The city of Providence, Rhode Island, flush with millions of dollars in federal Covid relief like many American cities, will spend $10 million of that money to pay Black and indigenous residents reparations to atone for what it calls centuries of racism and bias.

The Democratic mayor, Jorge Elorza, signed off on the spending plan Friday. The money is part of the $124 million it received under President Biden’s 2021 American Rescue Plan, the $2 trillion stimulus package that allocated $350 billion in taxpayer funds to state and local governments to bridge budget shortfalls caused by the pandemic. Almost $46 billion of that aid went to cities.

In addition to the reparations, Providence officials said the Covid relief money would be channeled into affordable housing projects, projects such as recreation centers aimed at addressing community disparities, and municipal infrastructure projects such as water and sewage treatment. The exact form of the reparations payments — formally dubbed the Covid-19 Equities Program — is to be determined by a task force.

“Reparations can take a lot of different shapes,” Mr. Elorza said at a news conference announcing the spending plan. “We know that $10 million is not enough. We can’t right all the wrongs of the past, but we can take an important first step.”

“I’m excited about this,” he added. “Providence is on the cutting edge of this.”

Mr. Elorza has put his city at the forefront of a movement by some local authorities to address what they say is a legacy of systemic racism in America. Two years ago, he established a “truth, reconciliation and reparations” committee to document discrimination against Black, indigenous, and other people of color in the city and to come up with recommendations on how to reverse those injuries.

The same resolution removed the term “plantations” from all city documents and oath ceremonies. The original name of the state of Rhode Island was the State of Rhode Island and Providence Plantations.

Other cities have followed Providence’s lead on reparations, among them Evanston, Illinois, which used proceeds from a marijuana tax to fund $400,000 worth of reparations to Black families for home repairs or down payments on new houses. St. Paul, Minnesota, last year created a reparations commission, and there are currently similar proposals before city councils in Boston and Detroit.

Mr. Elorza is also one of 11 members of what is called Mayors Organized for Reparations and Equity, a coalition of city officials who have promised to test out reparations programs in their respective cities. He is joined on the panel by the mayors of Los Angeles, Denver, Austin, Texas, and St. Louis.

When the stimulus package was signed, the Treasury Department said the money sent to cities could be spent on public health measures, economic relief for businesses and individuals, hazard pay to essential workers, to replace revenue lost as a result of the pandemic, and on water, sewer, and broadband infrastructure projects.

The Treasury Department made no mention of reparations for slavery in its guidance.

Since the law was passed, Mr. Biden has at times seemed to broaden the initial intentions of his law. At a White House ceremony earlier this month, he stood alongside a group of mayors and police chiefs to tout the American Rescue Plan as a lifeline for cities that he said were forced to make deep cuts in areas like law enforcement during the crisis.

“Through the law, we provided $350 billion — let me say that again — $350 billion directly — not to the legislatures — directly to cities, counties, and states independently of one another — money that could be used to hire back police officers, to invest in proven strategies like community violence interruption and prevention programs, and to keep their cities and counties safe, and ease the burden on law enforcement,” Mr. Biden said at the ceremony.

Recent analyses, however, have determined that state and local governments fared much better than expected during the outbreak. A study by the nonpartisan Committee for a Responsible Federal Budget found that state and local tax receipts over the course of the pandemic were 12 percent higher than the year earlier, and that money from the American Rescue Plan pushed those receipts to record levels during the second quarter of 2021.

Several states are now implementing or considering tax rebates because of their current budget surpluses.

Many economists, among them those at the Federal Reserve, believe that the 2021 stimulus package is partially responsible for the currently elevated level of inflation in America. By some accounts, it is responsible for as much as three percentage points of the current 8.5 percent rate of increase in the Consumer Price Index, the highest since 1981.