COVID-19 stimulus bill to create $500 million windfall for Maine towns and cities

York County could tap some of its $40 million share in federal stimulus money to help those grappling with mental health or substance use challenges during the pandemic.

In Portland, officials said a top priority of the city’s estimated $48 million pot will be to hold down property tax rates.

And along Maine’s northern border with Canada, leaders of one Aroostook County town say the money could help cover costly upgrades to a sewage treatment plant or expand broadband internet access.

Towns, cities and counties across Maine will receive nearly $500 million from the stimulus package passed by Congress this month, offering cash-strapped local governments a substantial source of additional revenue over the next two years. Yet local officials are anxiously awaiting details from the federal government about how they can use that financial windfall.

“It truly is historic,” said Stephen Gove, executive director of the Maine Municipal Association. “It is historic in the amount of funds that are coming to municipalities and historic that every single municipality, town and city in Maine has money earmarked to them.”

President Biden and supporters of the American Rescue Plan have often focused most of their attention on the $1,400-per-person stimulus checks to most Americans, substantially enhanced child tax credits and education funding in the $1.9 trillion bill.

But the massive bill also contains an estimated $360 billion in direct payments to states, towns, cities, counties and tribal governments “to mitigate the fiscal effects stemming from the public health emergency” caused by the COVID-19 pandemic. Despite some Republican portrayals of the bill as a “blue state bailout,” nearly every local government across the U.S. will receive a slice.

Maine is slated to receive roughly $1.65 billion in state and local aid, according to estimates released by congressional committees. That total breaks down as:

• $1 billion to the state.
• $118 million to the state’s five federally designated metropolitan areas (Portland, Lewiston, Auburn, Bangor and Biddeford).
• $115 million to 480-plus towns, cities, plantations and other incorporated islands.
• $261 million to Maine’s 16 counties, which could further distribute funds to local towns.
• $129 million for capital projects around the state.

What hasn’t been released yet, however, are the details on how that money can be spent.

The administration of Gov. Janet Mills has said priorities for the state’s more than $1 billion share will be boosting public health, supporting expanding COVID-19 vaccinations, putting people back to work and accelerating the state’s economic recovery. There is also talk about tapping some of that federal money to dramatically expand Maine’s spotty broadband internet infrastructure.

“The American Rescue Plan is meant to provide longer term, one-time funding, sunsetting in 2024; this Administration will be thoughtful and collaborative in both the planning and utilization of these much-needed and vital resources,” Kirsten Figueroa, commissioner of the Maine Department of Administrative and Financial Services, said in a statement.

Municipal and county officials in Maine are also eagerly awaiting that guidance as they attempt to finalize next year’s budget proposals.

“We are very, very happy to receive the money and have lots potential uses for it, but we just need to make sure we are doing it legally,” said City Manager William Bridgeo of Augusta, which could receive $1.8 million based on unofficial estimates from federal sources.

“We’re pretty much all in the same boat,” Bridgeo said. “I am hoping in the next couple of weeks to get more clarification.”

Allocations to municipalities and counties nationwide are based on population. For Maine municipalities, estimates range from $199 to Northwest Hancock Unorganized Territory (population: 2) to $48 million to Portland (population: 66,215). Unofficial payment estimates for counties, meanwhile, range from $3.3 million to Piscataquis County to $57.2 million to Cumberland.

The western Maine resort town of Rangeley (year-round population of roughly 1,000) could receive about $115,000 in federal funds from the stimulus bill.

“Any town in Maine could definitely use the shot in the arm, if you will, or the influx of additional revenue,” said Rangeley Town Manager Joe Roach. “Once we understand the guidelines, I am sure towns will find a legal and meaningful way to use that revenue.”

DETAILS LACKING

Congress did provide some general guidance to states and local governments about how the funds can be spent.

For instance, money can be used to cover the ongoing response to the COVID-19 public health emergency or to address the negative economic impact of the pandemic. That could include offering financial assistance to households, small businesses, and nonprofits or “aid to impacted industries such as tourism, travel, and hospitality.”

American Rescue Plan funds can also be used to cover revenue losses attributable to the pandemic or to make needed infrastructure investments, whether for roads, water and sewer facilities or broadband internet. State and local governments are barred from using stimulus funds to “directly or indirectly” offset a tax cut or tax credits, deductions or rebates enacted during the “covered period,” however.

Local, state and tribal governments will also be required to provide “periodic reports” to the Treasury Department and may have to repay unauthorized spending. The more than 600-page bill is short on other details, however.

“We are all anxiously awaiting,” said Gove. “While the municipal officials are excited about how they may use these funds and are starting to think about how they can use those funds, we are all sitting on pins and needles waiting (for guidance).”

