Kentucky city governments, ranging in size from Louisville to Wickliffe, received hundreds of millions in federal stimulus funds through the passage of the American Rescue Plan Act in March. Some western Kentucky cities are still deciding how to use the windfall, while others are already making investments.
In total, Kentucky received over $324 million to distribute among cities that have a population of under 50,000. It’s now up to each individual city on how they spend their allotted amounts, so long as it stays within the eligible uses stated by the U.S. Treasury Department.
The American Rescue Plan Act (ARPA) legislation overall is aimed at giving financial relief to individuals, private businesses, and state and local governments in a time of shared recovery from the COVID-19 pandemic. Through the bill, over $350 billion in aid was divided among the states to then be distributed to cities with populations under 50,000.
Local governments are given funds in proportion to their city’s population and the total population of all local Kentucky governments receiving funds, multiplied by the total statewide payment made to those governments.
In July of 2021, Gov. Andy Beshear said that cities would receive half of the aid then, and the other half would be given out between the spring and summer of next year. So far, every city has received their first installment from the state government and is in the process of deciding how that money should be used.
ARPA has stipulations on what the aid can be used for. Local governments are told to focus on four major categories including: a response to the current public health emergency, to negate negative economic impacts, providing premium pay to essential workers, replacing public sector revenue loss, and to make necessary improvements to water, sewer, or broadband infrastructure, among other uses.
Cities across Kentucky are given a lot of time to decide how best to use these federal funds; the deadline set by the Department of Treasury is Dec. 31, 2024. Some cities have yet to make any official plans on how they will be spending their funds.
Fulton in Fulton County and Arlington in Carlisle County have yet to begin discussions. Fulton City Manager Mike Gunn said discussions will not begin until next year for how to use it’s $548,993.09 in funding. Likewise, Arlington Mayor Bobbi McGee also said he’ll defer to his city commissioners first before making any final decisions on what to do with their $77,946.66.
Other western Kentucky cities have initial ideas for the money but also claim that current federal regulations are too strict for the plans they have in mind.
Mayfield City Clerk Tammy Johnson said potential projects, such as free wifi internet, are being put on hold until more guidance can be given from the federal government that might expand the options available to cities.
“We are waiting, truthfully, for the final guidance from the federal government,” Johnson said. “Things were put on hold to wait and see if maybe the guidance became a little more loose.”
Mayfield received $2,542,200.54 to spend within the next three years.
Some cities such as Hardin in Marshall County are attempting projects that could fall more within the grey area of whether or not a project is an eligible use of federal funds.
Hardin Mayor Randall Scott said part of their first installment of $78,205.62 has gone toward paying for security cameras to be installed in the city park. He said the park has been victim to vandalism which has been costly for the city to upkeep.
He also said the cameras have been active for a few weeks now and “haven’t had any incidents yet.” Hardin is expecting to get the rest of their promised $156,411.24 in the next installment.
According to Morgain Patterson, Director of Municipal Law at the Kentucky League of Cities, Hardin’s project once fell within the grey area in the U.S. Treasury Department's rules for eligible uses. Patterson said prior to the release of a FAQ in June, projects like Hardin’s security cameras would not have been thought of as viable options for ARPA funds.
“But, when they issued the frequently asked questions in June, they included a whole five paragraphs about how you can spend it on parks,” Patterson said.
She said if an increased use of the park during the pandemic led to vandalism and thus an increase of maintenance to the park, the cameras could be a justifiable use of ARPA funds.
Local governments are hopeful that as more information is released, there will be more options available to cities on what counts as an eligible use of ARPA funds.
Patterson described the current wording from the U.S. Treasury Department on uses for the funds as “generally specific.”
“[Federal guidance] has a few areas where it is very specific on how the funds may or may not be used. Then it has a whole broad category of uses that need more clarification,” Patterson said.
Yet despite regulatory uncertainty, some cities are moving forward with projects that are listed clearly as eligible uses by the federal government.
Wingo Mayor Charles Shelby in Graves County said his city has already begun using some of its $150,564 towards repairs in the city’s sewer and water system.
“This year, that’s what we’re going to focus on mainly,” Shelby said.
He said the sewer system was in need of some new pumps, while new meters were purchased for the city’s water system.
“Also, every five to six years, you need to clean and wash out your overhead water tanks. So, we did that with some of the money,” he said.
A final verdict on what are eligible uses for ARPA funds is expected to be released between now and April of 2022.
