By Sarah Curry, DBA
The COVID-19 pandemic began in March 2020, yet the federal government took over a year to direct financial relief to local municipalities across the country through the American Rescue Plan Act (ARPA). The pandemic hit local communities across Iowa hard, but through hard work and fortitude, governments survived the pandemic with little lasting fiscal damage. Now Iowa’s cities and counties face the task of spending ARPA funds while also complying with the U.S. Treasury’s complicated guidelines.
To discover how local governments were using these funds in Iowa, Iowans for Tax Relief Foundation (ITRF) conducted a survey of select communities across the state. Our intent was not only to report on what local government officials have done, but also to discern the long-term effects for taxpayers.
While elected officials have been presented with countless ideas about how to spend ARPA funds, prioritizing the interests of the taxpayer should have been at the top of their minds. In addition to direct property tax relief, investments in permanent infrastructure projects and fulfillment of deferred maintenance obligations would be prudent uses of these funds. Putting the taxpayer on the hook for future spending by hiring new employees, in contrast, is an example of windfall spending that should be avoided.
Polk County and Des Moines received a combined $190 million, with each getting around $95 million. Polk County has obligated 54% of its ARPA allotment, while the city of Des Moines had yet to spend or obligate any of its funds at the time of our survey.
The county chose to classify nearly a quarter of its ARPA funds in the revenue replacement category, allowing more flexibility to use the funds as officials see fit. Some identified projects are $15 million to the Housing Trust Fund for affordable housing, $8 million for the Hilton Hotel and Iowa Events Center, which lost revenue during the pandemic, $1 million to convert a hotel into an affordable housing unit, and nearly $600,000 for technology upgrades to the county emergency management system.
Taxpayers across the state have questioned why ARPA funds were not used to reduce property taxes. While no local government in our survey chose to directly reduce its property taxes with ARPA funds, Polk County falsely stated that ARPA funds could not be used for that purpose. Yet, in this year’s budget, the Board of Supervisors did choose to reduce county property taxes by 36 cents. In contrast, the Des Moines council chose to leave its levy rate alone.
No doubt, many local governments experienced negative financial effects from the pandemic; however, assistance given nearly 18 months after the onset was arguably too late to do much good. In fact, more than 85% of the rescue funds allocated to local governments we surveyed remains unspent. Even now, when our lives are practically back to normal, the federal government is scheduled to send more money, which will only further contribute to the country’s rising inflation.
To read more details about this survey, visit itrfoundation.org/where-did-iowas-local-covid-relief-funds-go/.