This post was written by Helen Loughead, Acting Director of Recovery and Grants & Director of Policy and Strategic Initiatives, Budget Office

The American Rescue Plan (ARP) represented a significant turning point for Philadelphia, not just in the fight against the effects of the pandemic but for the future of our city.  It provided much-needed resources to save lives, to keep our residents healthy and housed, and to support our schools and small businesses.

It also answered our call for direct and flexible funds that allow us to:

  • Avoid painful cuts to services and layoffs
  • Invest in the long-term safety, health and well-being of Philadelphia and our residents
  • Ensure an equitable investment in the future of our city for all Philadelphians

What is the American Rescue Plan

The American Rescue Plan (ARP) is a federal economic relief package that was signed into law on March 11, 2021. Included in the Plan is $350 billion in relief funds for state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. Of that amount, Philadelphia received $1.4 billion, which must be used by December 2024. The City is using the ARP funds each year through Fiscal Year 2025 to support long-term investments in the safety, health and well-being of all Philadelphians.

Fiscal Year 2022 2023 2024 2025 Total
ARP Funds Budgeted $250 Million $335 Million $391 Million $449 Million $1.4 Billion

How is Philadelphia using the ARP Funds?

The City’s plan is to amplify this once-in-a-generation federal funding to create an equitable and sustainable economic recovery from the COVID-19 pandemic. By using the ARP funds to replace lost revenue and combining with all other available resources in the City budget, Philadelphia will be able to maximize this opportunity over the next 3-5 year funding period.

Financial Impact of COVID-19 on Philadelphia’s Budget:

  • $1.5 Billion revenue shortfall projected over five years.

ARP Funding (FY22-25):

  • $1.4 Billion in ARP Funds

FY23 Investments made possible by ARP Funds

$390 Million

investment in education

 $208 Million

to reduce and prevent violence

 $12.3 Million

in new spending for homeless services

 $4 Million

to combat illegal dumping

$275,000

for racial equity training

A Tale of Two Budgets – With and Without ARP Funds

With ARP Funds

Without ARP Funds
  • No layoffs
  • No Fee increases
  • Still requires some cuts to allow new investments
  • Many public-facing services restored like summer pools, 5-day library services, and demolitions
  • Enables new investments in education, quality of life services and programs, and investments to prevent and reduce violence
  • Covers debt service for paving 115 miles of road
  • $450M gap in FY22 budget
  • $1.5B gap through FY26
  • Requires 10%+ cuts to non-fixed/inflexible costs
  • Virtually impacts to achieve without significant layoffs
  • Unable to sustain current levels of service like Fire/EMS
  • No return of pools, 5-day libraries and KeySpots
  • No new anti-violence/police reform investments
  • AND/OR significant tax increases to maintain current services

ARP Funds Compared to Projected Budget Gap

This one-time federal relief helps ease the effects of projected revenue declines stemming from the pandemic. At the same time, the funds we are receiving from the ARP are less than the actual need over five years to position our City to thrive: to fully fund service needs and priorities; and to keep city finances on a stable, sustainable path. While the City received $1.4 billion from the ARP, it was facing a $1.5 billion gap over the course of the last Five Year Plan.

We must be prudent and intentional in our approach to using ARP funds to ensure our resources are best directed to the pressing issues facing Philadelphians today. At the same time we must remain focused on investing in resources that will set our city up for success in the years ahead — and all the while we must maintain a racial equity lens so that every Philadelphian is part of that success.