Thread by @JaredWalczak

This has struck a chord, and I've seen lots of questions about what happens next. (No, you cannot establish yourself as the official government of Hartford County, sorry.) THREAD. 1/

taxfoundation.org/american-rescu…

This is a genuine mess, and the solutions will be imperfect at best. For nonfunctional counties, Treasury will most likely allocate the money to the states for distribution to localities within the county on a per capita basis. But this raises issues. 2/

Governments must certify to receive the funding; does this funding have to be claimed as well, or will Treasury just send it with instructions? And if states allocate it, who is responsible if it's misspent? Does it get recouped from state or locality? 3/

If the localities receive it from the state, are they even in a position to report on expenditure eligibility to the federal government? And while population is arguably the better way to allocate, note that these allocations will differ from what we see elsewhere for cities. 4/

And it's more confusing in the counties that do have some limited amount of government. Connecticut and Rhode Island counties have no governing bodies -- pass them over. But six Massachusetts counties do, they just have very limited roles. Do they keep the money? 5/

It might be harder to pass over any county that has a genuine government, even if almost all normal county functions are handled at a lower level of government, so you could get counties in Massachusetts receiving funds 7x their budgets with no authority to spend it. 6/

More broadly, the real issues with the local aid formula are that (1) a formula designed around low-income urban housing is a terrible choice for allocating COVID aid to local gov'ts and (2) there's massive diversity in local gov't responsibilities that feds can't capture. 7/

Some county governments are the primary funders of schools and others have no responsibility for them. Some pay for most of the roads and others devolve that authority to cities or have it handled by states. Federal aid is indifferent to those huge distinctions. 8/

Local gov't revenues grew 4% on average last year, there are limits on how they can spend the $130 billion ARPA gives them, and one allowable expense (broadband) is in line for $100B federal spending in the infrastructure bill. Real problem: how do they even spend the money? 9/

So the fact that $2 billion in ARPA local aid is currently lined up for county governments that don't exist is just one noteworthy part of a way larger problem. 10/

Most of the $2 billion will probably end up with actual local governments, though the Massachusetts issue in particular could be challenging. But it's a mess, and it's just a small example of a much larger problem in the way ARPA handles local aid. 11/11