Over $3.3 billion in American Rescue Plan funds is already on the way to Kansas cities, schools, and state-level operations via the American Rescue Plan of 2021. This money should go to help the ordinary people who have struggled most during the pandemic. These public bodies must now make decisions on how to spend the money within ARPA’s own limitations. Specifically, the funds are intended to act as:
- Revenue replacements for government services that saw decreased usage due to the COVID-19 pandemic. The potential revenues to be replaced are mainly taxes, current charges, and transfers between state and local governments with some exceptions.
- Investments in infrastructure projects ranging from highways to water and sewer development to broadband
- Premium pay for essential workers
- Assistance to local businesses and citizens who were affected by the pandemic.
Even with these provisions in place, numerous local governments across the state are already making irresponsible financial decisions that could lead to tax increases or service cuts down the road.
- The City of Lawrence is depending on ARPA to pay an $8 million deficit in their budget for the next three years, after which they’ll have to consider “some combination of service reductions, increased tax rates, or stronger growth in property values and sales tax or a combination of the above will be required to sustain direction.”
- The City of Wichita notes in its 2022 budget proposal that three-quarters of the approximate $73 million in funding that the city received will “support the operating budget” by restoring programs cut due to the COVID-19 pandemic and paying for new hires.
Top priority should be given to compensating people and businesses for COVID-related losses and there is a simple way to do so – use at least half of the money for property tax rebates. Every business and citizen suffered some degree of loss, and a rebate avoids the bureaucratic nightmare of evaluating individual applications for assistance.
Sedgwick County, for example, is getting about $100 million and has up to $80 million uncommitted (commissioners just voted to give county employees $20 million in bonuses.) The county is scheduled to collect $156 million in property tax this year. Allocating $50 million for property tax rebates is about 32% of the total, and so everyone could get a 32% rebate on property taxes paid this year.
Because ARPA funds are a one-time provision and cannot be used past 2024, they should not be used to fund potentially long-term policies, such as hiring new employees. Instead, this is an opportunity for Kansas policymakers to directly compensate citizens and businesses.
Transparency needed on ARPA spending
Kansans should know exactly how the state, school districts, and other local entities are spending ARPA funds, so state legislators should put consider is binding transparency conditions in place.
Each ARPA fund recipient should be required to disclose how much they received in compensation, what the reason for the expenditure was, and a detailed plan about how they intend to spend that money over the next five years. If the ARPA funds are being used to finance a non-government actor through fiscal relief funds, this should be well documented with a distinct reason attached to why the funds are being spent. All this information should be easily accessible and publicly shared with constituents. Something like a requiring hearing to discuss how the funds are spent and to field questions from citizens is optimal.
Kansas’ success with its recent Truth in Taxation legislation has demonstrated that lawmakers can be much more honest and transparent about their spending if they’re required to do so. Creating similar requirements for spending the hundreds of millions of ARPA dollars coming into the state prevents waste and ensures that money will go to help Kansans recover from the COVID-19 pandemic.