It pays to be the little guy. At least, that’s how some officials may have felt this year as federal coronavirus aid hit city coffers.
Part of the American Rescue Plan Act signed March 2021, the Coronavirus State and Local Fiscal Recovery Funds program allocates $350 billion to aid local, state and Tribal governments as they respond to COVID-19. How exactly the funds are distributed will leave some Metro Atlanta cities better off than others.
In all, $45.6 billion is earmarked for metropolitan cities, which ARPA essentially defines as a city with more than 50,000 residents. The Act allocates these funds in a way similar to the U.S. Department of Housing and Urban Development’s longstanding Community Development Block Grant program. The CDBG formula calculates an area’s need for federal aid using variables like housing availability, poverty level and population growth rate. The U.S. Treasury then gives the amount directly to each city.
Another $19.5 billion is allocated for smaller municipalities. These cities are in a category called non-entitlement units (NEUs) and receive funds indirectly. The federal government pays two lump sums to each state, which is then responsible for distributing them among their NEUs on a simple, standard per-capita basis. You take the state’s population, subtract the number of people in its metropolitan cities and then divide the NEU allocation by that amount. There are about 2.3 million residents of NEUs in Georgia, and their respective local governments will split $862 million.
Let the chips fall
So how did that shake out for Metro Atlanta cities?
The City of Milton has a population of 40,000. Its 2022 general fund, the budget of core administrative and operational tasks, is $34.8 million. It expects to see $14.7 million in federal aid.
For context, in 2018 Milton paid $4.5 million for the 130 acres now known as Milton City Park and Preserve.
To its southwest is Roswell, with 92,000 people and an annual budget of $82 million. Twice the size of Milton and notably less affluent, Roswell will receive about $11.3 million from ARPA.
Johns Creek has 85,000 people and a $62 million budget. Its ARPA allocation? $7 million, half what Milton is receiving.
Alpharetta has a budget of $66 million to serve 65,000 residents next year. It seems to have gotten the shortest end of the stick, standing to collect about $6.6 million in coronavirus aid.
So, what sets Milton apart from Alpharetta, Johns Creek and Roswell? It has fewer than 50,000 residents and, luckily for Mayor Peyton Jamison and the vacant finance director position, it is not classified a metropolitan city.
Allocation of federal funds from ARPA
The luckiest officials, though, will be Mayor Lynn Deutsch and the Dunwoody City Council.
I’ll give you the number first. Dunwoody is scheduled to receive $18.4 million in federal aid from the ARP Act. The city’s 2022 general fund clocks in around $28 million. Of that amount, $2.5 million will come from the city’s reserves. Another $8 million will come from things like alcohol permits and fees power companies pay to use city property. By the end of the year Dunwoody will have made more from ARPA than it will from business and occupational taxes, property taxes and the municipal court.
But they get luckier still.
When ARPA’s initial guidelines were released May 2021, the only full, publicly available Census data was from 2019. Statewide numbers for 2020 had been released but not yet broken down by city and county. To avoid confusion, the Treasury determined that it would only use the 2019 data. In the 2019 Census, Dunwoody’s population is listed as 49,731. In 2020, it’s 51,683.
Aren’t there rules?
Just like with the CARES Act, ARPA funding comes with restrictions about how, and when, you can use it. According to ARPA’s Final Rule, the money can only be used to:
• Replace lost public sector revenue
• Support the COVID-19 public health and economic response
• Provide premium pay for eligible workers performing essential work
• Invest in water, sewer and broadband infrastructure
There is a deadline for spending the money or you risk losing it. According to the Treasury, “costs must be obligated by December 31, 2024, and expended by December 31, 2026.”
As with the CARES Act and TSPLOST, and a few bond referendums, some Metro Atlanta cities are using inventive interpretations of what those instructions mean.
So, I guess it depends on who you ask.
Last month, the Dunwoody City Council voted to create an “ARP 2” fund and promptly deposited $10 million into it. The purpose stated in the meeting and explicitly on the city’s website was that the action “would allow that $10 million to be used for the same intent as the original funding, but it would remove federal requirements and time frames from the spending.”
My prediction is that over the next few years there will be even more greenspace acquisitions than we expected. We’ll see a cabal of consultants sign contracts with our cities to administer ARPA funds, just as we will with TSPLOST II. And we’ll watch those dollars quickly dissipate into general and capital funds, implicitly bound for projects that may or may not line up with their intended uses.
For the luckiest residents – those in Dunwoody – I urge a reminder. Remember this spending, and these coffers. Remember it when officials come to you, possibly in the near future, and pitch a tax increase. Especially remember it if the proposal cites needs that are addressed by the four actual, intended uses of ARPA dollars, like improvements to stormwater infrastructure and first responder pay.
You shouldn’t have to pay the little guy twice.