Strengthening Local Economies through the Recovery Fund: Executive Summary

COVID-19 Impacts on Key Economic Data

The COVID-19 pandemic took a toll on the U.S. economy, spurring a contraction in economic activity and causing substantial job losses that reverberated across all industries in early 2020. During the early months of the pandemic, the unemployment rate peaked at 14.7 percent (April 2020).¹ One month after peak unemployment, local governments experienced the full effects of the pandemic when jobs within the sector decreased by more than 1.2 million.² To this day, full recovery within local government jobs continues to lag.

THE PANDEMIC TRIGGERED AN UNPRECEDENTED ECONOMIC DOWNTURN, CAUSING WIDESPREAD UNEMPLOYMENT

U.S. Unemployment Rate, 2012-Present

County Response Efforts in the Early Months of the Pandemic

Counties faced a growing crisis throughout the initial months of the pandemic. In mid-2020, over 70 percent of counties were estimated to have cut or delayed capital investments.³ Additionally, over two-thirds of counties cut or delayed various services within our communities.⁴ Faced with these profound challenges, county leaders acted swiftly to provide frontline workers with hazard pay (Dallas County, Texas) and to support businesses’ recovery through investments, including providing personal protective equipment (PPE) (Orange County, Calif.), offering direct assistance to small businesses (Erie County, N.Y.) and supporting pandemic-impacted workers (Clark County, Nev.).⁵

Counties stood up novel testing and tracing programs at a larger scale than ever, ensuring community members could access personal protective equipment (PPE) as supply chains ran thin. When the vaccine was approved for public use, counties played an instrumental role in the effort to mass vaccinate Americans. For example, in November 2020, Galveston County, Texas (pop. 342,139) allocated $1.5 million from its general fund to continue a county-wide testing program.

Federal policymakers followed up by enacting the Coronavirus State and Local Fiscal Recovery Fund (Recovery Fund), part of the American Rescue Plan Act (ARPA), which NACo helped develop and strongly advocated to pass. The Recovery Fund allocates $65.1 billion in direct, flexible aid for every county, parish and borough in America. As directed by the ARPA and the U.S. Department of Treasury, counties are investing Recovery Funds into a broad range of programs, services and projects under four categories to support the public health response; address negative economic impacts caused by COVID-19; replace lost revenue; provide premium pay to essential workers; and invest in water, sewer and broadband infrastructure.

Counties Continue to Leverage Recovery Funds for Transformational Investments that Address Community Needs

In the two years since the historic passage of ARPA, counties continue to make transformational investments, spur recovery efforts and bolster the economy through our Recovery Fund allocations. County leaders nationwide are stepping up to strengthen America’s workforce, improve housing conditions, support local businesses struggling with the economic impacts of the pandemic and foster strong and equitable economic recovery.

Midsize Counties (between 250,000 and 500,000)

• 86 out of 123 counties are replacing lost revenue to continue key government services
• 44 out of 123 counties are investing in strategies that will strengthen the local public health sector workforce
• 32 out of 123 counties are expanding broadband access in unserved parts of the county

Large Counties (between 500,000 and 1,000,000)

• 49 out of 86 counties are supporting community aid programs that address issues such as food insecurity and nutrition assistance, and other expanded human service programs
• 34 out of 86 counties are strengthening critical water and sewer infrastructure 
• 30 out of 86 counties are providing aid to small business owners impacted by the pandemic

Largest Counties (over 1,000,000)

• 28 out of 41 counties are addressing local housing needs such as homelessness and other housing emergencies
• 16 out of 41 counties are expanding mental health services within the county
• 14 out of 41 counties are supporting local workforce needs through skills training and wraparound services for critical workforce needs

Despite a Slower Recovery in Our Workforce and Increased Demand for Service Delivery, Counties Continue to Invest Recovery Funds Rapidly

Counties deliver critical services to Americans every day — running local health systems, providing emergency response services, coordinating elections and managing a wide range of economic and community development programs, all to build healthy, safe and vibrant communities. To fulfill this mission and meet our communities’ needs, counties rely on a sizable workforce of 3.6 million workers. The Recovery Fund helped counties to stabilize our budgets and restore public-sector capacity, but our workforce continues to struggle to recover from pandemic-related job losses amid growing demand and need for local government services.

As we transition from investing in short-term pandemic response to long-term investments that will shape the future of our communities and strengthen our economy, counties are on the front lines in delivering these funds – a lifeline for our communities and a foundation for a strong and equitable economic recovery. County leaders are making strategic investments to support businesses and residents by reskilling community members and investing in infrastructure supporting employment and high-growth industries such as public transit, roads and human services like childcare.

Through the Recovery Fund, Counties Are Supporting Key Community Needs and Investments

Boosting the Economy

Counties are uniquely positioned to drive economic recovery and engage in a wide range of economic development activities that foster a supportive environment for business investment, job growth and enhancing the economic well-being of our communities. Using the Recovery Fund, counties are driving a strong economic recovery supporting every segment of the population. Counties are coordinating strategies with local small businesses and other key stakeholders to address the economic needs of communities most impacted by the pandemic and help strengthen our local economies. 

