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New York's Small Towns Shortchanged On Pandemic Funding

CHAMPLAIN VALLEY, NY (NCPR)—New analysis finds that some states, including New York, have been shortchanged because of a provision attributed to Senator Chuck Schumer.

The Biden Administration’s American Rescue Plan provided nearly $2 trillion to help families, businesses, and communities recover from the economic impact of the COVID-19 pandemic.

A big chunk of those funds is going directly to state and local governments.

New analysis finds that some states, including New York, have been shortchanged because of how the program was set up. New York's Senator Chuck Schumer appears to bear some responsibility for the outcome.

A wrinkle in funding that shortchanges North Country towns and villages

Getting financial aid to state and local governments was a major plank of the Biden Campaign. President Biden lauded that provision when his American Rescue Plan passed Congress.

“Schools are going to have the resources they need to open safely,” Biden said in announcing the passage of the ARP. “States and local governments that have lost tens of thousands of essential workers will have the resources they need available to them.”

The ARP allocated $350 billion for assistance to state, local, and tribal governments. But it turns out, small towns in some states are getting more than others.

“There’s sort of three streams of local funding in the American Rescue Plan,” says Jared Knowles is the president of the public policy consultant Civilytics.

While Congress approved the money for the rescue plan, it was the Treasury Department that wrote the rules for how it would be divvied up.

Large cities had one pot. County governments were paid a separate amount based on population.

And then there are smaller cities and towns. The kind of communities that dot the North Country. They are also receiving dedicated funds.

However, Knowles says there is a problem with the federal government’s formula that is shortchanging small towns in New York and elsewhere.

“Because there’s about 40% of people who don’t live in a metropolitan area, who live in what is called an unincorporated area, or a community with no town,” Knowles said in an interview. “And those folks are not accounted for.”

Unincorporated communities may sound unfamiliar to North Country residents, because New York State doesn’t have unincorporated areas.

However most states do. Unincorporated communities typically have fewer regulations and lower taxes, but also fewer services like police and fire.

In the American Rescue Plan, unincorporated residents did not qualify for extra money. So in states with a large unincorporated population, more money will go to incorporated towns and villages.

Knowles says that is distorting the funding formula, causing large disparities.

“A state like Nevada, with a large unincorporated population, the few incorporated areas that are eligible will get over 13 times the amount that a small town in New York would be eligible.”

A Schumer amendment to blame?

New York’s small towns are currently receiving $104 per resident from the Rescue Plan, compared to over $1300 in states with a large unincorporated population. That means potentially millions of dollars local communities in New York are missing out on.

Knowles thinks the distortion is likely a legislative oversight; a result of the rush to pull together the aid package.

The source of that oversight appears to be one of New York’s champions in Congress: Senator Chuck Schumer.

As Senate Majority Leader, Schumer was instrumental in getting the ARP through Congress. He was even recognized by President Biden for his contribution to the effort.

New York’s senior Senator talked up the benefits to New York after the deal became law.

“I have listened to New Yorkers for months,” he said at a Washington press conference. “They have told me of their problems, and I worked very hard as majority leader to make sure that we addressed all of their problems. And we have.”

Ironically, he may also be responsible for a substantial amount of money being steered away from New Yorkers.

After further analyzing the text of the American Rescue Plan, Civilytics now says that Schumer introduced an amendment that changed the funding formula to its final, problematic form.

That amendment changed just five words, but resulted in $5 billion being shifted away from states like New York, Connecticut, and Massachusetts, and given to Nevada, Virginia, and Maryland.

Senator Schumer’s office did not respond to a request for comment by the filing deadline on Thursday.

To address the imbalance, Congress would likely have to pass a new law. The Treasury Department is also accepting public feedback on the funding rules until July 16th.