A game-changer and a financial relief are the terms being used by the leadership of Calhoun County and the City of Battle Creek to describe millions of dollars they will be receiving through the American Rescue Plan Act of 2021, signed into law March 11 by President Joe Biden.

Calhoun County will receive $26 million and the city will receive just shy of $32 million, according to the National League of Cities. In addition, smaller municipalities within the county, such as the cities of Albion and Marshall and Pennfield Township, are each set to receive allocations from a $65.1 billion pool of funds set aside for more than 19,000 cities, towns, and villages throughout the United States. These funds are part of the $1.9 trillion American Rescue Plan Act.

Battle Creek City Manager Rebecca Fleury“We are thrilled. This is a game-changer for Battle Creek to stabilize its budget,” says Rebecca Fleury, Battle Creek’s City Manager. “This is not something I would have expected to see in my tenure.”

Kelli Scott, Calhoun County Administrator, says, “It’s definitely a sign of relief financially for local governments, including the county.”

Within the American Rescue Plan, the Coronavirus Local Fiscal Recovery Fund provides $350 billion for states, municipalities, counties, tribes, and territories, including $130 billion for local governments split evenly between municipalities and counties. This funding will be released in two allotments, half in the next 60 days following enactment of the legislation and the second half 12 months after the first payment. 

Fleury says she is waiting to get further clarification on what the funds may be used for. 

A local government has a lot of latitude in what it is able to use the stimulus relief funds for, including to defray costs incurred, to replace lost revenue, or mitigate negative economic impacts sustained as a result of the COVID-19 public health emergency, according to instructors and leadership with Michigan State University Extension Center For Local Government Finance and Policy.

Kelli Scott, Calhoun County Administrator“Funds can be used for water, sewer, and broadband infrastructure. However, these funds cannot be used to support tax cuts or shore up pension deficits. Recipient local governments will be required to provide to the U.S. Treasury detailed accounting of how these funds were used. Funds are to be spent by the end of calendar year 2024,” their report says.

“We’ve learned that these funds can be used for water, sewer, or broadband infrastructure, but they’re telling us that we have to choose. That’s a bit of a nuance,” Fleury says. “It can be used for revenue replacement because of the pandemic. The ARP Act says that I have to use the full fiscal year before COVID as a baseline so for us that was 2019. That becomes the baseline for revenues and expenditures.”

Fleury says she is focusing on lost local income tax in the current fiscal year which is somewhere between $3 million and $5 million. “This was impacted greatly because of the number of people teleworking,” she says.

Non-residents working for employers like the Kellogg Co. or the Federal Center pay half of one percent of city income tax while residents pay one percent. But with so many employees working remotely due to restrictions as a result of COVID-19, these non-residents did not have to pay that tax, and Fleury says the city now is looking at refunds to individuals and employers.

“I have to make sure I have a good idea of the revenue replacement because of COVID,” she says.

For all municipalities with more than 50,000 residents, funds will be made available directly by the U.S. Treasury. Grant amounts will be calculated by using the CDBG formula that measures population plus poverty plus housing instability. Municipalities with less than 50,000 residents will receive their funding allocations through their respective states. These allocations are based on a simple per-capita formula.

With a population of just over 51,000, Battle Creek was allocated $605 per person, according to information from the U.S. House Committee on Oversight and Reform. Calhoun County’s Emmett Charter Township with a population of 11,627 was allocated $99 per person.

In addition, tribal governments will receive more than $20 billion, according to the National League of Cities. Judi Henckel, spokesperson for the Nottawaseppi Band of the Huron Potawatomi in Athens Township, says the Tribe is waiting for more specific information about their allocation and what it may be used for.

Scott says that the majority of cities and townships, including those in Calhoun County, were allocated about $100 per resident with the county receiving about $200 per resident. 

“We’ve established much more formal and close relationships with other municipalities and nonprofits,” Scott says. “All of the cities and townships in the county are receiving millions of dollars. We owe it to our community to make the funds work for everyone in a strategic and coordinated way. We know who we should include now and who most understands the needs of our residents. We will be able to use these funds to make sure that county government is stable and we will work with other local governments and nonprofits to ensure the economic health of our community.”

The funds allocated under the American Rescue Plan can be spent over a three-year period. Scott says this will give county leadership time to figure out the most effective ways to maintain financial stability while also serving the public and taking care of their ever-changing needs.

“We know that some businesses survived and some didn’t,” Scott says. “We will be looking at how communities will move forward with economic development projects and housing needs. We know there is a huge need for broadband infrastructure and we have a countywide focus on that. The ability to react to changing needs has been amplified during the pandemic. We didn’t have extra funding to invest in needs like that.”

Other areas under consideration include county employees who need to work remotely or require flexible schedules in order to take care of their families. Scott says the remote way of working that began during the pandemic has shown the need for fewer people together in the same offices.

She also says that there is a need to address a backlog of healthcare needs that was created by the focus on ensuring that residents receive their COVID-19 vaccines.

“These funds will give us much-needed resources to better assess those needs,” Scott says. “This is in direct response to the economic impacts on our services because of reduced revenues. The challenge will be to ensure that we are not using these funds to increase the ongoing budget. We will be cautious to acknowledge that and to look long-term and ask ourselves if there are ways we can partner with the broader community to make investments now that will pay off later.”

Like municipalities throughout the country, Scott says she is bracing for the impact of reduced revenues as a result of a loss in property tax revenues but so far she does not know yet what that will look like.

“Almost 50 percent of our operating revenue comes from property taxes. Individuals and businesses have struggled during this pandemic. How quickly they recover has a lot to do with overall income and property tax that the county receives, which is the result of property values. We will be watching unemployment indicators. 

“It’s helpful to have the ability to look at the impact of reduced revenues and other funding that was used for direct response to COVID.”