OPINION: Counties, cities ponder their cut of 'rescue' funds

Clint Cooper, Chattanooga Times Free Press, Tenn.
·4 min read

Apr. 3—How much is the $71 million that Hamilton County will receive from the federal government in President Joe Biden's debt-spiraling American Rescue Plan?

It's a little less than one-eleventh of the county's $796.6 million budget for fiscal 2021.

It's about a sixth of the county's $420 million budget for schools in fiscal 2021.

It's more than a fourth of the county's $271 million general fund budget for fiscal 2021.

For a county that must account for every penny in balancing its budget, it's an unprecedented amount of money from a federal government that in recent years has had no compunction about having a balanced budget, or of even wanting one.

Hamilton County, befitting the fourth most populous county in the state, will receive the fourth largest amount from the plan among the state's 95 counties.

However, as the Sycamore Institute, a Tennessee independent, nonpartisan public policy research center, has calculated, the county won't be receiving the fourth highest amount of funds per capita. Instead, counties with the largest percentage of their residents living in municipalities will do better.

In that scenario, Hamilton County will receive $355 per person, which ranks it only ninth in the state. Not surprisingly, Davidson (Nashville) and Shelby (Memphis) are ahead of Hamilton, but more populous Knox County (Knoxville) is not. However, geographically tiny DeKalb, Lake and Moore counties are ahead of Hamilton because most of their residents live in municipalities such as Smithville, Tiptonville and Lynchburg, respectively, in those counties.

The American Rescue Plan funds were divided, according to the Sycamore Institute, by either population or an existing federal formula. But House- and Senate-majority Democrats made sure more went to cities in this round of relief funds because that's where their party's strength is. The thinking was that those who live in municipalities — especially those in the country's largest cities — will benefit the most from such largess and feel duty-bound to stay safely connected to their benefactor Democratic Party.

Surrounding Hamilton County, Bledsoe County, with only 12% of its residents living in municipalities, will get only $225 per person; Meigs County, with 13% in municipalities, will get $230 per person; and Polk County, with 12% in municipalities, will get $227 per person. Bledsoe and Polk are in the bottom five of the state in per-capita distribution.

Across the line in Georgia, residents can expects payouts of $13.1 million in Catoosa County, $13.5 million in Walker County, and $20.3 million in Whitfield County.

What can Hamilton County municipalities look forward to spending? Other than Chattanooga's nearly $40 million, East Ridge will get nearly $5.7 million, Soddy-Daisy more than $3.6 million, Red Bank and Collegedale a shade over $3 million each, Signal Mountain more than $2.3 million, Walden nearly $600,000, Lookout Mountain and Lakesite around $500,000 apiece, and Ridgeside nearly $120,000.

The above amounts don't include amounts the counties will receive for K-12 or higher education (with 90% of K-12 funding going to local school districts), for health care providers, for targeted industries (public transit, airports, restaurants, other entertainment venues), for social services, for aid to individuals through direct payments, unemployment compensation and tax credits, and even for COVID-19 relief (the 8% that will go to the ostensible reason for the package).

Of the $6.3 billion in flexible funding that Tennessee receives from the plan, 64% is allocated to state government, 21% to county governments, 8% to large city governments, and 7% to other towns and cities.

What can they spend it on? According to Sycamore Institute, the funds can cover costs directly related to COVID's health and economic effects, including assistance to affected households, relief for small businesses and industries hurt by the pandemic, and aid to nonprofits; premium pay for essential government employees; investments in broadband, water, or sewer infrastructure, and offsets in a drop in tax revenue from one fiscal year to the next.

They cannot be used to fund pensions or to offset tax cuts, the latter of which the bill's authors were afraid counties that have managed their money well — primarily conservative counties — would do.

Presciently, the bill's creators deemed that state and local governments must use the money on expenses incurred before Dec. 31, 2024, which comes the month after the next presidential election.

We have written before and maintain, as others have, that the "relief" bill was far too expensive. But the money is on the way or already has arrived. What is important going forward for states like Tennessee, counties like Hamilton and cities like Chattanooga — all of which were thriving before the pandemic and have been proper handlers of their money over the past year — is to remain good stewards of our money, even if they may not have been desperate for it.