Take a breath and start planning: Alabama cities, counties to receive millions in federal aid

By MARY SELL, Alabama Daily News

Alabama’s counties and municipalities will soon receive millions of dollars — some tens of millions of dollars — under the $1.9 trillion American Rescue Plan Act approved last week. 

While exact guidance and rules for spending haven’t yet been issued from the U.S. Department of Treasury, the act makes clear the money can be used beyond costs specific to the coronavirus pandemic.

“We’re telling them to take a breath and to begin thinking about how to best use this opportunity for legacy type programs,” Greg Cochran, executive director of the Alabama League of Municipalities, told Alabama Daily News about the group’s guidance to cities and towns.

The act includes nearly $360 billion to help states, counties and cities. Alabama is getting $4.04 billion of that. About $951 million will go to counties and $779 million to municipalities.

Large City Allocation Projections

According to the National Conference on State Legislatures, local governments can use the new money:

• Address the pandemic’s economic effects, including aid to households, small businesses, nonprofits, and industries such as tourism and hospitality;
• Provide premium pay to essential employees or grants to their employers;
• Provide government services affected by a revenue reduction resulting from COVID-19, and;
• Make investments in water, sewer and broadband infrastructure.

There are things the new money can’t be used for, including funding pensions or to offset revenue resulting from a tax cut enacted since March 3. 

Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said his organization is working to help counties plan to spend and account for the dollars. 

There are also conversations happening about some possible constitutional issues regarding the federal dollars, Brasfield said.

While the act does say the money allocated to local governments can be distributed to households and businesses, that is raising an issue here.

“In Alabama, the constitution won’t let us do that,” Brasfield said.

Section 94 of Alabama’s constitution says “the Legislature shall not have power to authorize any county, city, town, or other subdivision of this state to lend its credit, or to grant public money or thing of value in aid of, or to any individual, association. . ..”

In April of last year, the Alabama Attorney General cited Section 94 in an opinion that said counties and municipalities could not give grants or loans to small businesses hurt by the pandemic unless they money would “serve a public purpose rather than merely confer a private benefit.”

There are conversations happening now in Montgomery about exactly what that means for the federal relief money.

“Counties can’t just give money to people, so that’s going to require some more strategic thinking,” Brasfield said. “How do we use this money in a way that can change the county going forward?

“… I think the same goals can be reached — restoring and revising the community — we’re just going to have to be strategic about it.”  

County Allocation Projections

In an email to members, the league said municipalities with more than 50,000 population will receive funds through the U.S. Treasury. Those under 50,000 will receive funds through the Alabama Department of Finance.

The league said 50% of a municipalities’ money should arrive within 60 days. The rest will come one year later, at the earliest. This will give communities time to plan, Cochran said.

Money must be spent by the end of 2024.

Cochran said this is a once-in-a-lifetime opportunity for communities, especially rural ones, to make significant infrastructure upgrades.

Cochran noted that the act separately provides millions of dollars to education institutions, restaurants, entertainment venues, agriculture and rural health care outside of the $4.04 billion coming to Alabama governments.

Small City Allocation Projections