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Federal aid poses 'extraordinary opportunity' for state, local governments to plan together
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Federal aid poses 'extraordinary opportunity' for state, local governments to plan together

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Torian

President Joe Biden signs the American Rescue Plan

Virginia and its local governments have more than rescue in mind as they await the first installment of $6.8 billion in federal aid to end the COVID-19 pandemic, rebuild a damaged economy and bring daily life back to a new definition of normal.

The state and localities see the potential to achieve longstanding goals — from making broadband internet service available and affordable across Virginia, to beginning to repair and replace obsolete public school buildings — but only if they work together to coordinate spending federal money that is coming from multiple directions.

“This is an extraordinary opportunity to meet long-term obligations and challenges,” said Michelle Gowdy, executive director of the Virginia Municipal League, in a letter to General Assembly leaders on Tuesday that asks them to work with local governments and Gov. Ralph Northam to collaborate on using billions of dollars coming to them under the American Rescue Plan Act.

But the immediate challenge is getting clear answers from the U.S. Department of Treasury on how the money will be allocated among counties, cities and towns, as well as the rules for spending it and reporting back to federal government.

“It was a lot of unanswered questions right now,” Dean Lynch, executive director of the Virginia Association of Counties, said after a national conference call on Tuesday that included Treasury officials.

The same challenge faces Northam and the General Assembly, which expect to call a special legislative session in mid to late June to determine how to spend an estimated $3.8 billion that Virginia will receive under the American Rescue Plan Act that President Joe Biden signed into law on March 11.

The first half of state and local funding is due by May 10 under the law, but Secretary of Finance Aubrey Layne said, “There has been no guidance given to us.”

The assembly will meet on Wednesday to consider amendments that Northam has proposed to legislation and the two-year state budget that the legislature adopted at the end of February. The governor proposed several budget amendments that would clarify how the state could use money provided for its Medicaid program and child care, for example, “until we can address the matter fully at a special session.”

Local government officials expect close to $3 billion under the law, most of it coming directly to Virginia’s 95 counties and most of its 38 cities, with the state distributing money to small cities and towns that have fewer than 50,000 residents.

But the American Rescue Plan Act also will send $2.2 billion to local school divisions in Virginia, especially to help students overcome the “learning loss” from a year of closed school buildings and virtual education on their personal computers.

It will provide a separate pot of funding for building broadband networks across Virginia to serve residents who haven’t been able to reach or afford internet service that proved essential to remote work and learning during the pandemic. It includes funding for public transit and transportation, and hazard pay for essential workers.

The package has money to help small businesses and hard-hit industries, such as tourism, travel and hospitality, which asked General Assembly budget leaders on Tuesday for more than $272 million in aid for hotels, restaurants, tourism attractions, campgrounds and wedding venues.

“We hope that you will consider the needs of hospitality and tourism in Virginia,” said Eric Terry, president of the Virginia Restaurant, Lodging & Travel Association, in a letter to the leaders of the House Appropriations and Senate Finance committees. “The [American Rescue Plan] offers a unique opportunity to thoughtfully and comprehensively support these critical underpinnings of Virginia’s economy.”

The package includes 32 separate pots of federal funding, according to Gowdy at the municipal league, which represent cities, towns and eight counties. “It is really daunting.”

In her letter to assembly budget leaders, she urged them to establish a work group with local governments and the Northam administration to “address mutual priorities.”

Gowdy said the work group could “ensure state and local collaboration” and coordinate their spending of federal aid to avoid redundancy and, in combining their resources, “accomplish more than if immediately spent on one-time acts.

“Let’s make sure we’re complementary, not contradictory,” she said in an interview.

Legislative leaders say the state and local governments cannot make plans for spending the money until the federal government sets the rules.

“They want to make sure they are in compliance with the guidelines on the spending of that money and the appropriation of that money,” House Appropriations Chairman Luke Torian, D-Prince William, said Tuesday.

It’s not clear yet how much each county, city and town will receive under the law. The National League of Cities and National Association of Counties issued estimates that didn’t match up, in part because Virginia’s cities are politically independent of surrounding counties. Richmond is expected to receive more than $113 million, according to the league of cities.

However, Lynch, representing Virginia counties, said Treasury officials said Tuesday that the government is still trying “to determine the allocations, so whatever is out there now may not be exactly right.”

Rep. Abigail Spanberger, D-7th, relied on both sets of estimates in a Zoom overview on Tuesday for the 10 counties she represents in her district, including parts of the Richmond suburbs.

Based on those numbers, for example, the package will provide $196.5 million to the 10 counties, including $68 million for Chesterfield, $64 million for Henrico, $5.5 million for Powhatan, $4 million for Goochland and $2.5 million for Amelia County.

The localities would get additional money for their K-12 public school systems — $75 million for Henrico, $57 million for Chesterfield, and $2 million each for Amelia, Goochland and Powhatan.

“It will go through the states directly to the school districts,” Spanberger said.

But while the numbers are shifting and guidance is unclear, fiscal consultant Jim Regimbal said local governments should think big as they consider the opportunities for money they don’t have to spend until the end of 2024.

For example, Regimbal said, “It’s a perfect opportunity for the state and localities to fix schools and build schools.”

“You’ve got a ton of money,” he said. “It could be transformational.”

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