BOSTON — Hundreds of millions of dollars in federal funds are flowing into the coffers of city and town governments as part of a new pandemic relief law.
The American Rescue Plan Act, a $1.9 trillion pandemic relief package signed by President Joe Biden last year, diverted more than $5.2 billion into Massachusetts and Gov. Charlie Baker and legislative leaders have approved a plan to spend a sizable portion of that money, some of which is aimed at helping local governments.
But local governments also received a windfall in federal funding from the ARPA law — money that can’t be touched by the state — and city and town leaders are pitching plans to spend the funds over the next several years. The federal rules for spending the money are flexible, and a range of proposals are being considered.
In Haverhill, which will get more than $37 million, city leaders are reaching out to the community to gauge support to use the one-time windfall of federal money do extend water and sewer service to rural property owners, offset the cost of sealing up combined sewer outfalls, and expand the city’s drinking water supply.
“These funds are a once in a lifetime opportunity,” said Haverhill Mayor Jim Fiorentini. “We’ve identified about $410 million worth of potential projects, but we only have $37 million to work with, so we’re seeking public input. We want to know how people were hurt by the pandemic and how we use this money to help them.”
The city has already spent about $3.5 million in ARPA funds to resurface potholed roads, fix sidewalks and set up a new public health department, he said.
Salem Mayor Kim Driscoll said her administration is also taking a “thoughtful approach” to spending more than $35 million in ARPA funds the city stands to get.
“We want to make sure that Salem is ready to respond strategically to changes in the pandemic’s course, that we can ensure an equitable recovery and that we can make real transformative change in the areas of housing, economic and jobs growth, and connectivity for Salem residents,” Driscoll said.
The city has held meetings with stakeholders to discuss proposals for projects and initiatives that could be funded. A report with recommendations will be published soon.
Driscoll said the city has already spent some ARPA funds to expand access to COVID-19 testing, a worker retention program for small businesses, and other initiatives.
In Lawrence, Mayor Brian DePena is pitching a plan to spend $40 million in ARPA funds to replace the aging Leahy Elementary School. Voters rejected a plan to build a new school last year, but DePena said during his state of the city address that the influx of federal funding will help the city build the school without raising taxes.
Under the new law, cities and towns must commit the funds to projects or initiatives by Dec. 31, 2024 and spend the money by Dec. 31, 2026.
Baker is urging cities and towns to move quickly to allocate the funds, saying it will help spur the state’s recovery from the pandemic and provide more help to people and businesses that need it.
Local governments have received about half of their allocations to date, with a second and final trounce of funding set to be delivered sometime next year.
New rules issued by the U.S. Treasury Department gave local governments more flexibility to spent the funds and broadened the potential uses for the money.
The updated rules allow local governments to use up to $10 million in ARPA funds for “revenue loss” and funds can be used on capital expenditures that support an eligible COVID-19-related health or economic response, such as building more affordable housing, childcare facilities, schools, hospitals, and other projects.
ARPA funds can also be spent on water and sewer projects and expanding broadband internet service, according to the federal agency.
The federal government also expanded its definition of a “entitlement” community, which allowed 42 cities to get more money from the ARPA law.
Among local entitlement cities, Lynn will be getting the most, or more than $75 million, according to data provided by the state Executive Office of Administration and Finance. Lawrence will get $57.3 million, Gloucester $23.1 million, Peabody $21 million and Methuen nearly $20 million.
Other communities received extra money from a reallocation of ARPA funds pegged for county governments.
Geoff Beckwith, executive director of the Massachusetts Municipal Associaton, said he expects cities and towns be extremely careful with how they spend the money.
“Some communities have gotten a significant amount of funding, and they want to make sure they decide the highest and best uses out of it,” he said. “They’re doing extensive planning to follow the rules and can leverage the funds for a long-term impact.”
Beckwith said another challenge for communities is not creating new programs with the one-time windfall of federal dollars that would require ongoing funding.
“They don’t want to create a fiscal shelf that they’ll fall off of when these funds dry up,” he said. “So I think many communities will be looking at doing short-term investments that will yield long-term benefits and results.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at email@example.com.
How can ARPA funds be used?
- To pay for COVID-19 response efforts such as masks and other protective gear.
- To replace lost public revenue from the economic impacts of the pandemic.
- To provide “premium pay” and other financial relief for essential workers.
- To make investments in water, sewer, and broadband infrastructure.
- To build affordable housing, child care facilities and public health centers.
What can’t they be used for?
- To make a deposit into a local pension fund to reduce an unfunded liability.
- To replenish a local reserve or “rainy day” fund.
- To pay off municipal debt service or fund legal settlements.
- To enact policies that restrict public health responses to the ongoing pandemic such as a ban on vaccine mandates or masking.
Source: U.S. Treasury Department; National League of Cities
FUNDING BY COMMUNITY
Lawrence $57.3 million
Salem $35 million
Newburyport $5.4 million
Newbury $2.7 million
Beverly $12.6 million
Gloucester $32.1 million
Rockport $2.1 million
Haverhill $37.4 million
Methuen $19.8 million
Salisbury $2.8 million
Andover $10.8 million
North Andover $9.3 million
Peabody $21 million
Danvers $10.7 million
Marblehead $6.1 million
Ipswich $5.4 million
Essex $1.4 million
Manchester $1.6 million
Swampscott $5.9 million
Amesbury $5.2 million
Middleton $3 million
Hamilton $2.4 million
Rowley $1.9 million
Topsfield $1.9 million
Wenham $1.5 million
Source: Massachusetts Executive Office of Administration and Finance