All Press Items

August 20, 2022

Between the state, counties and local governments in Illinois, more than $14 billion from the American Rescue Plan Act is expected to be divvied up and spent over the next four years.

That amounts to about 4% of the $350 billion State and Local Fiscal Recovery Fund aid package approved by Congress and President Joe Biden in 2021.

The money was intended to stabilize government budgets that might have experienced pandemic-related revenue losses as well as fund operational expenses to maintain government services during the pandemic.

According to a recently issued report by the U.S. Treasury Department outlining the first year of ARPA spending throughout the country, government agencies in Illinois have spent nearly $5 billion so far on a wide range of initiatives and projects. But there is limited detail on how that money was spent and its effectiveness, concerning experts at some government finance organizations.

In Libertyville, $170,000 was set aside for a grant program that awarded nearly 100 small businesses in town between $1,000 and $2,000 after they were forced to close for part of the COVID-19 pandemic.

"Believe me, we were grateful for any help," said Liebe Samolinski, co-owner of Salt of the Earth salt cave and spa. "We had just opened weeks before the pandemic, and so when other grant programs were announced we didn't qualify because we didn't have the payroll documents necessary, because we weren't even established yet."

Round Lake Beach officials spent the $53,500 the village received from the American Rescue Plan Act last year on a COVID-19 vaccination incentive program for its employees.

Village Manager Mark Rooney said 63 of the town's 73 full-time employees received the roughly $1,000 incentive "because it wasn't a mandate."

Cook County spent nearly $40 million of its more than $1 billion allocation to give 20,631 employees retention bonuses.

"These payments were meant to reward Cook County employees for their extraordinary efforts in mitigating the COVID-19 pandemic and for supporting the essential work of government throughout the emergency," said Nick Mathiowdis, a spokesman for Cook County Board President Toni Preckwinkle. "In the face of the Great Resignation, and in line with similar efforts by local governments across the country, Cook County is committed to taking necessary steps to keep good people, stave off attrition and ensure continued provision of services."

What the Treasury Department's report doesn't detail, however, are the benefits of many of these funding initiatives.

Many towns simply earmark the funds for "public safety compensation costs" because they say the reporting requirements for those expenditures are easier to handle than other projects or programs that involve additional layers of red tape.

"We took the easy reporting route," said Todd Dowden, finance director in Bartlett, where $2.7 million was earmarked for public safety costs. "As far as the reporting goes, we listed it as public safety, but the surplus caused by the federal money is going to be transferred over to do sewer projects."

These loopholes tend to blur true accounting procedures, government finance experts argue.

"Public subsidy programs in times of crises are a good thing, but for them to be as effective as you want and responsible to the taxpayer as they should be, there needs to be thoughtful reporting practices and regulations from the get-go so state and local agencies can be held accountable for the spending," said Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability. "So far, it's been haphazard from a structural standpoint largely because the rule-making was lagging the availability of funds."

In fact, ARPA funds were distributed to many government agencies last year before federal regulators had decided what the money could and could not be used for. Many towns knew spending on police and fire would be covered, Martire said, so they opted for that route.

"The last thing cities or states wanted to do was spending money on something that looked like it was OK under the initial guidance and then have it declared incorrect by a subsequent regulation and have it clawed back," he said.

Martire said he expects that eventually better and more substantial accounting of the expenditures will be released because it is a requirement of the allocations. More detailed reports from the Treasury Department could come as early as this month, Martire said.

Currently, there is a dearth of spending transparency, government watchdog groups say.

For instance, Arlington Heights spent almost $3.4 million of its $6.7 allocation "to provide valuable general government services," according to the treasury report.

"It's very important for the success of any of these programs that governments share with their local community how the money was spent and how effective they were," said Laurence Msall, president of the nonpartisan government finance research organization the Civic Federation. "That would build confidence that governments spent their money wisely."

Tom Kuehne, Arlington Heights' finance director, said the village has always been upfront with taxpayers about plans for ARPA spending, even if that's not reflected in the federal government's reports. The first installment was used for water meter replacements and street resurfacing, while much of the second half will go toward replacement of public safety vehicles and the remainder into a capital projects fund.

"We recommended none of it be used for ongoing operational costs because we know it's not a revenue source that will continue into the future," Kuehne said.

Arlington Heights also shared some of those funds with the park district, which like the hundreds of other smaller taxing bodies throughout Illinois -- including fire protection districts, library districts and townships -- was not eligible for the federal funds. Kuehne said $500,000 was shared with the park district and helped pay for a new "multipurpose path" at Nickol Knoll Golf Course.

"With our enormous sums of other local governments in Illinois, it would be impossible for the feds to measure out payments to these agencies," Msall said. "It remains to be seen how different municipalities shared these resources with overlapping governments, and until we see that reporting it will be hard to see what levels of government were missed."

Because ARPA allocations were similar to other pandemic-related subsidy programs distributed during former President Donald Trump's administration, most county and municipal officials knew the smaller taxing bodies would be left out, and some made accommodations for those underlying agencies.

"We are putting $3.1 million to fire district, $3 million for townships and $1.8 million for park districts," said Liz Chaplin, chairwoman of the DuPage County Board's finance committee. "We've got another $8 million earmarked in municipal grants to cover stormwater projects throughout the county as well."

The county board is expected to vote on the grants for townships Tuesday, while grants for the other local governments will get a board vote in September, officials said.

According to the treasury report, DuPage County has spent more than $41.5 million of the $179.3 million allocated, including more than $16 million on a small business grant program that awarded 459 different businesses throughout the county with awards up to $50,000.

"It couldn't have come at a better time," said Keith Larson, owner of PJ's Camera & Photo Supply in Glen Ellyn, who received one of the grants. "We were wondering how long we could afford to keep going, and the program made it very easy for us to continue and look at the potential different ways we could survive."

Federal regulations require the state, counties and local governments to earmark the funds by the end of 2024 and spend the allocations by the end of 2026.

Source: The Daily Herald