|City of Independence|
|AGENDA ITEM COVER SHEET|
Consideration of Amended American Rescue Plan (ARPA) Expenditure Plan
Adoption of Amended ARPA Expenditure Plan
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. Independence is expected to receive a total of $20.3M and received it's first tranche of $10,742,962 on July 1, 2021.
Eligible uses of these funds include:
- Revenue replacement for the provision of government services to the extent the reduction in revenue is 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 Independence 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.
The Amended ARPA Expenditure Plan embraces the GFOA guidance above and addressed several community needs and organizational priorities. The attached plan reflects any amended projects in red.
|Department: Finance and Administration||Contact Person: Bryan Kidney|
|City Managers Office||Approved|
|City Managers Office||Approved|
|City Clerk Department||Approved|
|Council Action: ||Council Action: |