Oakdale City Manager Bryan Whitemyer approached City Council with recommendations for spending plans for the upcoming $4.4 million allocation of funds coming from the American Rescue Plan Act of 2021 in response to the COVID-19 pandemic that has damaged local and state economies.
The money, scheduled in two equally split annual payments of $2.2 million, has specific criteria for its use but seems to have broad interpretations that can include a wide range of possibilities.
On March 11, 2021, the American Rescue Plan Act of 2021 (Rescue Plan) was signed into law. The Rescue Plan expands existing COVID-19 relief programs and provides additional funding to states and local governments that had not been included in prior relief packages.
Oakdale will receive its first installment payment by July 1, and the final installment of $2.2 million a year later.
City staff expects the U.S. Department of Treasury to release guidance in a few weeks with specifics on how the federal administration interprets the statutory language in the Rescue Plan.
Following is information that the Legislative Analyst’s Office has released regarding the use of the Rescue Plan funds.
Currently, the funds must be used for the following specific purposes:
· To respond to the public health emergency or negative economic impacts associated with the emergency;
· To support essential work;
· To backfill a reduction in revenue that has occurred since 2018-19; or
· For water, sewer, or broadband infrastructure. State and local governments have until Dec. 31, 2024 to use the funds.
There are two restrictions on the use of the fiscal recovery funds. First, state and local governments are prohibited from using the funds to make supplemental pension payments. Second, the state cannot use the funds to directly or indirectly offset a reduction in the net tax revenue of the state through a change in law, regulation, or administrative interpretation. (This restriction does not apply to local governments.) This prohibition would apply from to the last date on which the state expends the funds.
Council will continue to discuss the specific spending plan as the date approaches, however, preliminary discussion included the possibility of allocating $1 million in economic development for the specific purpose of creating incentives for businesses to occupy the building formerly occupied by Kmart. City staff members have been working diligently to try and attract another large retailer for that building but thus far, haven’t been able to fill that space.