New Year’s Eve. It’s a day to get together, stay up until midnight, and celebrate. If you’re a local government, it’s also the deadline to finish distributing your COVID-19 recovery funds.
"We pride ourselves in being good stewards of taxpayer dollars, right? And so, we watch the purse strings very, very carefully," said John Faul, the Van Buren County administrator.
"Having learned how to say no with a smile on our face, to come into the last few years of my career, to have someone say, 'spend $14 million in three years… go,' is crazy," he added. "I mean, I never would have expected that."
ARPA
Faul is talking about the American Rescue Plan Act, better known as ARPA.
ARPA was the Biden administration’s response to the pandemic, following two other relief acts in 2020. Along with child tax credits and checks for individuals, it gave $350 billion to state and local governments across the US. And, it gave governments relatively wide latitude on how to spend those funds.
Faul’s office overlooks the elegant Van Buren County Courthouse, which he said was fitted with a new HVAC system using ARPA funds.
But the county’s main priority for its $14.7 million allocation was expanding broadband internet access. Thanks to ARPA and a couple of other sources, Faul said that "By the end of 2026, every parcel in the county will have access to high-speed internet."
Matthew Mingus is the director of Western Michigan University’s School of Public Affairs. He said the federal government has a history of providing money to local units in times of need.
How often do they get this much money with this much freedom to spend it?
"Almost never, to sum it up," he laughs. "I mean almost never, truly."
Mingus said ARPA has few restrictions because it was meant to replace lost revenue, which governments use in a variety of ways.
He said the funding made sure local governments survived the pandemic and kept community development going. Though by now, revenues are generally back to normal, and the economy is doing well.
Mingus said the deadline for using these funds should have been earlier.
"As a policy person, as an economist, you'd be like, 'No, this is crazy,'" he said. "We're past that period of time."
A hole in the budget
The award each government received was based on factors like population and poverty levels. Yet, the money ended up going further in some communities than others.
Battle Creek’s budget is made up, in part, of income tax revenue. The tax is paid by anyone who works in the city.
But, during the pandemic, many commuters shifted to working from home. They no longer owed income tax to Battle Creek.
Ted Dearing is the interim city manager.
"Just before the stimulus dollars [that preceded ARPA] became available," he said. "We had to eliminate a number of positions in anticipation of the impacts of the pandemic."
He said the ARPA money helped, but Covid still left a hole in the city’s budget.
"We don't want to discount the value of that money. It was extremely helpful. But it wasn't going to replace all of the revenue that we have here at the City of Battle Creek."
Housing and a new roof
Things were different in the City of Kalamazoo, which has sources of income that were not as affected by Covid.
The main priority for Kalamazoo’s approximately $39 million in ARPA funds was housing. It’s an issue that can be challenging for the city to address, said chief financial officer Steve Vicenzi.
"Providing housing tends to be what's called an individual benefit," he explains. "And we can’t use tax dollars for an individual benefit program. But we can use these ARPA funds."
Kalamazoo announced on Monday that it would put $1.5 million of its ARPA funds toward Rx Kids, a public-private partnership to provide cash assistance to expectant and new mothers.
For Portage, which received about $5.7 million, the emphasis was infrastructure: replacing City’s Hall’s roof and parking lot, replacing a sinking boardwalk through Bishop’s Bog, and investing in body cameras for police officers.
Pat McGinnis is the Portage city manager. "These ARPA funds helped us move those projects from maybe to yes and to do them much more quickly than they otherwise would have been done," he said.
Local governments have a couple more years to spend their ARPA funds. But they have to declare how they will spend them by the end of the month.
Van Buren County, Portage, and Battle Creek have already done that. Kalamazoo says it’s on track to meet the deadline.