Municipal coffers beginning to fill up with ARPA aid

Boston State House

Boston State House

BOSTON (SHNS) – Amid the spat between the governor and legislative leaders over who gets to control the $5.3 billion the federal government gave the state in mid-May, nearly every city or town government across Massachusetts is waiting to get its hands on its own piece of the $3.4 billion the federal government is sending to county and local governments in the Bay State.

The American Rescue Plan Act provided the $5.3 billion in direct aid to the state and $3.4 billion in aid to local cities, towns, and counties through the new Coronavirus Local Fiscal Recovery Fund (CLFRF). While the state’s portion came in one lump sum on May 19, the $3.4 billion for local governments is split up in a few ways and won’t be available all at once.

There’s $2 billion specifically for municipalities — $1.7 billion of which is being provided directly to 38 cities based on the federal government’s “metropolitan city” designation. Those 38 cities went through their own application process with the U.S. Treasury and have already received at least some of their ARPA allocations, the comptroller’s office said.

That leaves about $385 million in aid for 313 smaller cities and towns, to be distributed by the Executive Office of Administration and Finance based on population. The Baker administration received the first 50 percent of that money on May 28 and on June 1 the administration’s special director of federal funds, Heath Fahle, sent a memo to cities and towns outlining how they could get their ARPA awards.

“Per statute, these funds will be disbursed in two tranches, with 50 percent available … as of the date of this memorandum and the remaining 50 percent available not less than 12 months after the municipality receives the first tranche,” he wrote.

To actually get their money, cities and towns need to fill out an application with bank account information, a local government point of contact, and details on the municipal budget and forms that the U.S. Treasury requires be completed.

In the first week the application process was open for municipalities to claim their money, the state received the necessary information from 57 cities and towns, the administration said late Tuesday. Baker’s budget office said it anticipates sending the first batch of funds out to those local governments in the coming days.

“Additionally, if a municipality so chooses, it can request to decline its funding allocation and transfer funds to the Commonwealth,” Fahle reminded local government officials.

Local officials routinely ask the state to provide them with additional aid for things like road and bridge repair, education costs, and to cover the costs of new state mandates, and it’s unclear how the infusion of recovery funds will affect the traditional push and pull between state and local governments about aid levels.

Each city or town’s money will be distributed by the Department of Revenue’s Division of Local Services through the same process that’s used for local aid from the state.

The Baker administration’s federal funds office followed up on June 3 with a memo outlining the eligible uses of the CLFRF money. Unlike the previous rounds of federal pandemic relief, the state will not make any individual eligibility determinations regarding the use of CLFRF funds.

The federal law also provided $1.3 billion in direct aid to Massachusetts’ 14 counties — just more than $393 million goes to five functional and eligible counties (Norfolk, Bristol, Plymouth, Barnstable and Dukes) and the remaining roughly $943 million will be distributed by the state to each of the municipalities in the “inactive” counties based on population.

“The Commonwealth awaits further guidance from Treasury related to the timing and process for distributing these funds,” Fahle wrote in his June 1 memo.

Once cities and towns get their ARPA money and start to spend it, they will have to comply with U.S. Treasury reporting requirements.

The state, counties and the 38 “metropolitan cities” must submit quarterly project and spending reports based on existing CARES Act reporting, the other 313 municipalities will be required to submit annual reports, the state must submit an annual report certifying that it has not used ARPA funds to directly or indirectly pay for tax cuts, and any jurisdiction with more than 250,000 residents must submit annual recovery plan performance reports “which will provide information on [fiscal recovery funds] projects and how those projects achieve effective, efficient and equitable outcomes,” the Massachusetts Taxpayers Foundation wrote in a Wednesday paper outlining U.S. Treasury guidance.

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