As Baltimore’s spending of its pandemic aid windfall inches slowly forward and federal deadlines loom, Mayor Brandon Scott’s top stimulus officer predicted that changes may be coming to the $641 million spending plan as soon as early next year.

Shamiah Kerney, director of the Mayor’s Office of Recovery Programs, told City Council members in a quarterly oversight hearing Thursday that she remains confident the city is on track to spend the entirety of its American Rescue Plan Act allotment in time to meet the federal government’s end-of-2026 deadline. But hitting federal deadlines, she said, could very well require pulling money back from projects that have already been committed funds and rerouting it to other causes.

“If you asked me if we’re on track, my answer right now is going to be yes,” said Kerney, whose office is tasked with distributing the hundreds of millions of dollars and ensuring it’s spent in line with federal standards. But the former federal auditor’s optimism isn’t necessarily placed in the capacity of agencies who have been allotted money to get the job done on time.

The Office of Recovery Programs has been analyzing agencies’ pace of spending to determine whether any are in danger of missing the federal deadlines, and Kerney said Thursday that the city is likely “looking at early next year to do a real firm analysis” to determine, “go or no go.”

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Baltimore has until the end of 2024 to obligate all of its American Rescue Plan windfall and until the end of 2026 to spend it. As of July, the city had spent about $120 million, or 19%, and obligated about $236 million, or 37%.

Councilwoman Odette Ramos told Kerney that she seemed “notably more optimistic” Thursday that the city will be able to spend all of its stimulus money on time than at a previous oversight hearing, when the pandemic aid director publicly signaled that some projects may see their funding reallocated.

“I am optimistic because, again, there’s no shortage of things that we could spend money on,” responded Kerney, noting that the city still has the option to move money to different projects. “It’s just getting it done by the deadline that is the thing that concerns this team the most.”

In a presentation to council members, Kerney walked through the spending progress for some of the agencies that have received large ARPA allocations. Spending hasn’t started out as fast expected, Kerney acknowledged. But she noted that many agencies remain little more than a year into project implementation and said the city wants to give them an adequite runway to get work underway. The pace of spending will pick up substantially over the next year, she predicted.

The recovery office itself has performed internal evaluations of the risk that any of its grant recipients might run afoul of federal standards, designating many of the agencies and nonprofits overseeing the largest allotments of the city’s stimulus money as “medium risk/high risk” for compliance challenges in assessments earlier this year.

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According to data shared at Thursday’s hearing, the Mayor’s Office of Neighborhood Safety and Engagement, which received nearly $50 million to foster a public health approach to violent crime, had spent just under 14% of its funds as of July. The Department of Housing and Community Development, which is pursuing numerous supply chain-dependent affordable housing projects with its $73 million allocation, has spent just over 9%. Baltimore City Recreation and Parks, which received $41 million for various improvements to parks and recreation centers, has spent under 3%.

Few updates on hotels for homeless residents

Scott also committed more than $73 million to his beleaguered Office of Homeless Services to support unhoused residents in Baltimore. While the office has spent just 1% of its allotment, Kerney and homelessness officials have noted that the bulk of that money is set aside for purchasing hotels to serve as emergency shelters for homeless residents — a large commitment that will substantially spike the agency’s spending percentage once purchases are complete.

Updates on those hotel acquisitions, however, remain thin. At the start of last winter, the homeless services office had yet to finalize a budget for the acquisitions. Scott’s homeless services director said earlier this year that the city was in negotiations for the purchase of one hotel, and, with colder weather looming again, Kerney referred Thursday to an “active negotiation” to acquire the emergency shelters. Her office hopes that process concludes “sooner rather than later,” she added.

People remove tents at the homeless encampment on War Memorial Plaza Aug. 19, 2022. The mayor’s office told organizers and tent owners to remove their belongings because of an event scheduled on the plaza. (Taneen Momeni/Taneen Momeni/The Baltimore Banner)

Mark Council, an organizer for the group Housing Our Neighbors, spoke at Thursday’s hearing and asked when the money promised to homeless residents would be spent, stressing his hope that none of the funds earmarked for his community will be pulled back. He also appealed to city leaders to consider more lasting ways to support the homeless population than converting hotels into shelters.

”There’s a desperate need for this money in the homeless population,” Council said. “As you know, people are actually dying out here. We are really counting on this city to help these people out here.”

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Councilman Eric Costello told Council that his comments are probably better directed towards homeless service officials. Earlier in the day Thursday, Scott’s director of homeless services resigned in the wake of numerous agency crises, including a series of clerical errors that caused the city to lose out on nearly $11 million in federal reimbursement from the U.S. Department of Housing and Urban Development.

A small surplus and $54 million in overtime costs

Baltimore is closing out its 2023 fiscal year with a small surplus of $90.4 million — a fraction of the year’s adopted $4.1 billion budget — though finance officials attribute part of that excess to slower-than-expecting spending.

City budget officials shared their end-of-year analysis for the outgoing budget year, which closed June 30, at Thursday’s hearing, and reported $31.5 million surplus revenues and $58.9 million in lower-than-anticipated spending. Budget Director Laura Larsen noted that dollar figures remain preliminary.

Much of the city’s unbudgeted revenues stemmed from taxes on income as well as taxes and fees on real estate transactions.

Some agencies spent more than their allotted amounts, with the Baltimore City Fire Department going almost $19 million over budget, more than any other agency. Combined, the Fire Department and Baltimore Police Department spent $47 million more than budgeted on overtime costs, a consequence of substantial staffing shortages at both agencies, Larsen noted.

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Beyond the fire and police departments, the city paid out about $7 million over budget in overtime costs for civilian employees as well.

Overall, Larsen reported that the city’s cost savings from vacant positions were almost completely offset by overtime costs.

And the savings from spending over the last fiscal year wasn’t merely thanks to agency frugality. Larsen noted that back-end software issues as the city implements Workday — a software system for streamlining payroll, procurement and other core functions — may have held up payments to some outside contractors. Workday issues are likely “one-time,” Larsen predicted, as agencies get up to speed with using the new software system.

Adam Willis covers city government for The Banner, including the impacts of the large COVID-19 stimulus package that Baltimore received from the federal government.

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