BY CHUCK VANDENBERG
FORT MADISON – Plans are being carefully considered for nearly $4 million that will be coming into Fort Madison and Lee County next month.
Fort Madison is expected to get about half of a $1.43 million federal stimulus allocation under the American Rescue Plan signed in March by President Joe Biden. Lee County supervisors are expecting half of $6.54 million.
Fort Madison City Manager David Varley said Fort Madison is categorized as a non-entitlement city and its funds, along with funds to other Lee County incorporated cities such as Keokuk, Donnellson and West Point, will come out of a $1.4 billion allocation to the state.
The state has 30 days after receiving the funds to pass it along to local governments, but Varley said they could ask for an additional 30-day extension. He said Fort Madison probably won’t see the first payment until the middle of June. The second payment is expected in 12 months. Lee County could see its first payment this month.
Iowa Gov. Kim Reynolds and the Republican-controlled legislature have indicated they are going to carefully weigh the allocations and uses of the funds. At one point Reynolds was considering returning the funds.
Twelve of Iowa’s largest cities including Des Moines, Cedar Rapids, Davenport, Ames, Iowa City and others will receive money directly from the federal government as ‘essential cities”. Des Moines is getting the largest allocation at just under $95 million. Polk County also received $95 million.
But Varley said aside from a hit to the Hotel/Motel tax fund, the city really didn’t lose revenue during the pandemic because Internet sales seems to have made up the difference, road use taxes were better than the state had projected, and people were able to pay their property taxes.
“I can’t sit here today and tell you we’ve lost money due to the pandemic,” Varley said Tuesday.
“What seemed to happen was enough people did online shopping that sales tax came in higher than we thought. That’s people continuing to buy through Wal-Mart of other places online. They were staying inside but still buying and that’s kicked in.
“Because of that, revenue is up and property taxes have been stable because people, generally, make good on their property taxes.”
The city budgeted $208,000 in hotel/motel tax revenue for the entire year in the current budget. Even if the city lost half that revenue it would be about $100,000 The first payment expected from the state will total about $715,000.
Language in the ARP package outlines what the money can be used for which includes COVID mitigation efforts, public health initiatives, and some infrastructure improvements around roads, bridges and broadband infrastructure.
Varley has indicated the city will probably use the money on infrastructure improvements.
On Monday, Lee County officials discussed the incoming payment that they will get directly from the federal government.
Budget Director Cindy Renstrom said the program requires the money be allocated by the end of 2024 and spent by Dec. 31, 2026.
Auditor Denise Fraise said the money can be put in an interest-bearing account while the county determines the best way to spend it.
“We can put it in an interest-bearing account. We found that out last week, so we might as well sit on it for a bit,” Fraise said.
Lee County Supervisors have set up a committee to consider how to best utilize the stimulus money.
“We still have the board formed that Gary (Seyb) and I are on for how we’re going to disperse it. We’ve said all along we’re waiting to see guidelines for what we can spend it on,” Supervisor Ron Fedler said Monday.
“Also, we don’t want to get spend crazy early. We’ve got til 2024. We need to make sure we do it right, because if we violate one of the rules, the federal government will want it back.”
The committee will look at what expenditures would qualify and filter out what won’t, and then report back to the full board of supervisors.
Each state got a $500 million even distribution and then additional funding based on the state’s unemployment rate. Iowa’s supplemental unemployment distribution totaled $981 million, the 16th lowest in the nation. California received the largest unemployment distribution at $26.5 billion.