The money, from the American Rescue Plan Act approved in March 2021, was intended to help local governments confront the pandemic, assist struggling businesses and workers, and replace lost government revenue.
But as the public health threat and risk of severe economic recession fade, many local governments are choosing instead to invest the federal windfall on long-term investments. Many officials describe ARPA funding as a one-time opportunity to make improvements that will last generations. As a result, some governments — especially Maine's county administrations — are deliberately sitting on tens of millions of dollars and making spending decisions gradually.
"Just because money is not committed doesn't mean we are not vetting and reviewing plans," said Allen Sicard, chairman of the York County Board of Commissioners. "This is a once-in-a-lifetime opportunity and a game changer. We want to use it judicially, and we think we are."
Local governments have until the end of 2024 to make spending commitments but don't have to use all the money until 2027.
To date, York County has committed nearly $10 million out of an expected payment totaling $40 million. More than $2.7 million went to premium pay for corrections officers and $1.5 million to creating a teen center in a renovated Biddeford church and $1.8 million for a coastal dredging vessel. Contemplated projects include a substance abuse rehabilitation center and first responder training center near the county jail and affordable housing in Sanford.
County officials don't want to spend the money to subsidize daily operating costs, even though some people suggested divvying it up among the 29 communities in the county.
"We wanted to make an impact," Sicard said. "An impact that would last for generations on projects that would not otherwise have been done."
Local government funding from ARPA was delivered directly to county governments and "entitlement" communities — large cities that ordinarily manage federal grant money. More than 400 smaller towns and cities were given much smaller amounts as a pass-through from the state.
Half the money was awarded last May, with a second payment due the same time this year. Counties and major cities in Maine are expected to receive $382 million in total. Maine counties received about $130 million and have so far dedicated just about $47 million, a third of that early funding.
Nearly all county and city governments spent hundreds of thousands of dollars on premium pay for county employees who worked through the pandemic. Premium or hazard pay was clearly approved under early spending rules from the U.S. Treasury Department.
But after that, many county governments put off making major spending decisions. Franklin, Oxford and Piscataquis counties said a bulk of ARPA money will be spent to upgrade outdated emergency communications equipment.
Penobscot County, due to receive $29 million, the third-highest total, delayed most spending until public input could be gathered. Most of the money will be provided through grants to local organizations and municipalities. The same goes for Androscoggin and Kennebec counties, where more than half their ARPA funding will be distributed through awards to nonprofits and others.
Sagadahoc County, due to receive about $7 million, initially started a local grant process, but basic priorities, such as a $1 million courthouse roof replacement, took precedence, said Interim County Administrator Amber Jones.
Shifting spending guidance from the federal government complicated the county's deliberations, Jones said. Early rules made it appear that there were strict limits on how the relief money could be spent.
In the latest, final rule, Treasury made spending more flexible. Now, local governments may use up to $10 million — more than most Maine county governments will receive — as "revenue replacement" that can be spent on a broad range of government services.
"We as a county were evaluating the projects through the interim rules and whether (they) met the federal guidelines," Jones said. "The final rule basically said, 'Do what you need to do.' Anything could almost be justified through loss of revenue."
The experience of Maine counties is similar to those in the rest of the country, said Eli Byerly Duke, a senior research assistant at The Brookings Institution. The nonprofit research center, based in Washington, D.C., is tracking spending across local governments. To date, 104 county governments have committed $5.7 billion, less than a third of the relief funding, according to its tracker.
" Maine counties are not alone in not having allotted a lot of the money yet," Byerly Duke said. "It is a lot of money, and they haven't even received all of it yet."
Some spending of relief dollars has raised eyebrows, such as a hotel in Florida, a ballpark renovation in New York, and tourism marketing and golf course irrigation in Colorado. Those projects have been criticized for falling outside the original rationale for the funding, to confront and recover from the pandemic.
