications,” he said.
