Tennessee Comptroller Jason Mumpower told the Shelby County Board of Commissioners to exercise caution in planning for federal funds expected to come in next week, adding that without formal guidance from the federal government, there is little room for them to make mistakes.
Based on Shelby County’s population, commissioners expect to receive $181 million from the American Rescue Plan of 2021 and held a preliminary meeting about how to spend the allotment. Shelby County’s Civil Finance Manager Michael Thompson expects the county to have a deficit of $50 million by 2022 owing to deficits incurred because of the pandemic, including COVID-19 shutdowns. Thompson recommended spending the allotment to balance the budget.
The American Rescue Plan of 2021 provides $350 billion in emergency funds for state, local, territorial, and Tribal governments to relieve them of financial strains gained over the course of the pandemic year. Tennessee will receivere than $2.2 billion and will separately receive an additional $2.2 billion for education, of which 20% is to be spent on learning loss.
All counties and 15 cities, including Memphis, will receive funds directly from the federal government, and the deadline to spend the funds is Dec. 31, 2024. While officials have time to consider how to spend the allotment, unspent money must be returned to the federal government. If the government deems a municipality has not spent the money spent, it will need to be paid back to the U.S. Treasury, which has led to confusion.
Mumpower attended the meeting to provide guidance on this issue.
The main point of the American Rescue Plan is to help local governments, citizens and their economy to recover from the pandemic, but Mumpower is cautioning local officials to only make expenditures that they’re certain will comply with the American Rescue Plan in order to avoid paying it back or returning it.
The state treasury will be auditing funds but Mumpower assures the council that his staff is encouraging spending every cent.
The federal legislation includes several categories about expenditure possibilities. The recommendations, while not official, suggest the funds should be used to provide financial assistance directly to elected city councils, small businesses and nonprofit organizations. Local governments can also help industries affected by COVID-19, such as tourism, the travel industry and hospitality. Financial support for essential workers and employers that provided essential services are also included. Local officials may also provide replacement revenue to the extent that local revenues were reduced as a result of COVID-19, but these will need to be based on 2019, before the pandemic.
Mumpower recommended working with nonprofit organizations and community leaders for guidance and suggested the council use the funds to improve important infrastructures, such as expanding broadband access.
Until the federal government issues formal guidance on spending, the comptroller is always one call away, said Mumpower, for local officials needing further guidance.
“It’s always better for councils to call the comptroller before the comptroller calls you,” he said.