Cities and states take advantage of surprise pandemic budget surpluses

ABC News' Elizabeth Schulze reports on what state and local governments across the country are doing to utilize their budget surpluses from federal COVID-19 relief funds.
5:52 | 07/22/21

Coming up in the next {{countdown}} {{countdownlbl}}

Coming up next:

{{nextVideo.title}}

{{nextVideo.description}}

Skip to this video now

Now Playing:

{{currentVideo.title}}

Comments
Related Extras
Related Videos
Video Transcript
Transcript for Cities and states take advantage of surprise pandemic budget surpluses
As the pandemic was at its worst last year many state and local governments weren't at the economic damage would be devastating his shuttered businesses and piers and dried up tax revenue would put a strain on already struggling budgets. Here later many states are announcing a surplus of funds thanks in part to generous federal aid in a recovering economy. So what are the states doing with that extra cash and live look mean for further stimulus from Washington ABC's it was initials he has this report. In Alexandria Virginia and the economic outlook was bleak when the pandemic K it's. Early on. It was it was catastrophic forest every week unfortunately I was getting AA notification from. You know hotel's large restaurants telling us that they were shedding workers. Mayor Justin Wilson says the city like so many others reliant on sales and tourism taxes. Projected a budget shortfall of up to 100 million dollars there was so much of that. Not know lien Nguyen we would be out of this not knowing when the next shoe would fall. Fast forward a year the dire projections never became reality. Instead the city just passed a plan for how to spend an extra thirty million dollars from the federal government's. Including and guaranteed basic incoming experiment giving out 500 dollars a month. To about a 150 families and the Everett sexier body you be able to just hand out cash and residents never never never. It's a story playing out from coast to coast think student generous federal relief fund so rebound in consumer spending and stock market gains. State and local governments added predicted economic calamity. Now find themselves flush with cash. Reader programs and how jobs are we aren't. Now state and local governments are finding creative ways to dole out the money the number one plane was immediate relief directly to our citizens the Cherokee Nation is receiving one point eight billion dollars from the American rescue plan passed in March. Principal chief chuck OSCON junior says the money is going toward 2000 dollars stimulus checks for every citizen. Plus investments in mental health broadband Internet and a new hospital. I think about migraine Arthel let Cherokee lived most of his life in which a charity in vornado out electric sheep. You wouldn't imagine his grandson would be cheap let alone beat it cheaper to try and wish united state sending. One point eight million dollars to respond to a public health crisis. States like Maine an Alaska are planning to use some of their federal funds to support hard hit fishing industries. In North Carolina the governor is proposing allocating thirty million dollars of its money to repair NASCAR motor weighs. So are Arsene you'll onstage talk about. We're gonna have to really is also tax is cut also are sending. On and it didn't happen. The Treasury Department says about 200 billion dollars of the 350 billion in direct aid to state local and tribal governments from the American rescue plan. Has already been distributed. The money must be spent by the end of 22 when he six. And unlike the previous two Covert relief flaws there are fewer restrictions on how state and local officials can use it. Your receipts how dare. Everything's under water right now. And so I'm the third major piece lets see you around 121 and euros EB desire to give didn't you know freedom. President Biden is now urging some cities to use the funds toward fighting crying. Cities experiencing increasing gun violence free will use American rescue plan dollars to hire peace officers needed for community policing. Superior return. Meantime thirteen mostly Republican led states are suing the Biden administration because they want to use the federal money to fund tax cuts. Which is prohibited under the law arkansas' among them led by attorney general Leslie Rutledge. It's not a matter for the federal government to decide arkansas'. Structure is there are cutting tax and Whitney uncertain revenue going forward and uncertainty about the pandemic. Every namely your. Last year and campus had to look at their own tiny it's every business is to look at funny is they don't. All hands government bailouts to rely on the state of Arkansas personal errands not just grandma and her friend that we don't need to uber budget. Maryland comptroller Peter friend Joseph calls the federal aid to states and households and game changer. We felt we were going to be bankrupt frankly in the summer once when we were predicting what the pandemic would cost. And instead we had a relatively normal here as far as taxes but he says the funding isn't always going to the communities who need it most. Some of it will be well spent. A lot of that probably won't pay and that's the nature of having a fire hydrant cash. Come into the state suddenly. Raising some questions about if the government should inject trillions more into the economy through the president's infrastructure proposals. I think he keep writing blank each Saturday you know my daughter is will be three years old and a couple of weeks. And already she is going to be saddled with disorder because of this irresponsible spending and just writing checks that we don't have the money. But ace there are another trillion dollars or may be four trillion dollars in infrastructure package is passed. Is that calculating into your equation and for how to spend this money. Obviously we hope that happens but I think we always try not to make decisions counting on federal action. Because we never know and unlike the federal government you have to balance your budget every single here every single year. Without fail as well as missiles EA BC news Washington.

This transcript has been automatically generated and may not be 100% accurate.

{"duration":"5:52","description":"ABC News' Elizabeth Schulze reports on what state and local governments across the country are doing to utilize their budget surpluses from federal COVID-19 relief funds.","mediaType":"default","section":"ABCNews/US","id":"78978566","title":"Cities and states take advantage of surprise pandemic budget surpluses ","url":"/US/video/cities-states-advantage-surprise-pandemic-budget-surpluses-78978566"}