MECOSTA COUNTY — A major concern of local governmental entities during the COVID-19 pandemic has been the loss of revenue resulting from the public health emergency, including the loss of state revenue sharing funds.
A “final ruling” from the U.S. Department of the Treasury, which is not exactly yet finalized, states that local entities are allowed to use American Rescue Plan Act (ARPA) funds to replace that lost revenue.
The final rule offers a standard allowance for revenue loss of up to $10 million, allowing recipients to select between a standard amount of revenue loss, or complete a full revenue loss calculation.
Under the option, the Treasury presumes that revenue has been lost due to the public health emergency and recipients are permitted to use that amount to fund “government services,” information on the treasury website said.
The ruling states that the funds cannot be used to supplement county pension funds or to pay off debts and should be used specifically to replace revenue lost due to the public health emergency.
The Mecosta County Board of Commissions approved a recommendation from the finance committee to utilize the standard allowance in full for the $8.4 million the county will receive from the ARPA funding during its meeting this week.
“We are able to declare up to $10 million automatically as revenue loss,” city administrator Paul Bullock said. “It is like when you do your taxes you have your basic deduction, if you don’t itemize, you get this much. That is an analogy that I think fits.
“So, what the board has done, is they are telling us we are going to claim the entire $8.4 million as revenue loss,” he added. “The main things is, this will allow us to utilize the money for normal governmental expenses.”
Bullock said initially that the act wasn’t clear on how the funds could be utilized, so counties were concerned about spending the money appropriately. If it was determined to have been spent inappropriately, it would have to be paid back.
“Our biggest concern with this assistance program was how we are going to be able to use it to the benefit of our people without risking our fiscal wellbeing,” Bullock said. “A big part of it, from our perspective, is assurance that we don’t end up having to pay the money back because it was used incorrectly. We want to do it right, and doing it this way adds a layer of good faith defense to any argument later that we didn’t use it right.
“By doing this, it will simplify our reporting and it will simplify our accounting because we will be using it for things that are already in our budget,” he said. “That, down the road, will free up funding for other things from (budgeted) funds we didn’t expend. The board will have to look at how they want to utilize those additional resources that this will free up.”
Bullock said additional savings for the county would come from not having to utilize the services of a consulting firm to help guide them through “the minefield of the act.”
The county contracted with Guidehouse consulting services to assist them in navigating the rules and regulations associated with the ARPA and to figure out what they can and cannot do with the funds at a cost of up to $300,000.
He explained that with the revenue loss exemption in place, the need for those consulting services would be greatly diminished.
“I asked the board to leave the consulting contract in place so that if we do come up with questions on reporting or utilization, we can do that for a fairly minimal amount of money,” Bullock said. “So, in essence, this is going to free up additional resources to benefit the community from where we would have been if we had to spend the $300,000 on consulting.”
Bullock said that in declaring the lost revenue exemption, the county will need to have a plan in place for how the funds will be used.
The finance committee has been tasked with developing a plan for utilization of the funds, including how much will be spent on which items, and bring it back to the board in July.
The county received $4.2 million of the ARPA funds in 2021 and will receive another $4.2 million in 2022.
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February 05, 2022 at 05:57PM
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Mecosta County will use ARPA funds to replace revenue losses due to COVID-19 - The Pioneer
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