WASHINGTON — With COVID-19 surging a year ago, Congress began working on its largest pandemic relief bill, the $1.9 trillion American Rescue Plan that was enacted in March.
But with the Omicron variant now triggering record case numbers, nothing close to that scale is being considered, mainly because tens of billions of dollars from that first infusion — by design — remain available to tap into.
Much of that money comes from $350 billion set aside for state and local governments, which recently have been given more flexibility in how they can spend it. Economically hard-hit states like Massachusetts received all of their funding last year, but 30 states only got half. The rest — a total of $105 billion — will be sent this spring.
And many states still haven’t spent all the money that they’ve received. Massachusetts Governor Charlie Baker just last month signed a $4 billion COVID relief bill that included $2.55 billion in rescue plan money. That and other commitments leave about $2.3 billion of the state’s allocation still to be designated and spent. Massachusetts school districts also have most of the $2.6 billion available to them through a separate pool of rescue plan funding.
Still, some pots of federal money have run dry, spurring calls for more help from Washington. Restaurants are leading that charge as business has plummeted with the Omicron surge. They want Congress to replenish the rescue plan’s Restaurant Revitalization Fund, which blew through its $28.6 billion funding last year after only about a third of eligible restaurants received grants to help cover lost revenue from the pandemic.
“It was needed then. It’s needed even more now,” said Chris Coombs, the chef and owner of Boston Urban Hospitality, which has four restaurants in the city — none of which received money from the fund. “We’re back at a low point. We’re about as low as we can get without being shut down by the government.”
Other industries, including hotels, gyms, and live entertainment, are pushing Washington for targeted help as well. House Speaker Nancy Pelosi recently suggested that additional COVID relief funding, which would need bipartisan support to pass Congress, could be coming. White House press secretary Jen Psaki said the Biden administration is continuing to assess what might be needed.
But even though Omicron is expected to slow economic growth in the first three months of this year, the economy is much stronger than it was in early 2021. That’s partly because of the rescue plan, which included $1,400 stimulus checks for most Americans. And the legislation was designed so that some pools of money would still be available as the pandemic progressed, said Gene Sperling, the White House American Rescue Plan coordinator.
“Because of the American Rescue Plan, we are not in a situation where we need to go back and ask for more general relief to ensure state and local governments are fiscally healthy,” he said. “The issue is how they are best using the funds to address the most pressing and lingering economic and health challenges due to COVID.”
The White House continues to tap rescue plan money as it fights Omicron, including paying for National Guard deployments to help states overwhelmed by COVID cases and purchasing 1 billion at-home tests that Americans can request for free.
Massachusetts used rescue plan money to pay for 200,000 at-home rapid antigen tests for teachers and staff that the state provided to school districts over the holiday break. So far, school districts in the state have spent only $400 million of $2.6 billion available to them through the rescue plan’s Elementary and Secondary School Emergency Relief Fund.
The rescue plan included enough state and local government aid to last several years and avoid a problem that occurred during the Great Recession, said Ed Lazere, a senior fellow at the Center on Budget and Policy Priorities, a progressive think tank. The $787 billion stimulus bill enacted in 2009 didn’t provide enough money for state and local governments, and Congress was not willing to pass another funding package to help them, hindering the economic recovery, he said.
“It looks like this time around they made a choice to make sure state and local governments really had enough to recover from the pandemic,” said Lazere, who has been tracking how state governments are using their $195 billion share of the $350 billion fund. As of early January, state legislatures had appropriated about $112 billion of the money, he said.
And this month, the Treasury Department said it broadened what state and local officials can spend the money on, starting in April, so they “can adapt quickly and nimbly to changing public health and economic needs” because of the pandemic. That includes clarifying that they’re allowed to fund affordable housing, as well as child-care and hospital facilities.
“State and local governments, by and large, have the resources they need for what hopefully is going to be a weeks-long, not a months- or years-long disruption,” from Omicron, said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a fiscal watchdog group that also has been tracking federal COVID aid.
“To the extent there’s need, it’s going to be in the billions or tens of billions [of dollars], not in the hundreds of billions and absolutely not in the trillions,” he said of additional pandemic assistance. More federal COVID money should be “very tightly targeted” and Congress should offset the spending with budget cuts to avoid increasing the deficit, Goldwein said.
Restaurants are pushing hard for that type of targeted assistance and gaining bipartisan support. They’re asking for about $43 billion to replenish the Restaurant Revitalization Fund, which ran out of money in July after it was only able to provide help to about 101,000 of the more than 278,000 eligible applicants.
“We were the first industry to be shut down and we’re going to be the last industry to come fully back online,” said Sean Kennedy, executive vice president for public affairs at the National Restaurant Association, an industry trade group.
Coombs was one of the people unable to get help from the fund last year for his four full-service Boston restaurants. Three of them, Boston Chops, Deuxave, and dbar, have been operating through the pandemic, with some help from the federal Paycheck Protection Program from an earlier round of COVID aid. The fourth, Boston Chops Downtown, has been closed since the start of the pandemic because so many downtown offices remain shuttered, he said.
“It will never reopen again if we don’t get that [Restaurant Revitalization Fund] money,” Coombs said.
“We are an industry that lives and dies by consumer confidence. Unfortunately, when people are in fear of getting sick, one of the last places they want to go is out and gather with other people in a restaurant,” he said. “It was a tough situation before and Omicron compounded the situation and made it even more difficult.”