The federal funding received from the American Rescue Plan Act (ARPA) legislation comes with a number of restrictions and limitations. At this time, the City is reviewing all of the rules related to the funding. No decisions have been made regarding the expenditure of funds at this time. We will need additional information from the federal agencies prior to being able to form any recommendations on funding allocations. Here is what we do know:
The Government Finance Officers Association analysis states the following:
*Payments to local governments will be made in two tranches - first half 60 days after enactment, second half one year later
*Broad definition of allowable uses, including lost revenue (limited to revenue loss due to pandemic relative to fiscal year prior to the emergency), negative economic impact of the pandemic, and necessary investments in water, sewer, or broadband infrastructure
*Funds cannot be used to offset tax cuts or delay a tax; funds cannot be deposited into a
*Funds available and obligated by December 31, 2024
*U.S. Treasury maintains administration; the U.S. Government Accountability Office and the Pandemic Response Accountability Committee conduct oversight; Treasury Inspector General retains audit authority
Recently, the U.S. Department of Treasury released preliminary guidance regarding the ARPA allocations. The City of Saginaw Financial Management Team has reviewed the 150-page document and has attended multiple informational webinars hosted by the National League of Cities, the White House, Michigan Department of Treasury, and the Government Finance Officers Association. Most importantly, the City is awaiting the final rules from the U.S. Treasury after the interim final rule comment period closes on July 19, 2021 and we expect several addendums to the document.
Much of the preliminary guidance on the use of the ARPA funds indicates that these funds can be used for expenses related directly to Covid-19. That will be our first priority when allocating these funds. The City has in excess of one million dollars in general fund expenses from FY 2020 that were related to COVID-19 that could potentially be reimbursed from the ARPA, and we have a significant loss of revenue that is COVID related that we must consider as well. Other potential uses of ARPA funds would include supporting the public health response to COVID-19 and also addressing the negative economic impact caused by the public health emergency. This would include supporting small businesses and non-profits with loans to mitigate hardships or to implement COVID prevention or mitigation tactics.
Once those areas are reviewed, the City will explore other programs. This is where it is critical that we have the final rules from the U.S. Department of Treasury. The guidance and strict adherence to the rules will prevent the misuse of federal funds. For example, current guidance from multiple sources discourages the use of ARPA funds to create additional future expenses, so creating positions or ongoing programs that could not be funded after 3 years should not be considered.
Once final rules from the U.S. Department of Treasury are made available later this summer, the City will begin general discussions on the allocation of these funds. The discussions will occur in a public forum and will be a topic of discussion at the upcoming Strategic Planning Session planned for this fall.
City Manager Tim Morales stated, “We understand that $52 million in funding can transform a city. It is my goal and the goal of City Council to utilize these funds to positively impact this community for generations to come. However, this federal funding does have limitations and guidelines that are still being finalized. We must insure that these guidelines are in place before making any decisions.”
The City is aware that many citizens and local organizations would like to begin discussion on specific use of the American Rescue Plan Act funding. We are always open to listening to input from the community, however, the City cannot make plans to utilize the funds until final rules are provided from the U.S. Department of Treasury. We encourage citizens to be patient as the City is informed of the eligible uses for these funds.
For additional updates, visit the City of Saginaw website www.saginaw-mi.com and the City's Facebook page www.facebook.com/cityofsaginawgovernment.
Full details and additional information can also be found at the U.S. Department of Treasury website https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds.