The federal stimulus bails out Wyo state, local governments, for now

The $1.9 trillion stimulus plan’s full implications for Wyoming are too numerous and nuanced to know yet, but the import of one facet is already clear: The roughly $1.3 billion it provides Wyoming’s state, county and local governments will go a long way toward alleviating their current fiscal crises.

President Joe Biden signed the American Rescue Plan Act into law last week and the details of this latest federal stimulus are finally emerging.

Observers are already making comparisons to the CARES Act passed just under a year ago. Many question the sheer magnitude of the ARP Act package given that vaccinations are now readily available and the number of active COVID-19 cases is falling. Adding this latest congressional pandemic response will cause the total cost of COVID related relief to exceed $5 trillion! Even though most federal politicians on both sides of the political aisle aren’t vocally concerned about these massive deficit spending measures, economists are increasingly worried about a looming and difficult-to-avoid financial crisis.

Critics argue the law is less about COVID-19 impacts and more about the politics of providing lucrative benefits to states that shut down businesses during the pandemic. Others see the bill as a massive anti-poverty measure along with an associated income redistribution. As evidence, the allocation formula includes additional benefits to states whose average unemployment rate was high during the last quarter of 2020. Other pages of the bill deal with programs favoring low-income households.

The $1.9 trillion total cost of the latest stimulus bill is comparable to the Cares Act, but the allocation of spending is considerably different. With a new administration in Washington, a number of areas of national focus that were treated less generously under the previous administration appear to be indemnified in the ARP Act, according to analysts.

Will that translate into useful support for Wyoming’s state and local governments? Yes!

A year ago, a limited amount of the $2 trillion CARES Act funding was directed to state and local government, and what funding was provided came with many strings attached. Funds could only be used for direct COVID-related expenses, for example, and they originally had to be allocated by Dec. 31, 2020. By most interpretations, CARES Act funds couldn’t be used to replace government revenues that were lower because of the pandemic.

The ARP Act, by contrast, has far fewer strings attached. States can use funds to assist households, businesses or business sectors that have been impacted by the pandemic, for example, or they can use ARP allocations to pay for services that have been curtailed or reduced as a result of COVID-related decreases in tax revenue. Even making capital improvements to utilities and broadband facilities are allowed. Funding pensions and supplanting revenues related to tax cuts are among the few purposes that are off limits.

Generally, however, drops in revenue can be remedied with ARP Act funds. That’s a big deal for Wyoming.

Beyond the greater spending flexibility, there’s also just a lot more money for state and local governments in this year’s package — $360 billion nationwide, compared to $150 billion in the CARES Act.

This aspect of the bill was surprising to some observers because the majority of state and local government revenue streams actually increased in calendar year 2020. Wyoming, however, was one of the states that experienced decreases in revenue.

What does the ARP Act offer the state of Wyoming and its city and county political subdivisions? The short answer is: a lot. In fact, the amount of state and local government allocation to be received in Wyoming is the fourth-highest per capita allocation in the nation.

The state of Wyoming alone is projected to receive just over $1 billion. This allocation is divided into two distributions with the first half received in the next few weeks and the second no earlier than a year from now. Officials have until the end of calendar year 2024 to spend the money — enough time to address funding the next biennial budget.

Thus, although there are certain funding areas that states cannot finance with ARP distributions, there appears to be sufficient flexibility to greatly ease the current revenue crisis in Wyoming.

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The measure also provides each state with an additional allocation for capital projects. In Wyoming that totals about $110 million.

In addition, the act makes separate distributions to local governments which would seem to alleviate the need for the state to provide the type of local assistance it has in the last several budget cycles.

The amount of funding for counties and cities is impressive. Wyoming counties are set to receive about $112 million. Towns and cities will receive about $62 million. This total of $174 million is considerably larger than the $105 million that the state has been distributing to them in each of the last few bienniums.

To put this into a local government perspective, Laramie County is projected to receive more than $19 million. Smaller counties such as Sheridan and Goshen will receive about $6 and $2.5 million respectively. The small town of Buffalo should receive about $700,000, while Cheyenne and Rock Springs are expected to receive $12 and $3.5 million respectively.

Colleges and universities are eligible for funding as well. The American Rescue Plan will provide public higher education with $40 billion. This is beyond the distributions going directly to states. This is particularly important in Wyoming because the state has cut a larger percentage of its higher education budget than any other state in the nation, at about 15%.

By now, observers will likely anticipate what this flood of money will mean in Cheyenne. First and foremost, it will likely have a profound effect on the remainder of the current legislative session. Revenue generating bills and diversification measures will receive much less attention and committees will clear their agendas much quicker as lawmakers realize they can put off solving our structural revenue problems for at least another biennium.