Item Coversheet
City of Independence
AGENDA ITEM COVER SHEET
Approved

Agenda Title:

Council Action is requested to adopt an Expenditure Plan for funds received through the American Rescue Plan Act of 2021 (“ARPA”).
Recommendations:

Adopt Expenditure Plan
Executive Summary:

Signed into law on March 11, 2021, The American Rescue Plan Act of 2021 (“ARPA”) provides $350 billion in additional funding for state and local governments. The local funding portion is approximately $130 billion, equally divided between cities and counties. Independence will receive the funds in two tranches – the first after the US Treasury certifies the proceeds to each jurisdiction and the second one year later. 

 

 

Background:

The Government Finance Officers Association (GFOA) has calculated that the City of Independence should receive $20.3 Million from the ARPA. Eligible uses of these funds include:

  • Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency,
  • COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery,
  • Premium pay for essential workers,
  • Investments in water, sewer, and broadband infrastructure.

Restrictions on the uses of these funds include:

  • Funds allocated to states cannot be used to directly or indirectly to offset tax reductions or delay a tax or tax increase;
  • Funds cannot be deposited into any pension fund.
  • Funding must be spent by the end of calendar year 2024.

 

 

Implementation will be an extensive process as new or updated guidance and FAQs are developed and released by the U.S. Treasury, including an application process. Guidance from the GFOA cautions municipalities that:

  • Temporary Nature of ARPA Funds. ARPA funds are non-recurring so their use should be applied primarily to non-recurring expenditures.
  • Care should be taken to avoid creating new programs or add-ons to existing programs that require an ongoing financial commitment.
  • Replenishing reserves used to offset revenue declines during the pandemic should be given high priority to rebuild financial flexibility/stability and restore fiscal resiliency.
  • Use of ARPA funds to cover operating deficits caused by COVID-19 should be considered temporary and additional budget restraint may be necessary to achieve/maintain structural balance in future budgets.
  • Investment in critical infrastructure is particularly well suited use of ARPA funds because it is a non-recurring expenditure that can be targeted to strategically important long- term assets that provide benefits over many years. However, care should be taken to assess any on-going operating costs that may be associated with the project.

 

The funding provided under ARPA provides a unique opportunity for the City to make strategic investments in long-lived assets, rebuild reserves to enhance financial stability, and cover temporary operating shortfalls until economic conditions and operations normalize.

 

Staff has developed a preliminary use of funds that embrace the GFOA guidance above.

 

This was presented to the City Council Audit and Finance Committee on April 9, 2021 and was also presented at the City Council Work Session on April 12.

 

Since those meetings, Councilmember DeLuccie has proposed an amendment:  

 

1.  Amend the budget to increase the health department funding to cover the costs associated with the start up of the health department of $300,000.  This increase is offset by reductions of $285,000 to the abandoned vehicle enforcement program and $15,000 for the housing study. 

 



Fiscal Impact:

The latest estimate that the City will receive $20.3 million from "State and Local Fiscal Aid" portion of the American Rescue Plan.  The City has received the first tranche of $10,742,962.

 

The proposed 2021-2022 City Operating Budget includes $7,956,500 of the first tranche. There is an additional $2,786,462 proposed with the spending plan.

 

The second tranche will be included in future fiscal year budgets.



Department:          Finance and AdministrationContact Person:          Bryan Kidney


REVIEWERS:
DepartmentAction
Finance DepartmentApproved
Finance DepartmentApproved
City Managers OfficeApproved
City Clerk DepartmentApproved

Council Action:          Council Action:         

ATTACHMENTS:
DescriptionType
ARP Spending Plan Presented with Proposed BudgetBackup Material
ARP Spending Plan with Proposed AmendmentBackup Material