Some $29 million in federal COVID-19 relief funding will flow this week into the coffers of Vermont cities, towns and villages.
Now those municipalities just have to figure out what to do with it.
In Franklin County, Montgomery officials want to use some of the money to help pay for a new municipal sewer system they’ve been planning for several years.
But in Morristown, Town Administrator Eric Dodge said he plans to take a more cautious approach and see how it goes in other places first.
“If there are mistakes to be made, we’ll let somebody else do it, and we’ll learn from it,” Dodge said.
Dodge isn’t the only local leader worried something could go wrong.
Funds from the American Rescue Plan Act, passed in March, use a process that is essentially backward from most federal grants. If local communities want federal funding, they typically pitch a project first and get money once it’s been approved.
But with the American Rescue Plan Act, the money will simply show up in a town’s bank account. The U.S. Treasury has laid out four general categories towns can spend it on:
■To respond to the COVID-19 public health emergency or its economic impacts
■To provide premium pay to essential workers
■To make up for reductions in local revenue
■To invest in water, sewer or broadband infrastructure
Towns do not need to get approval before they cut checks. But they must later report where the money went. And if the Treasury says towns spent it in a way they shouldn’t have, local governments will have to pay that money back.
“I think the limits on how they can spend the money are really important,” said Joyce Manchester, senior economist at the Vermont Legislative Joint Fiscal Office. “They just have to be really careful to stay within the four restrictions here and not spend the money on things that aren’t allowed.”
Municipalities have until December 2024 to plan how to use this influx of federal dollars and until the end of 2026 to actually spend it.
“That’s a long time,” said Katie Buckley, an American Rescue Plan Act expert at the Vermont League of Cities and Towns. “Depending upon the type of projects you’re going to fund, it might give you time to wait a year and see what happens to construction prices.”
The federal government is distributing COVID-19 relief funding in waves and to multiple levels of government. There are funds designated for local governments, counties and states.
Vermont’s unusual role for county governments initially left local leaders to wonder how much they would actually get. Since the state’s counties don’t administer many services, the Treasury withheld the state’s $120 million slice of county money.
The Treasury changed that policy at the end of July and allowed that county money to flow directly to local governments. It will now be divided up to municipalities based on their populations.
The funding going out this week is the first half of what was designated to local governments from the get-go. Half goes out this year, and the other half will be distributed in 2022.
For the most part, those funds are also based on population. Most municipalities are expected to receive about $105 per person over two years, not including the “county” money that has yet to arrive.
In the state’s smallest communities, this is not a huge sum. The town of Victory in Essex County is expected to receive about $6,600 over two years.
Burlington is an outlier. The city is expected to receive way more local funding per capita from a separate metro fund — about $440 per person over two years, not including the county funds.
Some communities have already begun asking their residents how to spend this money. Rutland held a public forum Wednesday to solicit ideas.
Burlington Mayor Miro Weinberger said there will be a “robust community engagement process” to decide how the rest of the money is used, including surveys and public meetings where residents can give their opinions.
Julie Lowell, policy analyst at the Public Assets Institute in Montpelier, said a collaborative deliberation process, alongside Treasury reporting requirements, should prevent misuse or corruption.
“There’s plenty of oversight in this process and of these funds going out the door,” Lowell said. “The Treasury’s going to be overseeing this, and there will be reporting, and I think it will just be on the Treasury to make sure that we understand where the money goes.”
Towns can also use part of their allotment to cover administrative costs. They cannot, however, use the money for pensions, rainy day funds or paying off outstanding debt, per Treasury rules.
Can the money be used to build a new Burlington High School, after cancer-causing chemicals were found throughout the grounds of the old building and it had to be abandoned? “I don’t believe ARPA funds are eligible for school uses,” Weinberger said.
Buckley, in her role at the Vermont League of Cities and Towns, is encouraging municipalities to take their time and think about how this money can work as seed funding for bigger projects later on.
For example, if a community wants to expand affordable housing, they can use this money for a small, decentralized wastewater system that makes construction possible down the line, she said.
“It’s almost like playing cards and knowing when to throw your card,” Buckley said. “Strategy is so important. Patience, planning, strategy and the long game.”