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Local governments turn down $73 million in federal pandemic aid

JEFFERSON CITY, Mo. – From small towns to big cities, every government in the US has been offered a share of $350 billion in government coronavirus aid to shore up their finances, cover pandemic-related costs and invest in community projects.

Officials in 1,468 local governments effectively said “no,” rejecting a potential grand total of $73 million, according to an Associated Press analysis of data compiled from every state. The rejected funds ranged from $177 for the one-person village of Monowi, Nebraska, to $3.9 million for DeWitt County, Texas, which has a population of about 20,000.

The city of West Alton, Missouri — a community of more than 500 residents at the confluence of the Mississippi and Missouri rivers — turned down potential $106,341 in federal aid. Although the amount rejected was almost half the city’s budget, there wasn’t much discussion about accepting it during a city council meeting.

“The conversation lasted probably 15 seconds. We didn’t want to get involved unless we really needed to,” Mayor Willie Richter said.

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Other small-town mayors and village administrators gave a variety of reasons for refusing the federal money. Some thought they had no viable uses for it. Others didn’t want to deal with federal bureaucracy or were politically opposed to the financial aid approved by Democratic-led Congress and President Joe Biden last year.

The AP’s analysis identified 1,460 small towns, villages or communities that had declined a potential $61 million allocation. That equates to about 5% of the country’s roughly 28,000 small local governments, but only 0.3% of the total dollars allocated to these entities. Eight counties also waived a total of $12 million. No states or territories refused funds.

The US Treasury Department said it was pleased with the overall response to the US bailout plan, which marks the first time it has distributed money to such a broad constituency of governments in the US

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The program “was born out of an understanding that the economic impact of the crisis was being felt by jurisdictions of all sizes,” said Jacob Leibenluft, the Treasury Department’s chief recovery officer. He added: “The great, great, great majority of recipients saw the need to use these funds.”

Pandemic aid funds began flowing to governments a year ago.

Data published by the Ministry of Finance show that by the end of 2021, a total of 1,756 states, territories and major cities and counties had budgeted approximately $106 billion of the $208 billion originally received. That money helped, among other things, to roll out high-speed internet, help residents with housing costs, support small businesses, prop up depleted unemployment funds, and fund public health initiatives and government services.

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The Treasury has yet to release data on how smaller governments have used the money.

A second payment for local governments could come from the Treasury as early as this month. But smaller governments that refused the first payment are ineligible for the second round – a source of regret for at least some local officials.

The Village of the Branch on New York’s Long Island likely could have used the federal aid to improve the village house, pave roads or repair water drainage systems, Mayor Mark Delaney said. But that wasn’t clear to Delaney and other village board members when they turned down the funds ahead of New York’s August decision deadline. At the time, permissible uses seemed limited and federal reporting cumbersome, Delaney said.

Under a final Treasury Department rule issued in January, the village could have used its entire allotment of $183,149 for almost all government services. But by this time, the village’s share had already been redistributed among other local New York governments.

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“By doing the right thing and responding quickly, you basically missed an opportunity,” Delaney said.

The Treasury Department said it is working with states and local government associations to simplify the application process, clarify rules and encourage participation.

Larger governments, paid directly by the federal government, had no deadline to accept the money. In smaller communities, some have had more time to make decisions than others.

States were responsible for channeling funds to so-called “non-eligibility entities” of government — generally cities with fewer than 50,000 residents. Once a state received this money, it had 30 days to distribute it. However, some states have requested up to eight monthly extensions from the Treasury Department, pushing back their deadlines to 2022.

The Algoma Township, Michigan board of directors voted last July to reject the $1.3 million allotment.

“We’re very freedom-oriented and didn’t want to be stuck as a township with any terms or mandates,” said township supervisor Kevin Green, who believes federal aid is a waste.

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But as Michigan kept extending the response deadline — and community officials learned their share would be redistributed to others — Green and some of his colleagues had a change of heart. Finally they accepted the money. Though they haven’t spent it yet, it could help offset rising costs — due to inflation — for planned park improvements, he said.

“As conservative as we are, we’re also practical,” Green said.

Minnesota, which has a broader municipality than most states, has had the most governments that declined to apply for federal aid. More than 500 local governments — about a fifth of their “non-eligibility units” — turned down a potential $11.8 million total.

“We did everything we could to publicize it. We’ve tried very hard,” said Steve Fenske, general counsel of the Minnesota Association of Townships. But “we certainly don’t have a full commitment. So some of them didn’t know it was going on.”

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The Treasury Department’s online procedures have presented a hurdle for some smaller governments, said Irma Esparza Diggs, senior executive and director of federal prosecution for the National League of Cities.

“If you’re unfamiliar with the federal grant process and reporting requirements, assume it’s all getting too complicated and it’s always easier to return funding than to find out,” she said.

The chief executive of DeWitt County, which lies between Houston and San Antonio, said he turned down federal aid because the county already had enough money for its budget. He also raised concerns about the federal program.

“It seemed pretty selfish to create a need to request federal dollars that are being borrowed on the backs of our county voters’ children and grandchildren,” DeWitt County Judge Daryl L. Fowler, a Republican, said in an email to the AP.

The upscale community of Brier, Washington — with fewer than 7,000 residents — turned down the largest amount among cities, with more than $1.9 million. The city just north of Seattle has a small staff that includes a police force and a public works team. But there are no sewage treatment plants, psychiatric facilities, cultural centers or housing for low-income people.

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“We just don’t have a lot of things that cities would normally have to spend the funds on,” Mayor Dale Kaemingk said.

The sole resident of the northern Nebraska village of Monowi, Elsie Eiler runs both the town tavern and the city government. She didn’t want the “mess” of dealing with the federal government.

“The city is doing well,” she says. “If it matters and some money is needed, I’ll put some into it myself.”

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

https://www.local10.com/news/politics/2022/06/02/local-governments-turn-away-73m-of-federal-pandemic-aid/ Local governments turn down $73 million in federal pandemic aid

Sarah Y. Kim

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