The COVID-19 pandemic began in March 2020, yet the federal government took over a year to direct financial relief to municipalities through the American Rescue Plan Act (ARPA). The pandemic hit local communities across Iowa hard, but our governments survived the pandemic with little lasting fiscal damage. Now Iowa’s cities and counties face the task of spending ARPA funds while also complying with the U.S. Treasury’s complicated guidelines.
To discover how governments were using these funds, Iowans for Tax Relief Foundation (ITRF) surveyed select communities. Our intent was not only to report on what government officials have done, but also to discern the long-term effects for taxpayers.
While elected officials have been presented with countless ideas for spending ARPA funds, prioritizing the interests of the taxpayer should have been at the top of their minds. In addition to direct property tax relief, investments in permanent infrastructure projects and fulfillment of deferred maintenance obligations would be prudent expenditures. Putting the taxpayer on the hook for future spending by hiring new employees, in contrast, is an example of windfall spending that should be avoided.
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Council Bluffs and Pottawattamie County received a combined $42.9 million, with $24.8 million going to Council Bluffs. Council Bluffs had spent or obligated 52% of its ARPA funds at the time of our survey, while Pottawattamie County had only spent 40% of its total.
Council Bluffs and Pottawattamie County partnered to upgrade their countywide emergency management radio program. The county also gave $500,000 grants to both of its hospitals, expanded the sheriff’s office, and invested in stormwater and water infrastructure projects, while one of the larger expenditures was the purchase the Mt. Crescent Ski Resort as an expansion to Hitchcock Park. Council Bluffs claimed more than $16 million in the revenue replacement category, allowing flexibility to use the funds as officials see fit. Other expenditures include purchasing a new ambulance, upgrades to the mobile command center, and a $4.2 million investment in the Manawa property.
Taxpayers across the state have questioned why ARPA funds were not used to reduce property taxes. While no local government in our survey chose to directly reduce property taxes with ARPA funds, Council Bluffs stands out as the only city in our survey to falsely state it could not use these funds to do so. The Council Bluffs city council instead chose to increase its property tax rate, by 29 cents. Meanwhile, the Pottawattamie Board of Supervisors chose to reduce the countywide levy rate by over 38 cents.
No doubt, many local governments experienced negative financial effects from the pandemic; however, assistance given nearly 18 months after the onset was arguably too late to do much good. In fact, more than 85% of the rescue funds allocated to local governments we surveyed remains unspent. Even now, when our lives are practically back to normal, the federal government is scheduled to send more money, which will only further contribute to the country’s rising inflation.
To read more details about this survey, visit itrfoundation.org/where-did-iowas-local-covid-relief-funds-go.