ARPA 2021 – 2025

For those of you who read along, the most common complaint I get is “Dude, you repeat yourself allllll the time.” Point taken. I hate it. Unfortunately, most readers are not following along. So, one has to ‘tell the entire story’ over and over and over. And over. What kills me about this story is that it was only a few years ago.

If all you care about is “How did we spend the $9 million?” Click here.

If you recall, during the pandemic, most everyone got free money (stimulus checks) from the Federal government. In the Summer of 2021, the Federal government announced a similar give-away for cities called the American Rescue Plan Act (ARPA).  I wrote an article on it called Christmas In July.

We were given $9,029,000-ish? dollars with a 600 page book of rules. One rule was that we had to decide on how to spend it by 2024. Another was that we had to actually spend it by 2026. We were also told we needed to be very careful–you couldn’t spend it on just anything.

We held a spending discussion on September 16, 2021. Before the meeting, the City Manager gave us a suggested budget for spending $8MM of it, which had been vetted to pass those legal tests and left $1MM for the Council to debate over.

Over my strong objections, the Council voted to budget all of it, at once, using the City Manager’s template. I voted ‘no’, saying that we should only budget money on the most urgent items–ones we actually could spend money on now, and put off discussing the majority of the items to give us time to decide in a thoughtful manner. That is what most cities did.

Funny thing about that: within a few months, we were informed that, because our dole was less than $10,000,000 or so, we could essentially throw all those hard rules out the window and spend it pretty much as we chose.

So, since then, the City Manager came back to the Council over and over to re-allocate large portions of the money because many of the items in his original budget were not spent. That left money for new things like the Ferry.

But then, we got in such a financial scrape that we even pulled that back. In other words, we re-allocated the money so many times, it veered so far away from that initial vote, that I think most people lost track of the process. I certainly did.

So I created this time line. 🙂

September 2021

April 2022

ARPA first spending report

January 2023

January-12-2023-ARPA-update-and-reallocation

September 2023

As I discussed last week, at our Budget Meeting, the City Manager discussed re-re-allocating $1.2MM of ARPA money in order to fill expected shortfalls in the budget. But despite this, the Mayor said that he still hoped to keep $400,000 for a ferry next year.

At our November meeting those funds were moved over to the General Fund.

May 2, 2024

At our https://jcharrisfordesmoines.com/wp-content/uploads/Finance-Committee-02-May-2024-Agenda-Pdf.pdf Indicating that $7.15 M was obligated and $1.88 remained (somehow) available.

September 12, 2024

The next allocation of our $9.1M ARPA funding occurred at our 12 September meeting with this $614,313. Quick review: the rules stated that we either had to spend the money or have it under contract to do so by December 31, 2024. Ironically, that boxed us in. Even though we had until 2026 to spend the money, the 3-4 months we had left was far too short a time frame to put out bids for those longer term projects.

ARPA Reallocation September 12 2024

 

March 10, 2025 Update

ARPA TRACKER-20250310

Out of 9,029,879 we’ve spent 8,949,879 with 80,000 left to go. Of that money, about $800,000 was spent on true COVID emergency stuff (eviction assistance, business grants). Another $800,000 was spent for capital stuff (senior center roof, marina). The rest, $7.4M was salaries and other one-time expenses like a grant to SR3 that, to my mind, should be things we are able to cover through our normal budgeting process. In a very real sense, we used ARPA money to temporarily increase services we otherwise could not afford. As with the stimulus checks a lot of citizens got, COVID actually helped us paper over some of our long term budget problems.

The process…

I have always objected to the entire process.

• Use of one-time money for ongoing expenses. One-time money is money that is unpredictable. It’s the opposite of structural revenue. Permit revenue is one-time money. Property taxes are the opposite; you know it’s coming every month–like a paycheck. ARPA money was the ultimate one-time money, which is why I referred to it as Christmas in July. The rule of thumb for budgeting is: never use one-time money to pay for ongoing expenses. An ongoing expense is a salary.  That’s why police officers are generally funded with property taxes and not permit revenue. But we used $1.75MM to fund police officer salaries with ARPA money. Which is fine for those two years. OK, now how do we keep paying them?
• Unnecessary haste. We allocated money for programs we literally could not spend money on at the time, because there was no infrastructure in place to do so. Take a look at the money that is up for re-allocation, there’s a whole lot of ’emergency’ stuff in there. By ‘allocating’ it all in one night, we got a chance to look like we were doing a whole bunch of very noble stuff with great urgency.
• Lack of discipline. If that September 2021 vote had been realistic, the money would have been spent and there would be no money left to play with. That’s what a budget means. If we had wanted the ability to change direction so many times, we should not have voted to spend it all in one night. In reality, we simply gave full discretion to the City Manager to spend (or not spend) bits and then repeatedly come back to the City Council to re-allocate the unspent parts. And that is exactly what has happened over and over. The net effect being to use a great deal of the money simply to plug budget holes in an ad hoc manner.
• Perverse Incentives: We moved money around far too often. And every time moved money around for one-time term uses? The more it pushed us to keep using the remainder for one-time uses.My colleagues obviously disagree. They took the word ‘rescue’ literally. But the slogan for the program was also ‘build back better’. Somewhere along that line that pretty much was forgotten. We spent the vast majority on maintaining the status quo and very little on anything durable.

The Scoreboard

This is the money we’ve actually spent.  It is a work in progress because we’ve re-allocated money so many times. It is current as of March 10, 2025.