Polk County has shifted gears in how it plans to use its American Rescue Plan Act funds.
Before the U.S. Department of the Treasury released its final rules on how the federal pandemic relief funds could be spent, county officials approved using Polk’s more than $4 million ARPA funds on Sheriff’s Office and jail capital projects and salaries, County Manager Marche Pittman said.
When the Treasury Department did solidify guidelines for how the dollars could be used in January, the county began talking about shifting the plans for the federal money.
“We are learning so much from the final rule webinars about the broadest ways to use the funds with the least amount of cumbersome restrictions and lifelong asset tracking requirements,” Polk County Finance Director Sandra Hughes told Carolina Public Press on Feb. 7.
A few months later, the Polk County Commission voted to claim its ARPA dollars as “revenue loss” and move the funds into the county’s operating budget to be used for county employee salaries and broadband expansion.
Delayed guidelines lead to changed plans
Though the American Rescue Plan Act became law in March 2021 and local governments began receiving their first batch of the money in May 2021, the Treasury Department did not release its complete guidelines for the funds until January 2022.
This delay left many local governments with questions about how to appropriately and legally allocate the funds — a problem compounded by the December 2024 Treasury-set deadline for appropriating the dollars.
“There was a lot of uncertainty after the feds issued ‘interim final rules,’ Hendersonville Mayor Barbara Volk said. Hendersonville delayed allocating ARPA until the Treasury Department released definitive guidelines.
“We weren’t sure how many of (the interim rules) were going to be in the final-final version, so we didn’t want to make appropriations when the rules might change,” Volk said.
Many other Western North Carolina local governments expressed similar sentiments about waiting to appropriate the funds. In Polk’s case, however, officials didn’t wait for the final rules to decide how to use the money, which meant that when the rules were released, the county pivoted to meet the new guidelines.
That’s mostly because the final ARPA rules gave local governments more flexibility with the funds — specifically allowing them to claim up to $10 million in revenue loss, regardless of whether the pandemic actually led to a dip in revenue, and use the funds for essentially any purpose.
Most WNC entities have chosen, at least in part, to use the revenue-loss option. This has freed up funds in their budgets to use for future projects and programs.
A favorable shift
In Polk County’s case, the switch to use ARPA as a budget cushion is likely to invite less scrutiny than the previous plan to spend the money on law enforcement.
“We have made clear — we put in our final rule — that we do not think that that’s (in) the spirit of what these funds are for,” a Treasury Department official told Carolina Public Press earlier this year.
While not technically illegal or likely to invite a federal audit, the official said, “There are a lot better ways to use this money in (the Treasury Department’s) view.”
Some other governments in the region are still planning to use ARPA for law enforcement needs.
The Polk County Sheriff’s Office and jail will still likely get the previously determined needed improvements. According to County Commission meeting documents, these expenses will now simply come out of the county’s budget — where consequently its ARPA money now lives.
The improvements, however, will not be directly courtesy of ARPA, and they won’t be the only projects funded through the freed-up funds in the county budget.
“This does free up general fund money for current and/or future assets or needs,” Pittman said, adding that the projects that could be paid for by claiming the county’s ARPA allocation as revenue loss are yet to be determined.
Aside from the federal funds moved into the general budget for future or current county needs, Polk has also used ARPA for vaccine initiatives. In 2021, the county used nearly $92,000 to staff COVID vaccine clinics.
Polk has also set aside $300,000 for the Growing Rural Economies with Access to Technology, or GREAT, program in which the state works with internet providers to expand broadband access. Many other WNC governments have opted to do the same.
The GREAT grant appropriation could lead to expanded broadband access to about 4,000 Polk County households, Pittman said.