HELP ON THE WAY
Local governments receiving millions in federal aid from American Rescue Plan
The $1.9 trillion American Rescue Plan will soon deliver billions in much needed financial assistance directly to local governments of all population sizes that have been hit hard by the COVID-19 pandemic.
President Joe Biden signed the bill into law Thursday in the Oval Office, triggering $350 billion in assistance for states, territories, tribal and local governments, and counties.
It’s the first time that local governments of all sizes will receive direct COVID-19 relief from the federal government, which will be used to respond to the pandemic and its negative economic impacts, replace lost or decreased revenues, and support essential services, businesses and critical workforce wages.
Michigan and its counties, and local governments are estimated to receive a total of $10.3 billion in direct aid.
Of that total, the state of Michigan is expected to receive $5.6 billion, counties $1.93 billion, and local governments (cities, villages, and townships) a total of $2.46 billion. The state will also receive around $250 million for capital improvements projects including investments in water, sewer, or broadband infrastructure.
Paul Branke, Royal Oak City manager, said the direct funding will help the city replace lost revenue and to cover additional costs incurred for essential services such as police, fire, and emergency responders. The city is estimated to receive around $30 million, the largest sum of any community in Oakland County.
He said the city has seen a significant decrease in revenue collected from parking garage fees because the pandemic has forced thousands of workers from their downtown offices and into their homes.
“There was a period of time when we weren’t any revenue at all from our parking garages,” he said. “They were constructed based on the premise that the revenue we’d be bringing in would pay for the bond payments for the cost of that infrastructure.”
Oakland County government is estimated to receive $243.9 million with 52 cities, villages, and townships receiving a total of $154.6 million. That includes $58.6 million for Waterford Township, Royal Oak, Southfield, and Farmington Hills, the county’s largest communities.
Within the next 60 days, the U.S. Treasury Department is required to make direct payments to the state of Michigan, its counties, and local governments.
Metropolitan cities with 50,000 residents and over and counties will receive their payments from the federal government with the state charged with distributing payments to the non-entitlement communities with populations below 50,000.
The amounts allocated to states and local governments are based on existing federal population and Community Development Block Grant (CDBG) formulas, according to the bill text.
The state of Michigan’s $5.6 billion total was also calculated based on the state’s average number of unemployed workers over the three-month period ending in December 2020.
In addition to replacing lost revenue and support critical city services, Branke anticipates using some of the funding to invest in several capital improvement projects that have been delayed by the pan
demic. He said the city would be injecting federal dollars back into the local economy through the hiring of local contractors to perform the work.
The big concern for Branke continues to be the unknown, which is the long-term impact of the pandemic on the economy. He anticipates possibly using some of these dollars to “smooth out,” if necessary, some of those negative impacts in future year budgets.
“We are in the process of putting together our Fiscal Year 2022 budget, so this funding will definitely be an integral part of our budget discussions,” he said. “I think we want to take a very careful approach and be good stewards of the funds. Our tax base appears to be strong right now, but we don’t know what will be the residual impact of the pandemic. The residential real estate market is really strong here in Royal Oak. In terms of commercial properties, it’s kind of a mixed bag.”
According to the American Rescue Plan bill text, the relief dollars can be used to reimburse costs incurred by Dec. 31, 2024. Other eligible expenses include:
• To respond to or mitigate the COVID-19 pandemic or its negative economic impacts including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
• To respond to workers performing essential work during the COVID–19 pandemic by providing premium pay to eligible workers that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work
• Replace revenue that was lost, delayed, or decreased (based on revenue projections as of Jan. 27, 2020), as a result of the COVID-19 pandemic during most recent full fiscal year
• To make necessary investments in water, sewer, or broadband infrastructure
When contacted by The Oakland Press, officials in some smaller townships and cities were completely unaware that they would be receiving any direct funding from the American Rescue Plan.
Ferndale Mayor Melanie
Piana said the city will receive around $2 million in direct assistance from the federal government through the American Rescue Plan.
“That money is going to go back into our programs and services because we have taken a hit, particularly in parks and recreation,” she said. “Over the past year, a lot of cities have laid off their parttime parks and recreation staff. This money comes really at a great time because cities are starting their budgeting processes right now. As a team, we can really say how can we best leverage this funding and where are we going to fill in the gaps.”
In addition to supporting city services and replacing lost or decreased revenues, such as the $1.5 million loss in parking fee revenue, Piana said the focus will also be on supporting the recovery of residents and businesses citing the city’s 14 percent poverty rate.
“We will also be looking at our police and fire where we have had some reductions in funding for those services as well as public works,” she said. “We are also talking about our small businesses and how do we best support them going forward using this investment from the federal government, particularly women and minority-owned businesses. This is something we are going to be focusing on through our DDA.”
David Coulter, Oakland County executive, said his staff is preparing to receive an estimated $243.9 million in direct assistance from the American Rescue Plan. He sees the new federal dollars coming to the county as another great opportunity as well as a challenge in working to efficiently get those dollars out into the community.
Last year, the county administered 27 grant programs using the $219 million in direct aid they received from the $2.2 trillion CARES Act, which was passed by Congress March 27, 2020. County residents, small businesses, and the non-profit community were all helped with these federal COVID relief grant dollars.
Coulter said he and his staff will take the lessons learned from last year in administering those CARES Act funds and use them to modify the distribution process for these new federal dollars to make “even more of an impact.”
“The needs are a little bit different now because we are in a different phase of the pandemic and vaccines have helped change things,” he said. “I suspect that what you may see is fewer larger grants because now we’re getting a better handle on who has survived and prospered and who hasn’t. Rather than sprinkle a little bit of money to everybody, we may want to do some more targeting and give some larger support to some people.”
Coulter added that the restaurant community continues to be “heavily hit” by the pandemic, adding, “they will continue to be a big focus.” He said the county will be able to “hit the ground running” once it receives the $243.9 million from the federal government to assist residents and businesses.
“We will modify the way we distribute these dollars based on what we learned last year,” he said. “The good news is that a lot of what was tough last year was just figuring out who is eligible (to receive the federal dollars). All of them have already applied for grants once already. We know who they are, what they do, and what their needs are. We have that information and we won’t need to recreate that part of the process.”
The state and local government dollars cannot be deposited into any pension funds, but the dollars can be transferred to private nonprofit organizations, public benefit corporations involved in the transportation of passengers or cargo, or to specialpurpose units of state or local government, according to the bill text.