The numbers are in, and they are formidable.
Rock County, $31.6 million; Janesville, $12.14 million; and Beloit, $16.29 million. The American Rescue Plan is the biggest infusion of funds in decades, putting state, local and tribal governments in a situation they have not experienced in years: Items that had long seemed totally unaffordable are now well within reach. It is the spring season version of Christmas—get those gift lists ready.
Within the $1.9 trillion American Rescue Plan bill there is a pot of money totaling $350 billion that is earmarked for state and local governments. Is this infusion of cash from the federal government a solution in search of a problem? And does that search for a problem extend even into our home here in Janesville and Rock County government?
Before this new money, prior federal legislation in response to the COVID-19 pandemic has already included $212 billion in fungible aid to states, some of which was flexible enough to be used to back fill any state revenue losses. An additional $150 billion was provided under the Coronavirus Relief Fund to cover existing expenses, like the salaries of public safety and public health officials. A notable expenditure locally from these funds was $500,000 or so for a “surge relief” tent that sits in perfect condition, stored away and ready. It is OK, this was paid for with federal dollars, or so they say.
That gets us to today. Unlike some states, Wisconsin did not see a net decline in revenues for 2019 to 2020. In Wisconsin, we saw an increase of $2.34 billion in net revenues. To offset that revenue increase, relief payments under the ARA to Wisconsin total $5.65 billion, split between the state and local governments. Nationwide, total aid to states is 116 times the actual decline in state revenues—this on top of the federal government already providing over $200 billion I previously mentioned. That’s a lot of relief!
How is the local share calculated? It is split evenly between cities and counties. Aid is based on the existing formula for Community Development Block Grants and county aid based on population. The block grant formula considers population, poverty and the age and density of housing.
Here’s how it works: Federal funds are paid out over the next two years. They can be used as a replacement for revenues lost or expenditures incurred due to the COVID-19 public health emergency. It can also be used for water, sewer and broadband infrastructure.
Funds cannot be used to directly or indirectly offset tax reductions or delay a new tax or tax increase. And funds cannot be deposited into any pension fund.
Let’s do the math for Janesville. As a city, we started with a balanced budget and ended the last two years the same way. We are doing OK, frankly. Now, a rich uncle comes along and gives us a big check. Let’s see the shopping list (to the tune of “Christmas Eve is coming soon!) Let’s see, Johnny wants a bicycle trail, Susie wants a grocery store, Billy wants an ice arena, road construction begs some more.
Let’s see what the community adds to the lyric. After all, it’s Christmas in Janesville!