POTENTIAL USES

In Portland, officials have cut 65 positions in the city’s workforce since the pandemic began, offering “hazard pay” to some other employees and adopted a city budget that was roughly 20 percent smaller than in recent years. The city also held property tax rates flat last year to reduce the financial strain on local residents.

City Manager Jon Jennings has begun initial discussions about uses of the city’s estimated $48 million share, with a top goal of covering losses in order to reduce pressure on property taxes.

“This year the priority is to keep (the rate) as low as possible, and having that money to recoup revenue losses will help make that possible,” said spokeswoman Jessica Grondin.

York County is earmarked to receive up to $40.3 million total in two installments of roughly $20 million – a sum that county administrator Gregory Zinser described as “obviously a significant infusion.”

“But remember, this isn’t meant to replace the operating budget,” Zinser said. “It is really … to help with response to the COVID-19 pandemic.”

The actual amount could be less because York County’s budget this year was roughly $22 million, and the federal law caps allocations at 75 percent of a government’s annual operating budget. But governments have until Dec. 31, 2024, to spend the federal dollars on eligible costs, and it was unclear whether that $40.3 million could be spread out over additional years.

While conversations with county commissioners are just beginning, Zinser wonders whether the funds could be used to purchase an additional transport vehicle for the mass-vaccination clinic in Sanford. Another option, Zinser said, could be to funnel funds into mental health and drug treatment programs to address a “ballooning issue in the criminal justice system” tied to the pandemic.

“We are hopeful that we can develop some useful programming with this,” Zinser said.

In the Aroostook County town of Grand Isle (population: less than 500), Selectman Terry Helms said the estimated $42,870 could cover initial upgrades to the town’s 30-year-old water and sewer plants since infrastructure improvements appear to be an allowable use. But Helms, who serves on the Maine Municipal Association’s executive committee, said there is also strong interest among rural towns in investing in broadband infrastructure.

“We discussed that with the governor yesterday and she is on board,” Helms said on Friday.

PREMIUM PAY

Governments can also use their share of money to offer “premium pay” to essential public employees or offer grants to “eligible employers that have eligible workers who perform essential work.” Under the law, governments can pay up to $13 an hour in “premium pay” on top of other wages, capped at $25,000 per worker.

But specifics are, again, somewhat lacking.

The bill loosely defines eligible workers as those “needed to maintain continuity of operations of essential critical infrastructure sectors” and gives governors or tribal leaders the authority to designate other workers as “critical to protect the health and well-being of the residents.” The Mills administration, meanwhile, dropped the “essential worker” categorization when switching to a strictly age-based vaccinations strategy.

In Portland, businesses are fighting to block enactment of a referendum requiring them to pay an additional $6 an hour in “hazard pay” – for an hourly wage of $18 – to minimum wage employees who report for work during the statewide emergency.

The voter-approved referendum is currently held up in the courts and, based on the latest judicial ruling, wouldn’t take effect until 2022. And it’s unclear whether the city could – or would – tap into some of that $48 million to help businesses absorb the wage hike.

Grondin said that Jennings is exploring using some of the additional stimulus dollars to help cover hazard pay offered to city employees, although previous federal grants helped defray some of those costs already.

“I imagine he would leave the conversation up to the City Council to determine whether it should be extended beyond city employees,” Grondin said.

POLITICS AND COOPERATION

The American Rescue Plan passed Congress on a party-line vote. The only Democrat to vote “no” was Maine’s 2nd District Rep. Jared Golden, who joined every Republican in opposition.

That partisan undercurrent continued last week when 21 Republican state attorneys general pressed Treasury Secretary Janet Yellen to clarify the law’s prohibition on stimulus funds covering revenue losses tied to tax cuts. Threatening to challenge the provision in court, the attorneys general said the overly broad language could prevent states from cutting taxes independent of the relief funds.

In Maine, some lawmakers have criticized the Mills administration for not consulting the Legislature more on how $1.25 billion in previous federal COVID-19 relief dollars were spent. And now lawmakers – particularly among Republican ranks – are calling for greater cooperation and consultation on the expenditure of American Rescue Plan money.

Mills plans to offer a series of changes to her administration’s roughly $8 billion, two-year budget proposal based on the anticipation of additional federal COVID-19 relief funding. She has also outlined plans for a $111 million “Back to Work” bond package focused on technical and community college programs, broadband internet, child care facilities and Maine’s “heritage industries” of fishing, farming and forestry.

“I look forward to working with the Legislature to make the wisest choices on using these one-time funds to do the greatest amount of good for the greatest number of people who have been affected by this pandemic,” Mills said after the stimulus bill became law.