Last spring, local governments found themselves wringing their hands over what they presumed would be a budget-wrecking year caused by the global coronavirus pandemic and an upended economy.
“While we should be cautious and wary of the worst-case scenario, we should be comfortable in the fact that we have a fund balance to deal with the worst case,” Pinehurst Village Manager Jeff Sanborn told his Village Council a year ago.
Not knowing what to expect from sales tax and other revenues, “caution” and “wariness” were pretty much everyone’s watch words.
This year, those same local governments find themselves facing an entirely different — but no less daunting — challenge: how to spend millions of dollars in aid they never expected to receive.
The $1.9 trillion American Rescue Plan is the third stimulus package implemented in the past year. But unlike the first two packages, it includes massive funds for local governments.
Local governments that had feared layoffs, service reductions and unprecedented belt-tightening will now have cash coming in that, in some cases, amounts to almost another three months’ worth of revenue.
The challenge now: how to spend the money.
Reversal of Fortunes
The year-to-year turnaround couldn’t be more stark. A year ago, states, counties and cities feared a shortfall in excess of $400 billion, an amount that could have been the largest cash crisis since the Great Depression, according to a recent Harvard University study.
That never happened, largely as a result of aid approved by Congress to reimburse government agencies for their coronavirus expenses. And a massive online shopping spending spree allowed local governments to staunch damage to sales tax revenues.
“We all got very fortunate,” said Southern Pines Town Manager Reagan Parsons.
The latest aid package allocates $130 billion for cities and counties, including $10 billion set aside for infrastructure projects. Of the overall total, $65 billion is going to counties, and $130 billion is earmarked for K-12 education.
North Carolina will get about $5.2 billion, while counties will get $2 billion and local governments will receive $1.3 billion. State school districts will receive $3.6 billion.
Locally, Moore County will add more than $19 million to its coffers, dwarving previous coronavirus aid that totaled $3.84 million. The school district has yet to receive an exact figure, but it is expecting to receive a substantially larger amount than the $7.9 million it received from Washington earlier this year.
Unlike previous aid packages, the municipalities are all in line to receive checks. For instance, Pinehurst and Southern Pines stand to receive $4.86 million and $4.3 million, respectively. Small communities like Robbins and Taylortown will get $360,000 and $250,000, respectively.
Time to Figure It Out
First, we expect our local governments to use these new funds to stabilize operations affected by the pandemic or cover costs that went uncovered. That seems only reasonable.
After that, the stimulus law allows — and encourages — communities to invest in infrastructure and support their business community. Locally, this could look like improvements to roads, water lines, sewer systems, and sidewalks and street scaping in downtown areas. There’s not a town in Moore County that doesn’t have unmet infrastructure needs.
Town officials are currently at a loss for how to spend the money, and more than a few are skeptical of hidden strings. “I have never seen a federal program without a lot of rules attached and, so far, those have not been released,” Parsons said. “The guidance out there is very gray and wide open.”
But here’s the beauty: The money is available to use for another three years. So there’s no need to rush, meaning town councils can take their time to study options and plan accordingly.
This money is meant to be an investment in this country’s communities. Let’s make sure we take full advantage of that opportunity to build a stronger, better place to live.