Detroit to get $440M in federal aid. Now to figure out how to spend it.

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Detroit will eventually receive a total of $880 million, one of the biggest shares of funding intended for the local budget of any U.S. city. To put that number into context, in 2013, Detroit received $300 million in federal and private aid when the City filed for bankruptcy. (Shutterstock photo)

Detroit is expected to receive a massive slice of the American Rescue Plan fund as soon as next week, according to policy analysts. The City then has to decide how to spend the hundreds of millions in federal money. 

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The U.S. Department of Treasury is expected to send Detroit an estimated $440 million by the end of next week, said Chris Hackbarth, director of state and federal affairs for the Michigan Municipal League. That’s half of the estimated $880 million Detroit will eventually receive, he said. The other half is expected within one year. 

“That money is going directly to Detroit,” Hackbarth said. 

It is part of the overall $1.9 trillion federal stimulus bill passed in March, intended to revive the COVID-wracked economy. U.S. Rep. Brenda Lawrence, a Democrat who represents parts of Detroit and Southfield, described it as the largest bill she ever voted on in her four terms in Congress.

Next week, the Treasury Department is expected to send funding specifically earmarked for states, counties and cities with populations of over 500,000. With that funding, the federal government will likely give more direction on how the local municipalities can spend the money.

Generally, the funding is aimed to make up for the huge budget losses created by the pandemic.

So far, the feds haven’t given many guidelines to local governments, said Eric Lupher,  president of the Citizens Research Council of Michigan, a nonprofit that researches policy issues. 

Since March 2020, the City estimates it has lost more than $410 million in tax revenue due to the pandemic, resulting in widespread cuts in services and employee layoffs. To cover the sudden funding deficit, the City used nearly $300 million in rainy-day funding and other money originally planned for such things as blight remediation and capital improvement funds. The budget for the 2021-22 fiscal year is $1.1 billion. 

City of Detroit officials have said it will await further guidelines from the feds. A City spokesman didn’t respond Thursday to a request for information.   

Other cities, like Flint, have already begun to reach out to citizens to get their input, and city councils across the country have begun debating how to spend the funding. 

In Detroit, expect community meetings about how the millions should be spent, the two policy analysts said. The way it will be spent also needs City Council approval, Lupher noted.  

“We are telling our members to slow down, think about how you spend your money,” Hackbarth said.

There will likely be opportunities to partner with other entities, such as nonprofits, to help carry out policy goals, he said. The funding will be available until 2024. 

Parts of the American Rescue Plan have already been delivered. That includes the $1,400 checks sent to millions of Americans so far and unemployment benefits being extended until September. There’s also the $28.6 billion in relief grants for restaurants and, coming this summer, monthly payments to support the cost of raising children.

Detroit’s $880 million is one of the biggest shares of funding intended for the local budget of any U.S. city, according to the bill. Only four other cities — New York, Los Angeles, Chicago and Philadelphia — received larger amounts. 

To put the $880 million into context, in 2013, Detroit received $300 million in federal and private aid during the Obama administration when the City filed for bankruptcy. 

During the Great Recession more than a decade ago, the Bush and Obama administrations gave a combined $80 billion to prevent General Motors and Chrysler from going out of business.

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