ACTION REQUESTED:
Title
Communication from the City Manager and Finance Director with a Request to hold a POLICY SESSION on the CORONAVIRUS STATE and LOCAL FISCAL RECOVERY FUNDS
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BACKGROUND: Congress recently passed the $1.9 Trillion American Rescue Plan, which included $350 Billion for state and local governments through the Coronavirus State and Local Fiscal Recovery Funds (FRF). Over the next two years, the City of Peoria will receive $47,089,976 in FRF. Last week, the City received the first $23,544,988.
Congress outlined specific funding objectives:
• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
• Replace lost public sector revenue to strengthen support for vital public services and help retain jobs
• Support immediate economic stabilization for households and businesses
• Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic
Within these objectives, Congress and the Treasury Department outlined several areas of allowable expenditures:
• Support Public Health Response
• Address Negative Economic Impacts
• Replace Public Sector Revenue Loss
• Premium Pay for Essential Workers
• Water and Sewer Infrastructure
• Broadband Infrastructure
Since the pandemic has disproportionately impacted low-income families and communities of color, the FRF provides for additional flexibility for equity-focused services:
• Additional flexibility for the hardest-hit communities and families to address health disparities, invest in housing, address educational disparities, and promote healthy childhood environments
• Broadly applicable to Qualified Census Tracts, other disproportionately impacted areas, and when provided by Tribal governments
There are specific prohibited uses of the funds:
• Changes that reduce net tax revenue must not be offset with American Rescue Plan Funds
• Extraordinary payments into a pension fund are a prohibited use of this funding. Under Treasury’s interpretation, a “deposit” is distinct from a “payroll contribution,” which occurs when employers make payments into pension funds on regular intervals for employees whose wages are an eligible use
• Rainy day funds or financial reserve deposits
• Funding debt service payments, legal settlements, or judgements
The Federal government has granted significant flexibility to state and local governments to spend the funds in the allowable areas. Quarterly reporting of spending is mandatory, and the funds will be treated as a federal grant for auditing purposes. All funds need to be obligated by December 31, 2024, with all funds being spent by December 31, 2026.
Staff would like to walk through the attached presentation and specifically begin to assemble questions that Council Members may have. With a four-year window to spend the funding, the City has time to deliberate on how to best use the funding over the next 4 years - strategic investments that can pay long-term dividends.
FINANCIAL IMPACT: The City is in receipt of the first distribution of FRF in the amount of $23,544,988. The City has the flexibility to use the funds within the eligible uses and to restore lost revenue to the City, as well as providing economic stabilization to our residents and businesses.
NEIGHBORHOOD CONCERNS: Addressing the negative impacts of Covid-19 within our neighborhoods, particularly those hardest hit by the pandemic, is a centerpiece of this funding.
IMPACT IF APPROVED: No approval at this time, only gathering questions from Council.
IMPACT IF DENIED: N/A
ALTERNATIVES: N/A
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City
2. Grow Peoria
3. Safe Peoria
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Invest in our infrastructure and transportation.
2. Reinvest in neighborhoods.
3. Grow employers and jobs.
DEPARTMENT: City Manager's Office