DOVER — Delaware’s three counties and dozens of cities and towns are set to receive a windfall from the American Rescue Plan stimulus, but local leaders are waiting on more information on how to spend it even as the clock has started ticking.
In the $1.9 trillion American Rescue Plan Act (ARPA), $350 billion was set aside to help state, local, and tribal governments bridge budget shortfalls and mitigate the fiscal fallout. New Castle County is projected to see $108 million, while Kent County expects to receive $35 million and Sussex County is slated to get $45 million.
“This is a historic opportunity to reimagine the communities in which we live, an unprecedented opportunity to address problems that have festered for decades,” New Castle County Executive Matt Meyer told the Delaware Business Times. “We thank President Biden, Senator Carper, Senator Coons and Congresswoman Blunt Rochester in ensuring local governments across our state are all afforded the resources to build back better.”
The ARPA has several determining factors to calculate how much funding each state, county and local government will receive. While Delaware’s $1.25 billion was determined in part due to its unemployment rate, the counties and municipalities will be allocated funds based on population figures and a modified Community Development Block Grant formula.
Much like the state’s financials, both New Castle County and Kent County officials confirmed that while the pandemic did have an impact on some revenue figures, it was not as devastating as some were concerned. Other permitted uses for the funds include providing aid to homes and small businesses and nonprofits, or impacted industries like tourism or hospitality or making “necessary investments” in capital infrastructure.
The ARPA requires local governments to spend the funds by Dec. 31, 2024. For Kent County Administrator Michael Petit de Mange, that is what is guiding him as he prepares a rough budget on what to do with Kent County’s proposed $35 million.
“We have suffered some losses during the pandemic, nothing drastic. But if you think about how the funding has to be spent by 2024, we will be halfway through the Fiscal Year 2025 budget. You have to start thinking about pacing yourself and what do you see the future looking like,” Petit de Mange told DBT.
Jim Butkiewicz, professor of economics at the University of Delaware, warned local officials to do some forward-planning to avoid repeating history.
“In 2009, we saw the federal government provide relief to local and state governments for three years. For the first two years it worked, but by 2012 the recovery didn’t catch up so we saw a lot of losses,” he said. “We have never seen anything like a forced shutdown, but it turned out what happened was that the high-earners continued to work and taxes continued to be paid. Local governments may be in a good position right now, but with other industries with a staggered reopening it may just depend on how slow the economy takes to recover.”
While New Castle and Kent county officials have some ideas of what they would like to spend their portion of ARPA funds on, it’s too soon for specifics. Meyer has some considerations but nothing to share publicly at this time, according to New Castle County spokesman Brian Cunningham.
And Kent County officials are still waiting on formal direction from the federal government. The U.S. Department of the Treasury will also allocate $10 billion to state and local governments for capital projects related to remote work, education and health monitoring in response to the pandemic.
“There’s going to be specific mentions for broadband expansion, and that’s been a significant issue in Kent County,” Petit de Mange said. “The thrust of the funding is to mitigate the economic toll in our community, whether its households or businesses on a shoestring budget or nonprofits. It’s all important, but there’s some choices to be made.”
Half the funds will be distributed to local governments within 60 days of submitting certification to the Treasury. Delaware State Treasurer Colleen Davis is also tasked with allocating $85.6 million targeted to 55 towns and cities throughout the state.
Wilmington, the state’s most populous city, is projected to see $55 million. The municipalities expecting to see the next highest amount of funds are Newark ($17 million); Middletown ($11.7 million); Dover ($6.9 million) and Smyrna ($6 million). Wilmington and Dover will receive their ARPA funds directly from the Treasury, much like the three counties. A total of 19 smaller towns throughout the First State are predicted to receive over a million dollars each.
Butkiewicz said that personally he hoped that local governments used the ARPA funds on capital infrastructure projects that may otherwise be delayed, noting that construction would also bring a boom of contractors to Delaware. Another prime target could be retraining and educational programs, such as the state’s Forward Delaware program that Gov. John Carney hinted he may be looking at expanding with the state’s share of stimulus funds.
“Before 2007, we had all these construction workers working around the clock to meet the crazy housing demand. When the housing market crashed, they all left the field and were retrained to enter a new career. With demand back up, there’s no construction workers and tradesmen to meet that demand again,” Butkiewicz said. “It’s certainly beneficial to think creatively with retaining initiatives too.”