There are examples of questionable spending, but overall governments have put the money where it was supposed to go, Byerly Duke said.
"Really, on the whole, most places are spending the money how it was intended to address the pandemic and fuel the recovery," he said.
Portland, due to receive the state's second-biggest ARPA award of $42 million, plans to use one-third of its funding to cover revenue shortfalls until 2025. It's the only municipality to use that much for revenue replacement.
"We have so much diversity in our revenue streams, there were many that were impacted by COVID," said the city's finance director, Brendan O'Connell. Parking fees, cruise ship payments, and earnings from event venues and recreational programs pay more than half the city's yearly operating budget.
"We are one of the few places in northern New England where more than 50 percent of our revenue doesn't come from property taxes," O'Connell said. "The plan that we developed in last year's budget is that we will reduce our reliance on ARPA funding in our operating budget as revenues bounce back."
Portland plans to spend the remainder of its funding like many other communities — on infrastructure and community projects aimed at long-term benefits. The city pledged more than $14 million to 19 projects, including almost $3.8 million to replace the 60-year old Kiwanis public pool in the Riverside neighborhood, $3.5 million to the city's new homeless service center and $1 million each for housing and child care programs.
Other communities spread a wide net for spending.
South Portland used $1.7 million to fund existing capital expenses, including new Tasers, radios and other equipment for police. The city's biggest commitment is a $6.5 million grant program. City councilors are in the process of reviewing 18 applications totaling $12.6 million covering issues such as sewer and water infrastructure, housing and broadband internet.
The Auburn City Council last week approved its two biggest commitments — $3 million for an expansion of the Police Activities League youth program and $1.5 million for a new firetruck. It earlier pledged $1.4 million to a new Museum L-A, as well as hundreds of thousands of dollars for energy efficiency rebates, fiber-optic internet expansion and $565,000 in premium pay for city employees.
Mayor Jason Levesque said some of the city's remaining money — about $4 million — could be spent to incentivize market-rate housing in the city to jumpstart its future tax base.
"We are not using this to do budget offset," Levesque said. "Even though that is allowed, we don't need to. We are taking a very smart, business approach to the investment of this capital."
Across the Androscoggin River, Lewiston officials took a different approach. About a month after receiving its money last spring, the City Council approved a spending plan that allocated more than $19 million — about 90 percent of its entire $20.6 million payment — to install a drinking water line from the Lake Auburn reservoir and build new storage tanks at the sewage treatment plant to handle stormwater pollution.
"By the time we were ready to accept the grant, we pretty much knew how we were going to use the money," said City Administrator Heather Hunter. Water and sewer projects from the beginning have been fully approved uses of the funds under federal rules, compared to more "creative" uses for the money, she said. Spending federal funds instead of borrowing for the projects can save taxpayers hundreds of thousands of dollars in interest payments, she added.
"If we get audited, I would rather not be in a position that our projects didn't fit the regulations like we thought they did." she said.
Out of the 25 city and county governments that received direct ARPA payments, just two have not spent anything to date.
In Knox County, decisions to spend $7.7 million have been held up in a long finance process that includes both commissioners and a county budget committee. Funding items up for discussion include more than $1 million in premium pay, $4.1 million for affordable housing, $1.2 million for a health clinic expansion and $300,000 for a motor craft requested by the sheriff's office.
"We have had five meetings with at least two more meetings scheduled," County Administrator Andrew Hart said in an email.
Bangor hasn't even made it that far. Bangor leaders saw no pressing need to spend its $20.5 million disbursement immediately and wanted to wait for the final Treasury rule and go through the normal budget process, City Manager Debbie Laurie said.
"While it may appear we are slow to spend, I would say we are being strategic," Laurie said. "This is a huge, huge opportunity for us. We want to demonstrate to those who voted for this the significant investments in our community that will provide benefits for decades to come."
(c)2022 the Portland Press Herald (Portland, Maine) Distributed by Tribune Content Agency, LLC.
