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.
Cedar Falls, Waterloo, and Black Hawk County received a combined $62.3 million, with the majority going to Waterloo. Cedar Falls has obligated all its money; Black Hawk has used around half; and Waterloo still has most of its funds remaining.
Cedar Falls is using its ARPA money toward two large water and wastewater treatment capital projects. The little money Waterloo has used has focused on emergency housing vouchers for the Housing Authority, fiber connection to homes, and solar charging benches. Blackhawk has spread its funds across multiple departments, including water infrastructure, public health building improvements, and IT upgrades; yet, the most went to the Cedar Valley Nature Trail conservation project and an evidence intake building for the sheriff.
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, Black Hawk County stands out for having made a significant cut to its property tax rate in this year’s budget. The Black Hawk Board of Supervisors reduced the countywide levy rate by over 54 cents. In contrast, the Waterloo and Cedar Falls city councils chose to increase their levy rates by 33 cents and 12 cents, respectively.
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/.