Not So Fast, Wilton: Why Spending $5.3 Million in American Rescue Plan Grant Money Might Be Harder Than Expected

When the American Rescue Plan (ARP) was first announced on March 11, the town of Wilton learned it would be receiving approximately $5.3 million in grant money.

Fast forward two months, as First Selectwoman Lynne Vanderslice told Wilton’s Board of Finance (BOF) members at their meeting Tuesday night (June 15), the latest guidance from the U.S. Treasury on how ARP grant money can and can’t be utilized by the town is proving more complex than first thought.

Initial Expectations

Vanderslice began her presentation to the BOF by saying, “I think it is important to keep you up-to-date and most importantly, to manage expectations” about the funding.

Back in March when the Biden administration unveiled the economic rescue plan, there were few details on how the funds could be used. Apart from the roughly $863,000 that the ARP expressly directed to Wilton’s Board of Education, Vanderslice’s expectation was that the funds could be used for:

• Municipal expenses not otherwise reimbursed for COVID-19-related expenses
• Replacement of lost revenue due to the pandemic
• Overtime premiums for essential workers, up to $13 per hour
• Water, sewer and broadband investment

One thing that was clear from the beginning was something the town could not use funds for — providing tax relief to residents or funding pension obligations.

Recent Developments

In the time since the White House rolled out ARP, Vanderslice and Wilton’s chief financial officer, Anne-Kelly Lenz, attended an ARP training session conducted by the National League of Cities (NLC), a federal-level advocacy group. (Vanderslice said the NLC is continuing to seek clarification and some changes to the Treasury’s guidance.)

As currently articulated by the Treasury, the ARP funding is intended to provide relief rather than stimulus. Vanderslice reviewed the plan’s objectives with the BOF:

• “Support urgent COVID-19 response efforts”
• “Replace lost revenue” to governments “to strengthen response of vital public services and lost jobs”
  • Vanderslice noted Wilton isn’t eligible under this provision because the town did not experience a loss in total revenue during the pandemic.
• “Support immediate economic stabilization of households and businesses”
  • Vanderslice told GMW the “stabilization of households” would include the types of assistance Wilton is providing through Wilton Social Services, such as food, rent or utility assistance, for example. She emphasized there would have to be a direct connection between the need for assistance and the pandemic.
  • She said it wasn’t clear yet how programs to support businesses and non-profits would be managed.
• “Address systemic public health and economic challenges that have contributed to the unequal impact of the pandemic”

Despite the program’s objective of providing relief, municipalities can only use ARP funds for expenditures incurred on or after March 3, 2021 — essentially a full year after the start of the pandemic.

“We are disappointed with the March 3 date,” Vanderslice told GMW, “but we assume it is related to the date of passage of the legislation, as the bill was signed on March 11. We do have eligible reimbursable expenses since March 3, including vaccine clinics, work done to the interior of the Town Hall and Town Hall Annex to facilitate expanded access, and work/equipment at Comstock to enable hybrid meetings.”

She told the BOF she would be eying the savings from reimbursed expenses to be applied to the town’s building maintenance fund, to address a backlog on some infrastructure projects that were deferred during the pandemic.

Addressing Inequity is “Encouraged”

Vanderslice emphasized that the “big theme” of the latest Treasury guidance is about addressing inequity.

“When this was first announced, it almost sounded like free money, and it was being given to help jumpstart the economy or enhance the economy, but that’s not what this is all about,” she said, adding, “The ‘encouraged’ expenditures are to address ‘racial disparities, inequity and disproportionate harm,’ which you just don’t have a lot of that in Wilton.”

That makes it more difficult for Wilton to qualify, Vanderslice explained.

“That creates a difficulty for a community like Wilton, where we don’t have that many people who are underserved or at an income level that would qualify for a lot of assistance. The National League of Cities presentation repeatedly reminded us that if [a community is] not a qualified census tract ([which are] communities that have 50% of households with incomes below 60% of the area median income, or have a poverty rate of 25% or more), then [those communities] are going to have to go the extra mile to justify [their] expenditures,” she said.

BOF member Chris Stroup saw a silver lining in Vanderslice’s update.

“We’re a fortunate community, we’re affluent. We perhaps don’t have the needs that other communities have. And while we may not be the beneficiary of federal grants, perhaps there’s some celebration in that, because perhaps we don’t need it.”

Vanderslice agreed with Stroup’s sentiment. “There may be a lot of this money authorized by the legislature that never gets spent. You’re right, we’re fortunate,” she said. “I’d rather be in a position that we don’t qualify rather than have that great need.”

No Pre-Qualification for New Spending

Wilton isn’t the only community facing the conundrum of being allocated money it ultimately won’t be able to use.

“There’s definitely concern about whether a lot of communities are going to be able to have expenditures that will qualify,” Vanderslice told the BOF.

Complicating things further is that the Treasury won’t pre-approve spending. “Notice of a disqualified expenditure will occur after the monies have been expended,” Vanderslice said.

For that reason, Vanderslice said the need for consultant expertise and ongoing training would be critical. In addition to the NLC, she expects to receive support from state and regional advocacy groups, including the Connecticut Council of Municipalities (CCM) and the Western Connecticut Council of Governments (WestCOG), in working through the various requirements.

“It’s going to take us quite a bit of time to develop how we may be able to spend this money,” she said. “It will be a while before we have a plan together.”

The burden on the municipalities to prove an expense was COVID-related is very high. In order to be eligible, any spending would have to be clearly linked to “the harmful effects of COVID-19” with “a causal or compounding connection.” Demonstrating a “disproportionate impact on distressed sectors or populations” and that “the expense produces the expected outcome” are also part of the framework for assessing eligibility.

Vanderslice had initially hoped that Wilton would be able to use the ARP funds for much-needed investment in upgrading the public safety radio system used by police, fire, EMS and DPW. In that case, Wilton taxpayers could potentially save hundreds of thousands of dollars over the next 10 years.

“We are still hoping that we will be able to use the money for the emergency radio system, but as you go through the training you can see how maybe only a limited amount of that would qualify. You really have to go back and say, how does this spending tie to the pandemic and how does it help a pandemic response? So it’s going to be difficult,” she said.

Vanderslice is reluctant to rely on ARP funds for new projects.

“We don’t want to get ourselves in a bind. We have to be very sure. I don’t want to put the next Board of Finance, the next Board of Selectmen, the next First Selectperson in a real bind that we spent, say, a couple of million dollars on the [emergency radio system] and then it gets disallowed,” she said.

The BOF agreed that a cautious approach would be best.

“It’s probably prudent to presume that our reimbursement will be almost nothing, and spend that which we believe we can finance ourselves. And if it turns out that we’re the beneficiary of that [ARP] program, terrific. And if not, we’ve prudently planned for our own spending,” Stroup said.

Wilton will receive the ARP grant money in two installments, the first later this month and the second next year. Money Wilton does not spend will have to be returned at some future point, but in the meantime, Vanderslice told the BOF, the town will at least earn interest on any money held.