Author Archives: Chris Hackbarth

New Info Coming From MI Treasury on ARP Dollars for NEUs

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The Michigan Department of Treasury recently provided an update to League staff on their continuing efforts to distribute the $322 million, first-year tranche of American Rescue Plan dollars designated for Michigan municipalities that are designated as Non-Entitlement Units.  These dollars were allocated to 1,724 Michigan cities, villages, and townships and are scheduled to be distributed on a per capita basis.  To date, MI Treasury has received applications from than 1,660 eligible units, with every Michigan city having requested their funds, following the July 8th opening of Treasury’s application portal.  Treasury is anticipating being able to begin distributing funds to completed and approved applicants by the middle of September.

Treasury’s 3rd party vendor has recently begun the process of reviewing the submitted funding request applications and auditing those submissions as a precursor to distributing the funds.  As of last week, the vendor had completed the initial review of about 1/3 of the applications. Treasury’s Coronavirus Local Fiscal Recovery Fund webpage is being updated as the vendor completes their audit of applications to display the status for each application.

During this review process, a high error rate has been encountered, with many errors being relatively superficial in nature (missing or wrong signatories, missing addresses or incomplete fields, DUNS number errors, etc).  Communities with errors in their application will be asked to make corrections to their applications and resubmit in order for the funds to be disbursed.  To facilitate the necessary error corrections, Treasury’s vendor is expected to begin contacting communities by phone late this week/early next week to make those communities aware of the situation with their application.  Following this direct contact, a letter will also be issued, likely next week, with the specific errors identified and the process for any necessary corrections and resubmission.

Treasury staff will also be participating in next week’s (Sept 7th) Live with the League broadcast to provide a more detailed update and answer any questions.

Here is some additional information shared recently by the Michigan Department of Treasury:

Intended Audience: Non-Entitlement Units of local government requesting or declining Coronavirus Local Fiscal Recovery Funds under the American Rescue Plan Act (ARPA). Non-entitlement units are defined as primary local governments (e.g., cities, villages, townships) other than federally defined metropolitan cities and counties under ARPA.

The Michigan Department of Treasury is reviewing more than 1,600 applications from local units requesting or declining Coronavirus Local Fiscal Recovery Funds (CLFRF). Over 95% of local units have completed the on-line submission process.

The Department of Treasury review team has begun to examine applications. Once the review has been completed and the application is error-free, the contact person and Chief Administrative Officer (CAO) will receive an e-mail from  treas-arpa@michigan.gov.

Errors in Submission

If errors were found in the on-line submission, the review team will contact the local unit to discuss the identified errors. Additionally, a detailed e-mail will be sent from treas-arpa@michigan.gov describing the errors. Please note: to successfully request funding, a local unit will have to log back into the ELITE system portal and correct identified errors. To ensure funding, local units are encouraged to complete this within seven days of receipt of the e-mail or be at risk of not receiving funding.

To assist with understanding common errors, the Michigan Department of Treasury has created a list of common errors and how to fix them.

NEU Status

NEUs can go to the Michigan Department of Treasury’s American Rescue Plan Act (ARPA) webpage to obtain their status update through the on-line summary file. Additionally, once audits are completed, local units will be able to access all their submitted information on the Michigan Department of Treasury’s document search site.

Payment Status

Payments to a NEU will occur after all application requirements have been met and after a Michigan Department of Treasury review. The first payments are anticipated to be issued in the next three weeks based upon the information local units verified in SIGMA.  These first payments will be for 50% of the allocation amount. The second 50% payment will be approximately 12 months later. Additionally, a smaller payment will be made after the initial on-line submission period is closed. This payment is the redistribution of funds from NEU’s that were non-responsive.

Questions? Comments?

More information and resources on CLFRF are available at Michigan.gov/ARPA.

