Chattanooga local governments waiting for final rules to decide on stimulus spending

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Jun. 24—As the federal government begins to earmark spending from the $1.9 trillion American Rescue Plan Act, which was signed into law in May, local governments are waiting on guidance before tapping into their share.

President Joe Biden announced this week that the White House will allocate a portion of the funds toward public safety, including $350 million for state and local law enforcement agencies.

"With the secondary consequences of the pandemic and the proliferation of illegal guns over the same period, we have seen increased violence over the past year and a half. Homicides rose 30%, and gun assaults rose 8% in large cities in 2020," a statement from the White House released Wednesday said. "The number of homicides in the first quarter of 2021 was 24% higher than the number of homicides in the first quarter of 2020, and 49% higher than in the first quarter of 2019. Black and brown Americans are disproportionately harmed by the direct and indirect consequences of gun violence."

As the federal government begins to bear down on its priorities for the money, $350 billion in local funds — more than $270 million of which will come to the Chattanooga region — is still awaiting rules on usage.

In May, the U.S. Department of the Treasury issued "interim final rules" for city and county use, but those rules are still just a working list of criteria, which won't be solidified until sometime after a public input period ends on July 16.

"I mean only the federal government could issue the interim final rule, right?" Tennessee Comptroller of the Treasury Jason Mumpower joked during a presentation on fund usage to Hamilton County and Chattanooga government officials this month.

According to Mumpower, money under the current set of rules can be spent in five major categories:

> Public health expenditures, like vaccines, tests and other medical care

> Addressing negative economic impacts caused by COVID-19, which could include things like helping workers, businesses, households or nonprofits economically burdened by the pandemic

> Replacing lost public sector revenue if the locality's overall revenue took a hit during the pandemic

> Providing premium pay for essential workers, which can include workers deemed essential by the city or county mayor and can provide up to $13 an hour in additional pay, and can be applied retroactively for hours worked during the pandemic.

> Certain infrastructure improvements, like water, sewer and stormwater infrastructure.

"And so what I'm telling you is the rules may change," Mumpower said during the meeting. "They may get looser. It's hard to think of how they could get more restrictive really."

Later, he cautioned officials not to let the money "burn a hole" in their pockets.

As such, localities are holding off on spending any of the funds, even with the new rules coming from the federal government.

"The Biden administration did update its fact sheet with additional material covering allowable expenses under the interim final rule, including a number of public safety programs, but the city is awaiting the final rule before moving forward," Chattanooga Director of Special Projects Ellis Smith said Wednesday, when asked if the city would be using any of its funds for similar public safety measures.

Chattanooga will receive $38.6 million in funds from the act, but officials say the city is not going to spend or even budget any of that funding until rules are more certain.

"The city is awaiting final guidance from the U.S. Treasury Department before committing to any specific expenditures related to the American Rescue Plan," Smith said.

"Federal rules require cities to pay back any dollars that are found to have been spent on unallowable expenses, so the city is waiting for final guidance to ensure that we will be compliant with federal law," he said.

Similarly, Hamilton County Mayor Jim Coppinger told the Times Free Press in May that the county, which is slated to receive $71 million, will hold off until the rules are more certain.

"That money comes with a lot of restrictions, but primarily it can be used for anything COVID-19 related, so there's stuff we can do with our health department," Coppinger said. "Other than that, some of it can go for infrastructure things, such as sewer or wastewater, so we're looking at that kind of stuff as well."

"What we're really hoping is that the federal government will be more flexible with what we can do with it," he said. "But this is a huge help to not just the county general government but also a big help to the taxpayers."

Contact Sarah Grace Taylor at staylor@timesfreepress.com or 423-757-6416. Follow her on Twitter @_sarahgtaylor.

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