The mammoth $1.9 trillion COVID-19 relief and stimulus bill enacted last week will deliver to the Cullman area a significant infusion of new money to county and municipal governments. The question is — how will it be spent?
States, counties, and municipalities nationwide are set to receive $350 billion from the American Rescue Plan Act, which President Joe Biden signed into law last week. Overall, Alabama is expected to receive $4.043 billion in funding, according to the state Department of Finance, with $2.1 billion going toward a statewide COVID-19 relief fund.
An additional $951 million in stimulus spending is marked to be divided among Alabama’s 67 counties. On top of that, metro-area cities statewide will receive a total of $417 million, while municipalities that aren’t part of metropolitan area are set to receive a combined $362 million.
The Cullman area is slated to receive more than $21 million share of that total, including $16 million for the county and approximately $3 million for the city of Cullman. Cullman’s smaller municipalities may receive anywhere from $50,000 (Colony) to $640,000 (Hanceville). The infusion of cash comes at a time when revenues from local sales taxes have actually increased over the previous year, leaving the Cullman County Commission and Cullman City Council to decide how the additional funds will be used.
Unlike the CARES Act funds, which had to be used in a relatively short period of time and were limited to reimbursements for COVID-19 related expenses, the latest federal spending bill gives local governments two years to use the funds and expands the way they can be used. The funds will be delivered in two separate payments, one coming this year and the other next year.
One way local governments can use the funds is to make up revenue shortfall.
Even with increased revenue in sales tax, Cullman Mayor Woody Jacobs noted that the pandemic hit the city’s tourism revenue. “We took a hit on lodging tax,” he said.
Cullman County administrator John Bullard said Tuesday that county commissioners are waiting for consensus-based guidance as the Association of County Commissions of Alabama (ACCA) prepares a statewide committee to get conclusive answers on how the funds can be spent. But, like the City of Cullman, the commission is considering using some of the money to replace non-sales tax revenues affected by the pandemic in 2020.
“You can’t use this money to lower taxes and then replace that missing revenue. But you can make up lost revenue,” said Bullard. “We lost about $200,000 in gas tax revenue last year, so we could apply to replace that.
“We learned from the CARES Act last year that the spending won’t be carte blanche, although we do expect a lot more flexibility this time around,” he added. “The state county commission association (ACCA) is setting up a committee to look at it, and it will be made up of commissioners and administrators. I’ll be serving on that committee, so Cullman will be among the first to know what is going on as we get answers.”
The county is set to receive the first half of its share — about $8 million — sometime in April. Bullard said the money will go into a fund to be held until the commission is satisfied with the answers it learns on spending stipulations, and forms a spending plan from there. In all, the entire $16 million allotment must be spent before the end of December of 2024.
County commission chairman Jeff Clemons said it’s too early to wish-list all the ways the county’s three commissioners could envision spending the funds until after the ACCA refines some of the questions that county commissioners across the state are asking.
“When you get money from the government, there’re always stipulations about what you can use it for. We haven’t come to any conclusions, this early, on what that will be,” he said. “We do hope we can use some of it to compensate for COVID-related illnesses for our employees across the board, because it’s still affecting a number of our employees in a pretty bad way.”
Greg Cochran, executive director of the Alabama Municipal League (AML), said municipalities that attract tourism and host large events have been the ones hardest hit by the pandemic. “Our middle to smaller towns, they did okay,” he said.
The funding from the American Rescue Plan gives municipalities a rare opportunity, said Cochran. “We’re telling them, ‘Put this money in your account and take a breath. Think about legacy projects that you can do. Think about water and sewer projects that are going to make a long-term impact.’”
According to the AML, the money can be used to:
• Respond to the COVID-19 emergency and address its economic effects, including through aid to households, small businesses, nonprofits and industries such as tourism and hospitality.
• Provide premium pay to essential employees or grants to their employers. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.
• Make investments in water, sewer and broadband infrastructure.
• State and local governments could transfer funds to private nonprofit groups, public benefit corporations involved in passenger or cargo transportation, and special-purpose units of state or local governments.
State and local governments cannot use the funds towards pensions or to offset revenue resulting from a tax cut enacted since March 3, 2021. Cochran said the bill does not include funding road infrastructure, but Congress is working on a bill they hope to pass this fall that addresses that. He said the association is also cautioning municipalities to consider what other entities are getting funding through the $1.9 trillion bill.
In an email to members, the AML said, “We ask that you be aware of the following groups and categories who are also receiving funding directly from the relief package and, therefore, may not need additional funds from municipalities: agriculture, education, small businesses, restaurants, event venues, health and human services, transportation and infrastructure, unemployment, housing, technology, broadband and cyber, homeland security, energy and environment, as well as other entities. It is unusual to receive this type of funding so please be sure to carefully consider how your dollars are invested into your community.”
Jacobs said the City of Cullman is still getting information from AML about the funding, and has not made any decisions about how to use the money. “We’ll take a look at it and come up with a plan,” he said.
Good Hope stands to receive $440,000 in federal funding from the bill, and while Mayor Jerry Bartlett said he hasn’t had a chance to discuss the influx of money with the members of the Good Hope City Council, he anticipates much of it will go towards the city’s sewer projects that are in the works.
He said the city has two projects in the planning stages: expanding the sewer system along Reid Road to County Road 222 and the west side of Interstate 65; and increasing the capacity of the wastewater treatment plant.
Expanding the sewer system into the west side of the city is important because there are businesses that are already planned for the area or are looking at the possibility of coming there, Bartlett explained.
Good Hope recently entered into an agreement with the city of Cullman to allow a new convenience store that will be located within the Good Hope city limits on County Road 222 to tie into the Cullman sewer system. Good Hope, said Bartlett, will need to expand its own system into the area as more businesses look to move there.
The new sewer lines, pump station and other equipment that will need to be installed for the expansion have been estimated to cost somewhere around $700,000 to $1 million, so the federal funding could help that project along, Bartlett added.
Good Hope is growing and seeing more subdivisions and businesses moving into the city, so increasing the capacity of the water treatment plant is also an important project to account for future growth, Bartlett said. “We haven’t outgrown our capacity yet, but we’re inching towards it,” he said.
Because Good Hope still has time to gradually increase the capacity, the city is working to plan out the project that will see new equipment installed in several stages that will allow the costs to be spread out and will not result in one bill of several hundred thousand dollars, Bartlett said.
“We wouldn’t have to spend it all at one time, so that’s one option that we’re looking at,” he said.
Hanceville mayor Kenneth Nail could not be reached by phone before deadline for this article. Hanceville is set to receive $640,000 in direct federal relief funds.