Rescue Cash for Every City, County and Town

Carl Geffken, Fort Smith city administrator, suggests that his town spend the funds on water projects.

The 14 larger Arkansas cities receiving nearly $209 million in federal pandemic recovery funds aren’t looking a gift horse in the mouth — even one that comes with 150 pages of riding instructions.

But officials are unsure exactly how they will spend the windfall from the American Rescue Plan Act, which is giving an unprecedented financial infusion to every local government in the nation. There are strings attached — restrictions the U.S. Treasury Department laid out last month in book-length guidance for metropolitan cities as well as Arkansas’ 75 counties, which are in line for a separate $586 million.

The second federal COVID-19 stimulus package, which Democrats pushed through Congress and President Joe Biden signed in March, will deliver $2.6 billion in total to Arkansas, distributed in two batches by the new Coronavirus State and Local Fiscal Recovery Fund.

“We’re still trying to wade through the guidance, and we’re taking our time,” said Mayor Doug Sprouse of Springdale, which is receiving $21.4 million. “We want to be sure it’s spent in the most effective ways, in ways that last the longest for residents.”

While no officials reported setting certain plans for the money, Fort Smith City Administrator Carl Geffken told Arkansas Business he suggests spending his city’s $21.2 million on water projects. “That’s going to be the city administration’s recommendation,” he said.

One possibility is helping along a new 48-inch water transmission line project from Lake Fort Smith at Mountainburg to near Chaffee Crossing. The federal money would cover a sixth of the $140 million cost of the remaining work.

Water, sewer and broadband infrastructure projects top the list of possibilities for many localities, in part because they are specifically approved at the end of the recent guidance.

Plans are fluid and options have to be hashed out by city council and quorum court members across the state.

Working and Waiting

County Judge Barry Hyde of Pulaski County, which will be getting $76.1 million as the state’s most populous county, said his staff was “working on several ideas but waiting on more clarification and answers from the Treasury.”

Cynthia Anderson, chief of staff to Pine Bluff Mayor Shirley Washington, was in a similar situation. “We’re still in the very early stages of applying the guidance. Right now we have no definite plan, and nothing is set” for the $16 million headed to Pine Bluff.

Little Rock will get $37.7 million through the program, which is disbursing the money in two equal tranches. Cities and counties received the first half last month and will get the other a year from May. All the calculations are based on local population.

Mayor Frank Scott Jr. has asked Little Rock board members and department directors “for input to be considered with the guidance,” Communications Director Stephanie Jackson said. “The mayor and Chief Administrative Officer Bruce Moore will bring a plan to the board of directors” aligning with the goals of the program, she said. “Similar to the CARES funding, the guidance is expected to be fluid and will likely change.” The city got the first tranche of funding May 17 — $18.86 million — and put it in a special account.

Smaller Arkansas cities and towns will share a designated $216.2 million fund for non-entitlement units of local government, a legislative term for cities and towns of less than 50,000 that are outside metropolitan statistical areas. Those governments are still waiting for the money, which will be distributed by the state, and for guidance on using it.

Nationwide, the American Rescue Plan devotes $19.5 billion for smaller towns, $45.6 billion for cities, $65 billion for counties and $195 billion for states.

“We know from a cursory reading of the rules that water projects, sewer projects, broadband, all those things are going to be allowable,” Springdale’s Sprouse said in a telephone interview. “So we’re going to be looking at that. We also hope that the list of eligible capital projects can be expanded a little bit. We’re just going to have to go through this process of learning and seeing what other cities around the country are doing.”

Sprouse said that the usual path to federal money is to first make a proposal and apply for approval. In this program, the money is coming first, and governments must apply it to eligible projects.

“Even in CARES Act funding, you had to have an ask, then receive money for that particular project,” Sprouse said. “But here we’re receiving buckets full of money, and we’ve got to make sure we spend it right.”

Water and Sewer

Like everyone else, Conway Mayor Bart Castleberry is awaiting guidance, but he’s excited about the possibility of addressing stormwater drainage, a persistent problem in the Faulkner County seat. “I’m greatly interested in that. We recently did a survey of 1,500 residents for Conway’s first strategic plan, and the two points that people are most concerned about are drainage and city streets.”

The cities will have about three years to spend the funding, Castleberry said. “We have to set up accounts and keep very good records on this. We expect the oversight to be strict.”

Municipal officials said they’d be coordinating with state and county officials to avoid overlaps and shepherd the grants wisely. They’re also expecting some form of Biden’s infrastructure plan, still in Congressional limbo, to play into the picture. General infrastructure spending is not an eligible use of the COVID recovery money.

Geffken said Fort Smith will not apply the money to sewer work associated with a 2015 consent decree with the U.S. Department of Justice and Environmental Protection Agency, a decree imposed after the city violating the Clean Water Act with untreated sewer discharges from 2004 to 2015.

Fort Smith has sought to modify the decree, even as it spent hundreds of millions of dollars on sewers and raised rates 167% between 2015 and 2017.

“We still have the federal wastewater consent decree, and we’re still requesting a modification,” Geffken said. While that issue is pending, he said, “it is always important to provide clean, fresh drinking water. That’s why we’ll be recommending improving and maintaining our water infrastructure.”

Eligible uses include spending for public health, remedying negative economic effects from the pandemic and offering premium pay to essential workers — something that Washington County is exploring, according to County Judge Joseph Wood. The aid can be applied retroactively to January 2020.

“We’re looking at water, sewer and broadband, but also looking to help law enforcement, jail employees and the coroner, employees in buildings and ground crews and maintenance,” Wood said. “The legislation allows that [enhancing pay for essential workers], but all this has to be vetted by the justices of the peace.”

Wood will be working with the county’s municipalities, including Fayetteville, looking to ensure all entities get the most for their money.

Fayetteville City CFO Paul Becker has been watching webinars and reading Q&A’s, he said. “The rules look more restrictive than we anticipated,” he said. “Of course broadband, water and sewer are pretty well available to do, so we’ll look at some infrastructure areas.”

At $46.5 million, Washington County trails only Pulaski County and Benton County on the county allocations list. Benton County is in line for $54.2 million. “With the counties getting so much money, there will certainly be an element of coordination,” Becker said.

“We have not yet set specific priorities and we’re being patient with the whole process,” Benton County Comptroller Brenda Peacock said, adding that the topic is on the agenda for this week’s county finance meeting.

Top 12 Counties for American Rescue Plan Funds

Source: Association of Arkansas Counties

American Rescue Plan Act Aid to Arkansas’ Metropolitan Cities

Source: National League of Cities