Liberty to receive $410,000 from American Rescue Plan Act but devil is in details of allowed expenditures

By John Estridge

Liberty can spend the $410,000 coming from President Joe Biden’s $1.9 trillion American Rescue Plan Act of 2021 (ARPA) on infrastructure issues.

That funding allowance could include the proposed $2.1 million water project. However, tapping that funding source may put in jeopardy an Office of Community and Rural Affairs (OCRA) grant the town is trying to win. A public hearing concerning the grant application was held as the first order of business at the Monday, April 5, Liberty Town Council meeting.

LTC is planning to upgrade several water lines in and around Liberty. Part of the funding, $700,000, is planned to come from the proposed OCRA grant. (See upcoming related article).

Liberty native and former Union Circuit Court Judge Jim Williams attended his first LTC meeting as the town’s attorney. He took over for Walt Chidester, who recently retired.

LTC President Matt Barnhizer initiated the discussion by talking about the ARPA money coming to Liberty. He said $205,000 will come this year with the same amount coming again to the town in the next year.

Barnhizer explained there are going to be procedural steps for LTC to follow in preparation for the money such as creating a line in the town’s budget for the money and then coming up with a plan for what the town plans to do with the money.

Liberty Clerk/Treasurer Melissa Shepler explained if the town does not spend the money allotted to it, it has to pay the federal government back the amount of money not spent, so it is a large incentive to the town to figure out how to spend all of the allotted money.

Shepler made up a list of the ways the money can legally be spent by governmental entities, and she put the lists in the town council members’ packets she readies for each meeting.

According to the National Conference of State Legislators, these are the following allowed areas for ARPA funding for governmental entities:

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.
Provide government services affected by a revenue reduction resulting from COVID-19.
Make investments in water, sewer and broadband infrastructure.

After it was determined infrastructure projects are on the list of allowed expenditures, Barnhizer then stated it was his understanding the money could be spent to help pay for the project. Right now if the town receives the $700,000 grant, it will have to fund the remaining amount, $1.4 million from the Water Fund and General Fund, among other possible funds in the Liberty budget.

It is a concern if the town uses the ARPA money to help fund the project, OCRA would either not approve the grant application or modify it down to a lower figure. Earlier in the meeting Mike Kleinpeter of Kleinpeter Consulting, the town’s grant writer for the OCRA application, held the public hearing. He emphasized in the hearing it is a very competitive process.

Williams said, at this time, he is unsure if the town uses the ARPA money on the water project if it will put the grant money in jeopardy.

During the ARPA discussion, Kleinpeter said OCRA is supposed to release guidance on federal money and grant applications.

Williams said he has learned some governmental agencies in Indiana have stated they will not spend the money on anything that would result in recurring expenses such as new employees.

According to Williams and Shepler, another area the LTC may want to look at for the ARPA money is the third category: provide government services affected by a revenue reduction resulting from COVID-19. Shepler said governmental entities should see revenue shortfalls from tax funding sources such as Excise Tax, among other tax revenues used for local funding in the next couple of years, because of the reduced activity during the pandemic.

The money could be used to make up for those shortfalls. It is called revenue replacement.

Kleinpeter said the LTC should work with its accounting consultants, Baker and Tilly, to help in explaining the situation. He said that company can put it in black and white.

Williams said he will work on an ordinance the town will need for the ARPA money, and he will do more checking about what, if any, repercussions to the OCRA grant application could come from using ARPA money on the water project. Also, Williams cautioned that $410,000 seems like a lot of money, but it does not go as far as it once did.