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The Use of ARPA funds in Muscatine and Muscatine County

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 municipalities across the country through the American Rescue Plan Act (ARPA). The pandemic hit local communities across Iowa hard, but our 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, Iowans for Tax Relief Foundation (ITRF) conducted a survey of select communities. Our intent was not only to report on what 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.

The City of Muscatine and Muscatine County received a combined $11.8 million, with $8.3 million going to the county. For the most part, both local governments have already decided how to spend those funds across the community.

The city opted to classify all its ARPA funds in the revenue replacement category, allowing more flexibility to use the money as officials see fit. Some of the projects they have identified include security upgrades, software purchases to improve services, city planning updates, and the expansion of community development programs.

The county, however, did not claim any revenue loss. Most of the county’s funds went toward infrastructure projects, namely stormwater and sewer projects, levee improvements along the Mississippi River, and rural fiber Internet. Other projects included digitizing records, upgrading the jail computer server for increased security, and supporting Muscatine Legal Services for low-income residents.

Taxpayers across the state have questioned why ARPA funds were not used to reduce property taxes. While no local government included in our survey chose to directly reduce its property taxes with ARPA funds, Muscatine County stands out for having made a significant cut to its property tax rate in this year’s budget. The Muscatine Board of Supervisors reduced the countywide levy rate by over 53 cents. In contrast, Muscatine’s city council chose to increase its levy rate by nearly 30 cents.

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/.