PASCACK VALLEY AREA—While Pascack Valley’s eight municipalities will gross nearly $7 million in American Rescue Plan Act funds to be paid out in 2021 and 2022, the first piles of cash comprising about half of relief funds due have recently started arriving in local coffers.
We connected with officials in Emerson, Hillsdale, and River Vale for this initial installment; we’re watching for developments in Montvale, Park Ridge, the Township of Washington, Westwood, and Woodcliff Lake.
The local funding was provided as part of the $1.9 trillion federal American Rescue Plan Act of 2021, signed into law on March 11 by President Joseph R. Biden. Towns and cities should receive half of allocated funds this year and the remaining half next year.
Now the hard part comes: figuring out how to best spend the funds and on what. And the choices seem limitless, according to an 11-page Local Finance Notice released June 4 by the state’s Division of Local Government Services (DLGS).
The six broad categories for funds to be spent on include:
- Replacing lost public sector revenue;
- Investing in water, sewer and broadband infrastructure;
- Providing premium pay for essential workers;
- Supporting public health expenditures;
- Addressing Covid-19 related negative economic impacts; and
- Addressing disproportionate public health and economic impacts of the crisis in hardest hit communities, populations and households.
To be eligible for funding, expenses must have been obligated by Dec. 31, 2024, and all projects funded must be completed by Dec. 31, 2026.
Under “Prohibited Uses,” it specifically states that relief funds cannot be used to offset tax shortfalls.
“States and territories may not use LFRF (Coronavirus Local Fiscal Recovery Funds) to directly or indirectly offset a reduction in net tax revenue due to a change in law from March 3, 2021 through the last day of the fiscal year in which the funds provided have been spent. Although this prohibition does not expressly extend to counties and municipalities, because LFRF funds are to be utilized for affirmative assistance measures, those funds should not be used to merely reduce the county or municipal tax levy,” states the DLGS guidance.
If receiving relief funds, municipalities of 50,000 or less must submit annual reports to the U.S. Treasury until Dec. 31, 2026, with initial reports due Oct. 31, 2021 and every Oct. 31 thereafter, states the DLGS notice.
We reached out to the municipalities we cover to get a first-hand look at what towns may or may not be doing with the extra federal funds.
EMERSON
Emerson Borough Administrator Robert Hermansen said the borough received its first tranche of funds in early June, soon after DLGS released its spending guidance.
He said the funds, about $397,531, will be appropriated by using “a budgetary process” similar to what is always used for allocating funds for specific programs or expenses.
“We’ll see what’s in the best interest of the residents to get the best bang for the buck we received,” said Hermansen. “Nothing has really changed. We’ll still go through the process before spending this: We’ll analyze the best way to spend it and decide where it makes the most sense to us to utilize it.”
Hermansen said, “There’s a lot of things in there [local relief guidance] that look like they make sense. Still, we’ll evaluate them all and see which ones make the most sense to us now.”
He said maybe the federal relief funds offer funding for new broadband 5G capacity to service the renovated borough hall and other infrastructure upgrades that may be doable.
He noted that funds would be used mostly if they could be stretched by additional grants that could “possibly multiply their value to taxpayers.” He said he would discuss funding options with the local finance committee and possible spending options would be publicly discussed.
HILLSDALE
Hillsdale Business Administrator Chris Tietjen said the borough expects one-half of its Covid-19 relief funding, about $503,000, to arrive soon and that mayor and council discussion will occur over the next few months to determine where best to apply it.
He said two areas that stand out and are likely to get funding attention were infrastructure, possibly sewer system leaks, as well as funding for the pool utility [Stonybrook Swim Club], and possibly a prior reduction in parking fees revenue.
“We have a little bit of time now to do our due diligence on what we’ll get and what our needs are,” Tietjen said.
He said he would bring a spending plan and recommendations for the council to consider on the federal funds, likely discuss it in committees, and figure out the best way to apply the funding to help make up for local revenue shortfalls.
He said decisions by the mayor and council on how and where to spend Covid relief funds would probably be made in the fall.
RIVER VALE
The borough’s administrator, Gennaro Rotella, said the DLGC guidance is “very, very specific for what you can use it for” and said the township is likely to use its initial 50% payout (approximately $522,000) for infrastructure projects.
At the June 28 council meeting, Mayor Glen Jasionowski called the federal funds “a free million dollars.” The township will receive $1.04 million after its second payment in 2022.
Rotella said infrastructure projects likely to use the Covid relief funds include upgrading and replacing stormwater catch basins in “hot spots” and also for possibly water retention or storage basins.
He said certain areas prone to flooding would likely be targeted initially.
Moreover, another infrastructure priority will likely be to have an inspection of the stormwater pipes to detect problems such as breaks in pipe, cracked pipes, and areas where clogs or snags may develop.
Rotella said that engineer Christopher Statile will recommend specific plans and costs to upgrade catch basins and inspect the stormwater system. He said these plans must be approved by the council and DLGS before being implemented.
He said “it will probably take a couple months” before a project is ready to start.
Another likelihood, said Rotella, is to use some federal relief funds to replace lost local revenues. He said one example could be a reduction in police ticket revenue due to less traffic during the pandemic, while other revenue shortfalls would be confirmed by an audit.
He said a specific federal formula exists for recouping lost municipal revenues and that will likely be used by towns who receive Covid relief funds.
Recovering Lost Revenue
Under “Replacing Lost Public Sector Revenue,” the DLGS notice spells out a three-step formula with an Excel-based revenue loss calculation worksheet to help towns determine how funds can be added to the local general treasury to recoup losses.
“Upon receiving LFRF Funds, recipients may immediately calculate the reduction in revenue as of Dec. 31, 2020 and deploy funds to address any shortfall. Once a shortfall in revenue is identified, recipients will have broad latitude to use this funding to support government services, up to this amount of lost revenue,” states the DLGS notice.
It adds, “Recipients will have the opportunity to re-calculate revenue loss as of Dec. 31 in 2021, 2022, and 2023 to capture any lagging impact of the crisis on revenues. Please review the Interim Rule and reference materials for further details on what can be factored as revenue loss.”