A gift is defined as “something given voluntarily without payment in return, as to show favor toward someone, honor an occasion, or make a gesture of assistance; present.”
During the last two weeks many municipalities big and small received a gift of money from the American Rescue Plan. Now comes the question of how to spend the gift. Getting the gift was not easy, deciding how to spend it will be harder.
Here is what a municipality can spend it on: COVID-19 mitigation, health disparities, water and sewer, behavioral health care, small businesses, housing and neighborhoods, broadband, Impacted industries, educational disparities, essential workers, public sector, and healthy environments such as childcare and enhanced child welfare services or as it has been stated human infrastructure. I believe human infrastructure will be the hardest one governments will be funding but it may be the most critical.
Several municipalities I know have lost employees through resignation due to Covid, This is simple to understand. If your wages are all used up by putting your kids in childcare, it is simple math. Many parents will realize that when their kids go to school they will actually get a raise in family income due to reduced expenses on child care.
Municipalities may also use the money to offset reduced income from public service charges. Once again here is the formula for that: The formula used to calculate that is (2019 general revenue * (1+your growth adjustment factor)%5E(n/12)). n is the number of months starting with January of 2020. In short the process is just beginning. There is no hurry but according to federal government guidance only need apply the funding for a project by December 31, 2024. You then have until December 31, 2026 to complete the project for which the funding was applied.
Some are simple. The Village of Lake Hallie is looking for an additional water well to accommodate growth. Money from the American Rescue Plan could be used for that. The Town of Hallie could provide some funding for broadband or send some to the Chippewa Fire District. If a municipality had to lay off workers due to the pandemic, it could hire them back. Municipalities could give essential workers premium pay. Essential work is defined as work involving regular in-person interactions or regular physical handling of items that were handled by others.
Bear in mind that elected officials cannot receive premium pay. So as hard as municipal officials (board members, clerks, treasurers, mayors, town chairman and Village Board presidents) worked during the pandemic, only those workers that are not elected could receive premium pay. Those could include police officers, firefighters, appointed clerks and treasurers, road crews, water and waste water employees and other municipal workers.
The money cannot be used for paying down pensions or filling in holes created by tax cuts. Nor can a municipal government use the money to cut taxes. Some municipalities appear not to want the money. Some municipal governments feel the money should be used to pay down the national debt. In the application process a municipal government had to uncheck a box or the money would have gone to the State of Wisconsin.
If I was a lead governmental official I would invest the money back into the municipality. If anything the pandemic has shown us that without good broadband infrastructure the citizens of a community are at a huge disadvantage. Educational process is slowed down or stopped. Government meetings that are held remotely put citizens who do not have broadband behind the information curve.
Adding to the municipal water supply or improving wastewater treatment plants are another good use of the money. As stated above human infrastructure is also very important. I am no economic expert but it will take a raise in wages in the service sector coupled with meeting the needs of our families before we can return to fully normal.
The Wisconsin Towns Association has counseled its members to have patience, patience and more patience. The money local governments receive may be best served if it sits in an interest bearing account for a while. There is no need to spend like drunken sailors. As they say look before you leap.