Spend the new stimulus money carefully
We've all heard about the $1,400 stimulus checks for people earning $75,000 or less in the mammoth $1.9 trillion stimulus bill, known as the American Rescue Plan, which President Joe Biden signed into law in early March, along with continued unemployment supplements and child tax credits. What you might not have heard about was that a significant chunk of change is targeted to come to state, county and local governments, plus school districts.
For Michigan, that translates to $5.9 billion for the state, $244 million for Oakland County, and a nice windfall for our three local municipalities, as well. Bloomfield Township is slated to receive $4.1 million; Birmingham, $2.1 million, and Bloomfield Hills, $394,658, based on population. Some municipalities, such as the city of Detroit, which was the largest municipal bankruptcy in the country just six-and-one-half years ago, in July 2013, only to become a “phoenix rising from the ashes” success story as workers filled newly-renovated office space and people flocked to live in apartments, condos and neighborhoods, is projected to get almost $880 million.
Although one would think that a financial rescue act at this time would be directed at addressing just the financial impact on local governments directly related to the pandemic, that is not the case with this broad stimulus package.
Yes, each of our local municipalities, as well as neighboring ones, incurred unexpected expenses in dealing with the COVID-19 pandemic. The good news has been that state shared revenues have not dipped as much as expected, and property taxes are holding steady. Which means the influx of federal dollars can – and should – be carefully studied for how to best be utilized for any community.
Birmingham City Manager Tom Markus rightly analyzes the situation as one where “we should say you should spend it on a one-time expenditure because the money isn't ongoing. It's a lot more than in past stimuluses. I'd say to my commissioners that capital expenditures may be an area, where it's of community-wide benefit, that we may want to look at.”
Birmingham budget talks will take place in May, prior to the fiscal year ending June 30, and Markus anticipates the stimulus money to be part of the discussions.
Bloomfield Township Treasurer Brian Kepes noted, “We clearly have spaces to utilize it,” but township staff is continuing to study the bill, and are speaking with the Oakland County Treasurer's office to see if there are ways to collaborate on joint infrastructure projects or if there are constraints. One area, noted Kepes, where the money cannot be used for is pensions.
Birmingham and Bloomfield Township are on the right track. There is no rush to spend the stimulus dollars – which can be spent between now and 2024. It's important for local municipalities and counties to take their time, analyze needs and wants before plunging in – because once the money is spent, it's gone. We believe it is critical to not start any new, ongoing programs that would then become ongoing costs for a community once the stimulus money disappears. We've seen that playbook in the past with federal programs – and the ending never changes.
Whether choosing to restore depleted funds, such as Birmingham's parking fund, which has lost well over $1 million in revenue due to the city's wise consideration of retail, restaurant and business needs during the pandemic and their continued response to not charge for monthly parking passes for employees and parking at the city's structures, or to help offset construction costs at a park or for the 2024 S. Old Woodward reconstruction project, there are spending options that should be discussed, debated and discussed some more, before final approvals are made. Ditto in Bloomfield Township and Bloomfield Hills.
Meanwhile, municipalities must keep in mind that what is finally allowed as a legitimate expense for the federal stimulus money has yet to be determined. Attorneys general in a number of states are already questioning language in portions of the new stimulus act – specifically whether states are losing their authority to design their own fiscal policies – and some of these finer points will be determined in what is shaping up to be court challenges in the days ahead.
So there's no rush to determine how this local windfall should be spent over the next several years.