Workforce, tourism and parking: three ways governments are spending recovery funds

Hello friends and Happy Friday! This week I’ll talk about three kind-of-related ways governments are spending their American Rescue Plan Act (ARPA) funds. 

But first, I have some exciting news: LSS is expanding with a new podcast that is scheduled to launch next week! It’s called the Public Money Pod and I’m co-hosting it with the ever-thoughtful and brilliant Justin Marlowe from the University of Chicago. The podcast will be produced with support from the university’s Center for Municipal Finance Research, and sponsors include Build America Mutual and the Government Finance Officers Association.

We’ll talk about the latest muni finance news from LSS, research from the university, and bring on guests to do a deep dive into timely topics. Stay tuned for more details on how to subscribe!

Photo by Eric Prouzet on Unsplash

Nearly $600 million in workforce spending

Amid a major workforce shortage, state and local governments have so far obligated more than $577 million in ARPA funding to jumpstart job training, hiring and worker retention programs. I analyzed the publicly available data from the Pandemic Relief Accountability Committee, and that spending is across 366 different workforce-related programs that run the gambit from housing to sector-specific programs to hiring subsidies.

The data covers the period March 3, 2021 through December 31, 2021 so this total is likely to increase as more governments update their ARPA spending reports. And, as I reported in my Route Fifty newsletter last month, this spending is in addition to $500 million in workforce grants awarded by the U.S. Commerce Department, putting the total planned workforce spending near $1.1 billion.

The spending push comes as the employment recovery from the pandemic has left big gaps in a number of industries, including state and local government. Even with this month’s strong jobs report, the public sector is still down almost 600,000 jobs from before the pandemic. 

While a handful of governments have reported using funds for staffing up, many of the “rehiring” initiatives are one-time expenses, such as new equipment, bonuses, backpay for furloughs or recruitment campaigns. 

The takeaway: While many government officials are worried about staffing levels, most are not using their ARPA funds for recurring expenses like pay raises or salaries for new hires because they don’t want to be on the hook for those expenses after the federal funding expires. What’s more, four out of five workforce dollars so far have gone toward boosting local area employment. The focus is on industries where workforce shortages are the highest such as: manufacturing, wholesale and retail trade, and education and health services.

$670 million for tourism recovery 

When it comes to spending recovery dollars on sectors impacted by the pandemic, governments had the most flexibility with the tourism and hospitality industry. While the rules governing ARPA funds require governments to show how other businesses were “impacted” by the pandemic, they don’t have to do that for businesses in the tourism sector because it’s assumed any business in hospitality and tourism took a hit.

So far, nearly 200 states and municipalities have reported spending ARPA funds in aid to tourism or hospitality.