The City Council Budget and Policy Committee began discussing how Denver will spend its portion of the $1.9-trillion American Rescue Plan Thursday, passed by Congress earlier this month to foster recovery from the COVID-19 pandemic.
Brendan Hanlon, Denver’s chief financial officer, said officials are unsure how much relief funding Denver will receive as it depends on whether it is considered a city, county or consolidated government.
“We are making the argument that we have both functions of a city and a county in our organization, and we should be eligible for both allocations,” Hanlon said. “The U.S. Treasury is going through that deliberative process right now.”
Based on the distinction, Denver could get $140.04 million, $170.04 million or $310.08 million from the federal government.
According to the Colorado Municipal League, the city of Denver is set to receive $170.04 million — more than double the amount of any other city in the state — and Denver County is expected to receive $141.04 million.
As of Thursday, Denver hasn’t yet received any funding or guidance from the U.S. Treasury Department, but officials are trying to establish allocation plans to expedite distribution when the funding comes in.
“It’s an effort to be prepared as we possibly can,” Hanlon said. “We want to have a thoughtful process that is socialized before that check comes.”
Generally, the funding can be used to pay for pandemic response, essential workers, infrastructure and assistance to small businesses, households and industries.
These spending guidelines are intentionally much broader than that of the Coronavirus Aid, Relief and Economic Security (CARES) Act from last year, said Kevin Bommer, executive director of the Colorado Municipal League.
"It is intended to spur the economy to ensure we don’t have the type of lagging recovery that we saw with the recession," Bommer said.
Last year, Denver received $127 million in CARES Act funding. Approximately $18 million was appropriated to the 2021 budget, to be spent in the year or returned to the federal government, according to a report from the Denver Post.
Of the remaining funds, $37.21 million was spent on city operations, $33.99 million on emergency shelters, $18.83 million on economic recovery, $8.2 million on housing support, $5.29 million on public health, $2.99 million on food assistance and $2.24 million on support for people impacted by COVID-19.
But without specific guidelines from the federal government, Hanlon said they can’t be certain where the incoming funding is allowed to go.
“The provisions are fairly high-level which indicates a fair amount of flexibility,” Hanlon said. “But we want to make sure we’re getting that Treasury guidance to make sure that we’re spending in accordance with the Treasury’s rules.”
As of now, officials are planning funding allocation in four categories: restoring services, supplementing services, emergency response and economic recovery, all using an equity lens.
Denver’s primarily goal is to equitably restore service reductions made in 2021 due to the COVID-19 pandemic. Early restorations would begin immediately after funding is received and then in phases through the spring/summer.
Supplementing existing services would mean providing short-term investments to service backlogs caused by COVID-19. The funding would support and follow immediate restoration services.
Emergency response and economic recovery efforts would receive funding, but it would likely be less since they get existing funding from Colorado Relief Fund, the Denver Economic Development and Opportunity and larger recovery efforts.
Though details are still very slim, council members offered some ideas for what they want the allocation to prioritize.
“We’ve spent close to $60 million in the last year helping people (experiencing homelessness). What are we going to do to make sure we are able to maintain that level of service?” Councilwoman Kendra Black asked. “Can we use it to buy hotels, buildings?"
Hanlon said they don’t yet know if the funding can be spent on that kind of infrastructure but Denver will have to be careful with its funding distribution since it is only a one-time payment.
He said the money should be used for in ways that can be maintained long-term.
“We cannot restore everything. Sustainably, we don’t have that revenue profile,” Hanlon said. “We’re going to need to look at compiling that list of priorities.”
Hanlon said one of his priorities with the allocation is focusing on canceling furloughs among city employees that were issued as a result of the COVID-19 pandemic.
Many council members agreed with this emphasis on city employees.
“I’ve been thinking about the Obama stimulus and why it failed to have the effect that it was indented to,” said Councilwoman Robin Kniech. “In part, it was because it missed out on the tens of thousands of government employees who were unemployed and out of work.”
“When that employee gets that pay, they spend it in our community. It has a benefit to the economics in addition to the service that they provide.”
In addition to the $140.04 million to $310.08 million going to the local government, funding could also be allocated directly to other agencies and regional partners.
This could mean direct funding for vaccine distribution, public health workers, the Paycheck Protection Program, restaurants, venues, libraries, SNAP, Denver Public Schools, the Denver International Airport, Denver Water, RTD and more.
“If 2021 and 2022 are decent years for Denver’s economy, which I think they are going to be, it sounds like this is going to be a big net win for our city,” Black said.
Of the funding, 50% will be sent to Denver in 2021 and the other 50% will be sent in 2022. All of the money must be spent by Dec. 31, 2024.
Next, officials will work with city agencies and individual Denver City Council members to determine specific priorities for the funding allocation. The finalized plan will be presented to and voted on by the whole Council.