The COVID-19 pandemic began in March 2020, but it took more than a year for the federal government to direct financial aid to municipalities through the American Rescue Plan Act (ARPA). The pandemic hit local Iowan communities hard, but our governments survived the pandemic with little lasting fiscal damage. Iowa cities and counties now face the task of spending ARPA funds while meeting complicated U.S. Treasury guidelines.
To find out how governments used these funds, the Iowans for Tax Relief Foundation (ITRF) surveyed selected communities. Our intention was not only to report on what government officials have done, but also to discern the long-term effects for taxpayers.
While elected officials have come up with countless ideas for spending ARPA funds, putting the interests of the taxpayer first should have been at the forefront of their minds. In addition to direct property tax relief, investments in permanent infrastructure projects and the fulfillment of deferred maintenance obligations would be prudent expenditures. Putting the taxpayer on the hook for future expenses by hiring new employees, on the other hand, is an example of an unexpected expense that should be avoided.
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Council Bluffs and Pottawattamie County received a combined $42.9 million, with $24.8 million going to Council Bluffs. Council Bluffs had spent or obligated 52% of its ARPA funds at the time of our survey, while Pottawattamie County had spent only 40% of its total.
Council Bluffs and Pottawattamie County partnered to upgrade their countywide emergency management radio program. The county also gave $500,000 in grants to its two hospitals, expanded the sheriff’s office and invested in stormwater and water infrastructure projects, while one of the biggest expenditures was the purchase of the ‘ski resort of Mt. Crescent as an expansion to Hitchcock Park. Council Bluffs claimed more than $16 million in the revenue replacement category, allowing flexibility to use the funds as officials see fit. Other expenses include the purchase of a new ambulance, upgrades to the mobile command center and a $4.2 million investment in the Manawa property.
Taxpayers across the state have questioned why ARPA funds were not used to lower property taxes. While no local government in our survey chose to directly reduce property taxes with ARPA funds, Council Bluffs stands out as the only city in our survey that falsely claims it could not use those funds to do so. Instead, the Council Bluffs city council chose to raise its property tax rate by 29 cents. Meanwhile, the Pottawattamie Board of Supervisors voted to lower the countywide levy rate by more than 38 cents.
Undoubtedly, many local governments experienced negative financial effects of the pandemic; however, the assistance given almost 18 months after the start was possibly too late to do much good. In fact, more than 85% of the bailout funds earmarked for local governments we surveyed remain unspent. Even now, when our lives are pretty much back to normal, the federal government plans to send more money, which will only further contribute to the country’s rising inflation.
For more details on this survey, visit itrfoundation.org/where-did-iowas-local-covid-relief-funds-go.
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