Crain's editorial: Spend wisely

The past year has been rough, but with the federal government’s help, it has not been as brutal on state and local governments’ finances as originally feared. No one who works on a municipal budget feels relaxed, but the doomsday scenario of plummeting tax receipts and massive service cuts hasn’t materialized.

Now, with the $1.9 trillion American Rescue Plan, city and state governments are in line to receive billions to assist in the rebuild from the pandemic’s economic damage. The money is allocated under the Community Development Block Grant formula, which means cities like Cleveland, with relatively higher levels of poverty and older housing stock, benefit more than other places. Cleveland will receive an estimated $541 million over two years, the most of any Ohio city. Akron is set to get about $153 million.

ARP opponents argued it was excessive, but the first portion of the money soon will be on the way. It sets a high bar. How, if you’re Cleveland, do you spend a fresh $541 million effectively?

“It’s like hitting the lottery or something,” Mayor Frank Jackson said during a recent virtual town hall. “All of a sudden you’ve got relatives and family members and friends that you never knew you had before. There are a lot of people inquiring as to how they can help us spend money.”

The mayor offered few specifics for spending the money, but mentioned offering assistance to people who lost jobs; covering extra city costs (worker overtime, safety upgrades to buildings); helping small businesses and the hospitality and entertainment industries; and bolstering Cleveland Hopkins International Airport.

As usual, Jackson is cautious. He’s right to be wary about everyone coming with a hand out. Still, we urge the administration to focus on big goals, not piecemeal investments.

A smart Brookings Institution piece co-authored by Brad Whitehead, senior adviser to the Fund for Our Economic Future, recommended a three-pronged approach for cities to use ARP funds: stabilize, strategize and organize. It sets a template for how money can “move fast and be deployed smartly and equitably.” On the final component of priorities — organizing — Whitehead and co-author Joseph Parilla write, “the most effective public officials know that deploying (ARP money) will require a team” and urge the creation of “regional recovery coordinating councils” to “execute strategic investments and monitor impact.” The councils “should be public/private partnerships that include small businesses, neighborhood leaders, social service agencies, philanthropic leaders and corporate heads.” They would be tasked with “setting goals, recommending investments and tracking results.”

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