The Department of Treasury will issue guidance detailing its interpretation and implementation of eligible uses, but the statutory language specifically authorizes use of the funds. Each of the following is a separate allowable use of the funds for the recipient:

• To respond to the pandemic or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;

• For premium pay to eligible workers performing essential work (as determined by each recipient government) during the pandemic, providing up to $13 per hour above regular wages;

• For the provision of government services to the extent of the reduction in revenue due to the pandemic (relative to revenues collected in the most recent full fiscal year prior to the emergency);

• To make necessary investments in water, sewer, or broadband infrastructure;

The language explicitly prohibits funds from:

• Offsetting, either directly or indirectly, a tax cut made since March 3, 2021; or

• Being deposited into a pension fund.

From the language contained in the Bill, four categories have been provided to guide local communities in the spending of the American Rescue Act (ARA) Funds. In terms of the first bullet, the town has provided $1.7M of Cares Act Funding from the initial congressional authorization to assist our local businesses, restaurants, non-profits and residents with utility accounts in arrears. In terms relative to bullet two, the town did not pay any premium pay for any of our front line workers, and therefore we would not be in a position to compensate ourselves for this item. For the third bullet, the loss of revenue, it is obvious that the administration worked with Council to reduce our FY21 budget $2.6M below the FY20 budget anticipating significant revenue loss. A true calculation of loss must be performed to determine the actual extent of loss that would be eligible for replacement into the three separate Fund Balances. Obviously the fourth bullet is the broadest allowance, which would allow the town to do capital improvements or capital asset replacement in water infrastructure, sewer infrastructure or broadband infrastructure.

This category of infrastructure investment would seem to yield the highest level of benefit to both our resident and our business community, as the town has over $15M in critical CIP improvements. Should the town invest the majority of the money into water infrastructure, we can stabilize water rates at the 3% established by Davenport/Stantec and substantially reduce rates for the second decade 2030-2040.

It is therefore, my recommendation that rather than having an open ended question to residents, which will produce a number of “blue sky” ideas but may not fit into the authorized Federal Treasury spending categories, nor achieve a benefit to our rate payers for well over a decade, the best question to place on the survey would be ask of the citizens if they “would support utilizing the majority of the funds for capital water infrastructure improvements to stabilize water rates at 3% through the close of this decade and assist in lowering rates for the next decade”.

In light of this brief analysis and recommendations, I would fully support Council member Milan’s draft question and could include in the preface of the question, the allowable uses and the exemptions, plus a brief outline of our ten-year water capital projects.