The City of Cleveland would have faced financial chaos and potential layoffs, had it not received hundreds of millions of COVID-19 stimulus dollars from the federal government, a top official said Thursday.
Ahmed Abonamah, Cleveland’s chief finance officer, told cleveland.com that a combination of federal programs aimed at alleviating the city’s financial troubles from COVID-19 prevented the city from having to cut wages and even potentially lay off employees.
Cleveland received $60 million from the CARES Act in 2020 roughly $512 million through the American Rescue Plan Act in 2021. Of the ARPA dollars, Cleveland used a legal mechanism known as “revenue recovery” to effectively put $340 million in the city’s general fund, a common tactic among local governments to increase fiscal flexibility.
“Without the CARES Act funds, which the city used to shore up the budget, there would have been some combination of furloughs, hiring freezes, wage cuts, potential layoffs (in 2020),” Abonamah said. “Without that ARPA money that was transferred into the general fund in 2021, we would have faced similar choices in 2021-2022, given the structural deficits we faced. And so having that money in the general fund really staved off disaster for the city and its workforce.’
The revenue recovery portion of ARPA was aimed at preventing the sort of financial ruin Abonamah described. However, Abonamah said at a previous city council committee meeting that Cleveland probably didn’t lose $340 million in revenue because of the pandemic. However, Cleveland arrived at the $340 million number because of a formula laid out in ARPA.