• Howard County, Md., is funding a second offering of its successful Business Revitalization Initiative Through Entrepreneurship (BRITE) program, which offers support services to entrepreneurs and small businesses in the county. This program targets communities most impacted by the pandemic, particularly minority-owned small businesses and startups facing additional obstacles during the economic downturn.
• McHenry County, Ill., is supporting recovery in the local manufacturing industry through its Advance McHenry County Manufacturing Initiative, which provides manufacturers with customizable technical assistance and training solutions to rebound from the pandemic, become more globally competitive and improve resilience to future economic shocks.

Expanding Local Capacity through Infrastructure

From building and maintaining roads and bridges to providing efficient transit systems, counties connect communities and strengthen our economy. Annually, counties invest $134 billion in building, maintaining and operating physical infrastructure and public works. Counties are utilizing Recovery Funds to address long-standing infrastructure needs, investing in expanding reliable broadband access and bridging digital divides, overhauling water and sewer systems and addressing disparities in transportation and transit services across our jurisdictions.

• Spartanburg County, S.C., is installing over 300 miles of a high-speed broadband infrastructure network capable of providing service to the unserved and underserved areas of the county.
• Cumberland County, N.C., is using Recovery Funds to support two major water and sewer projects. These projects will provide an affordable housing development project with a sewer system and enhance a community water system to address existing public health problems associated with consuming unsafe drinking water.

​Generating High-Demand Jobs

County governments support the economic prosperity of our communities by coordinating efforts to create jobs, bolster the local workforce and retain businesses. Counties are leveraging Recovery Funds to address workforce shortages across key industries and so propel our communities forward. Counties are also improving labor market outcomes for residents disproportionately affected by the pandemic and experiencing higher unemployment rates and underemployment by connecting them to higher-wage jobs and other critical wraparound services that will ensure their economic success and upward mobility.

• Salt Lake County, Utah, is funding its Workforce Inclusion & Successful Employment (WISE) program with $10 million from its Recovery Fund allocation to support workers and assist unemployed residents disproportionately affected by the pandemic in finding gainful employment.
• Benton County, Ark., is funding a new organization, Upskill NWA, that will move lower-income wage earners to higher-wage, high-demand jobs, specifically in the healthcare industry, through additional education and certification. Upskill will also assist participants with tuition and all academic fees and connect them to additional wraparound services that will allow regular class attendance.

Increasing Educational Supports

Our local education systems impact our ability to attract businesses and possess a skilled workforce – both of which are essential for the economic success of a community. Although states tend to have the primary responsibility for elementary and secondary education, education is the third largest county investment, collectively $103 billion annually. These investments fund the construction and maintenance of public school buildings and support higher education institutions, such as community colleges. Counties are using the Recovery Funds to help our communities recover from pandemic-related learning declines, expand early learning programs and address teacher shortages.

• Gloucester County, N.J., is developing a transition-to-work program, Project SEARCH, to provide an immersive workplace experience and mentorship opportunities for young adults with intellectual and developmental disabilities.
• York County, Pa., empowers adult residents for successful engagement in the home, workplace and community by supporting community organizations such as York County Literacy Council (YCLC), which aim to teach literacy and workplace-ready skills to adults.

Supporting Housing Solutions

Counties are fostering strong and vibrant communities through critical investments that help ensure access to safe, stable and affordable housing for every segment of the population. Annually, counties invest $12.8 billion in the construction, operation and support of housing and redevelopment projects. With the Recovery Funds, counties are building on these investments by responding to long-standing housing challenges in our communities, from affordability and homelessness to expanding the housing supply in our communities.

• Forsyth County, N.C., is funding a housing assistance program, Housing 4 Our Heroes, for low-income families and chronically homeless veterans and their families. This program also includes a mentoring carpentry and construction program to teach them skills for employment.
• Prince George’s County, Md., is expanding affordable housing by funding its Right of First Refusal (ROFOR) Preservation Fund, which provides financing for the acquisition, rehabilitation and stabilization of rental apartment properties subject to the county’s ROFOR program.

Endnotes

1 - U.S. Department of Labor, Bureau of Labor Statistics, “Table B-1. Employees on nonfarm payrolls by industry sector and selected industry detail, [in thousands],” Available at: https://www.bls.gov/webapps/legacy/cesbtab1.htm (March 10, 2023).

 2 - U.S. Department of Labor, Bureau of Labor Statistics, “The Employment Situation — February 2023,” Available at: https://www.bls.gov/news.release/archives/empsit_03102023.pdf (March 10, 2023).

 3 - National Association of Counties (NACo), “Comprehensive Analysis of COVID-19’s Impact on County Finances and Implications for the U.S. Economy,” Available at: https://www.naco.org/sites/default/files/documents/Analysis-of-COVID-19s-Impact-on-County-Finances-and-Implications-for-the-US-Economy.pdf (July 2020).

 4 - Ibid.

 5 - See National Association of Counties (NACo), “Measuring COVID-19's Impact on America’s County Workforce,” Available at: https://www.naco.org/resources/measuring-covid-19s-impact-americas-county-workforce (May 2020); National Association of Counties (NACo), “Counties and COVID-19: Positioning America for Recovery,” Available at: https://www.naco.org/sites/default/files/documents/COVID%20Financial%20and%20Economic%20Impacts.pdf (February 2021).

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