By Ron Calhoun
State and local governments across the country are well ahead of Ohio when it comes to planning to spend The American Rescue Plan Act of 2021 (ARPA) money which provides $350 billion in additional funding for state and local governments.
The state funding portion is approximately $195 billion with $25.5 billion distributed equally among the 50 states and the District of Columbia, and the remaining amount distributed according to a formula based on unemployment.
The local funding portion is approximately $130 billion, equally divided between cities and counties. Localities will receive the funds in two tranches — the first after the U.S. Treasury certifies the proceeds to each jurisdiction and the second one year later.
For cities, $65 billion is divided between jurisdictions that are Community Development Block Grant (CDBG) entitlement jurisdictions and those that are not. $45.5 billion of the $65 billion will be allocated to metropolitan cities utilizing a modified CDBG formula, and the remaining amount for jurisdictions that are non-entitlement CDBG will be allocated according to population. For the non-entitlement jurisdictions, the amount will not exceed 75% of their most recent budget as of January 27, 2020. Additionally, non-entitlement jurisdictions proceeds will be allocated through the state for redistribution to local governments.
For counties, the $65 billion will be allocated based on the county’s population. Counties that are CDBG recipients will receive the larger of the population or CDBG-based formula.
Eligible uses of these funds include:
- Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency
- COVID-19 expenditures, or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery
- Premium pay for essential workers
- Investments in water, sewer, and broadband infrastructure
Restrictions on the uses of these funds include:
- Funds allocated to states cannot be used to directly or indirectly to offset tax reductions or delay a tax or tax increase
- Funds cannot be deposited into any pension fund.
Funding must be spent by the end of calendar year 2024.
As with previous COVID-19 relief packages, implementation will be an extensive process as new or updated guidance and FAQs are developed and released by the U.S. Treasury. For example, the legislation requires each jurisdiction’s executive to “certify” that the funds will be used for eligible purposes. That process is currently under development by the U.S. Treasury.
The Government Finance Officers Association (GFOA) will provide regular updates as information becomes available. If you have specific questions or need clarification, GFOA has launched an online portal to gather member questions to help shape engagement and solicit answers from the Administration.
For many jurisdictions, the funding provided under ARPA is substantial and could be transformational for states and local governments in their pandemic rescue and recovery efforts. Elected leaders will need to decide how to best use the additional funding in a way that is consistent with the ARPA requirements, which are very broad. Finance officers play a critical role in advising elected leaders on the prudent spending of money received under ARPA. Finance officers are best positioned to help ensure the long-term value of investments and financial stability of its government using this one-time infusion of resources. Source: The Government Finance Officers Association (GFOA)
The questions to ask are: Where, When and What for spending ARPA funds. The location, time spent in vetting out how to spend the funds, and ultimately what to spend the funds on are all critical in understanding Ohio politics. Ohio politics can be summarized in four letters of the alphabet, “DTTN”. In general, this means “Don’t Tell The People.” Urban Cleveland has another expression for the “N” in “DTTN.” Let’s play it safe and say “N” means “Neighbors.”
Other cites started the vetting process as far back as May 2021. Oakland is one of those cities. Mayor Libby Schaaf proposed a $3.85 billion “Just Recovery Budget”. The two-year plan makes unprecedented investments in homelessness and housing, supports public safety and re-instates prudent fiscal policies.
“As the City begins to recover from the devastating impact of the COVID pandemic, this Just Recovery Budget reflects our shared priorities and values,” said Schaaf. “It invests in Oakland’s most pressing demands of the day: homelessness and housing, public safety, streets, and long-term fiscal health.”
The City of Rochester, New York presented to City Council for their consideration on Sept. 29 to spend the $202.1 million in American Rescue Plan funds provided by the federal government. With community input and an internal review of the City’s highest priorities, Rochester has developed this Strategic Equity and Recovery Spending Plan for the investment of ARPA funds to meet Rochester’s immediate needs as well as to provide long-term, transformative investment for tomorrow. The plan is a living document and will continue to evolve as the City responds to the COVID-19 pandemic. Working together, we can create more jobs, safer and more vibrant neighborhoods, and better educational opportunities for all of our residents.
Then there is Cleveland. The Cleveland City Council was presented in a special meeting, verbally a review from the interim finance director on how to spend The American Rescue Plan Act funds. The City’s Interim Finance Director, Jim Gentile, explained the Administration’s spending priorities to Council members: $26.3 million, as “primarily [for the purchase of] emergency vehicles, equipment, and security cameras;” $15 million for “strategic demo” [demolition of vacant properties in neighborhoods that meet ARPA criteria]; $191,000 for professional services to ensure compliance with ARPA guidelines; and $8.3 million for community and economic development programs such as home repairs and down payment assistance.
Gentile did not mention when it pertains to real estate plans; the city claimed it will certainly make use of the funds to attend to food instability, real estate instability, financial instability, as well as more than $27 million for real estate initiatives. It is wished that the funds will certainly be dispersed to sustain house rehab, house repair services, as well as the battle versus lead-based risks. The city has three major locations of organization growth:
- Help local business from the financial influence of COVID-19 as well as begin brand-new services, particularly minority as well as women-run services.
- Strategic financial investments to reinforce locations that have actually dealt with divestments with economical real estate as well as small company possibilities.
- Create long lasting adjustment to produce financial investment possibilities in Cleveland for years ahead.