Governments across the country are being provided a bounty of funds from the federal government through the American Rescue Plan Act of 2021. The first round of disbursements was doled out last July with the other half coming by the end of the current calendar year.
The options are broad for the funding and include public health expenditures; addressing negative economic impacts caused by the public health emergency; replacing lost public sector revenue; providing premium pay for essential workers; and investing in water, sewer, and broadband infrastructure.
Most governments are using these unbudgeted funds – which must be used by 2024 – to pay for large-scale capital projects that would otherwise need to be financed or delayed indefinitely until they surge on the priority list.
Berlin will receive $4.79 million in funding and has already decided to allocate about $1 million toward smart meters for the town, $350,000 for a well replacement project and a $110,000 on a drainage project, among other things. Discussions are ongoing on how to spend the remainder of the funding, but indications are a bulk of the dollars will go toward major sewer and water projects totaling about $2.3 million. Also, being discussed is a refund of business license fees, which we think should be reconsidered and directed toward more pressing town projects like stormwater issues in problem areas.
Worcester County is expected to receive about $10 million and used nearly half of it on costly broadband service projects and meeting increased fire company support requests.
Ocean City will receive a total of $6.8 with $3.4 million in this year’s budget and allocated for street paving and canal dredging, ongoing maintenance projects the town evaluates each year for offseason work.
The best tact to take with this is tackling significant capital projects or public safety initiatives that may otherwise be difficult to fund or result in the town going to the bond market, resulting in debt service. It would be wrong to call these dollars “free money” but the federal government rarely disburses these types of funds in large amounts. Federal and state governments typically pass legislation requiring local governments to take certain action costing more money. These sorts of decisions are called “unfunded mandates.” In the case of ARPA, it’s certainly bonus funds and local governments need to take full advantage of them because it’s not going to happen again anytime soon.