Questions regarding the CLFRF can be directed to the Michigan Department of Treasury by e-mail at Treas-ARPA@michigan.gov.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

 

Legislature Breaks Without Finishing GF Budget

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The Legislature recessed for at least two weeks earlier this week without finalizing a General Fund budget and without allocating any of their remaining GF fund balance or available American Rescue Plan Act funds.  A school aid budget was completed and sent to the Governor in HB 4411, but the House’s attempt at a baseline/continuation budget in HB 4410 and the Senate’s response that simply funded revenue sharing and a couple of DHHS line items remained unresolved by the time each chamber had adjourned.

While revenue sharing was not completed before they recessed, both chambers provided a 2% statutory revenue sharing increase ($5.2 million) in their different versions.  The Senate proposal also included a League-requested $433,000 to restore the August 2020 revenue sharing cut for dozens of League members that were unable to utilize the federal CARES funding that was offered as a replacement for that cut.  The Senate proposal and a different House proposal in SB 27 also offered a $10 million appropriation to provide relief to communities impacted by the severe storms that occurred in June.

While not completed this week, these items are all expected to resurface in a full budget negotiation that is expected to proceed between the Administration and legislative leaders in the coming weeks.  Those negotiations will likely determine when the House and Senate return to action to vote on a budget deal.  At this time, the House and Senate are scheduled to return for session days on; July 14 in the House, July 15 in the House and Senate, July 21 in the House, and July 27 in the Senate. While these days are currently scheduled, the success of ongoing budget negotiations will likely determine which, if any, of these days are utilized.

The League continues to advocate for improvements in revenue sharing funding, support for municipal infrastructure repairs necessitated by shoreline erosion, substantial state investments in water and sewer infrastructure similar to the Governor’s MI Clean Water Plan and the Senate proposal in SB 565, and state funding for replacement of local bridges as proposed in different versions by the Governor and legislative leaders, among a host of other spending priorities.

In addition to their work on the various Departmental budgets, the Governor and Legislature are also debating priorities for allocating the state’s first ARP allocation of $3.25 billion.  The League and our partners are pressing for leaders to agree on a comprehensive spending plan for these dollars that will provide local governments with additional opportunities to invest in their communities and leverage the dollars that they have available for greater impact on infrastructure, building local capacity, improving housing and community development, and promoting local economic development efforts.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

 

Non-Entitlement Units Can Prepare Their ARP Allocation Requests

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This morning, the Michigan Department of Treasury finalized the necessary forms and guidance to assist Michigan’s 1,724 “non-entitlement units”, eligible for American Rescue Plan funding on a per capita basis, to submit their requests to receive their eligible distributions. This will be the first of two distributions that NEUs will be eligible to receive under the federal stimulus, with the second distribution expected in 2022.

Treasury anticipates that the following new documents/request submissions will be able to be uploaded to Treasury’s ELITE System by July 6th.

The following information was shared by MI Treasury…

Intended Audience: Non-entitlement units of local government requesting or declining Coronavirus Local Fiscal Recovery Funds under the American Rescue Plan Act (ARPA). Non-entitlement units are defined as primary local governments (cities, villages, townships) other than federally defined metropolitan cities and counties under ARPA.

The ARPA Coronavirus Local Fiscal Recovery Fund (CLFRF) Non-Entitlement Units of Local Government (NEU) Funding Election and Budget Certification Form (Form 5751) is now available for NEUs to complete. Additionally, Numbered Letter 2021-5 is now available to assist NEUs in calculating their top-line budget for CLFRF reporting.   

The Form 5751 will be uploaded into the ELITE system along with other required documentation. Currently, the online submission portal is not active. The online portal to submit the required CLFRF reporting is expected to be live the week of Tuesday, July 6, 2021.

NEUs Can Prepare Application Materials Today

All documents to accept the CLFRF NEU funding are now available. NEUs can complete the following tasks, save each completed file as a PDF, and be ready to upload in the ELITE system in anticipation of the launch next week.

Application Requirements:

Contact Us

More information and resources on CLFRF are available at Michigan.gov/ARPA.

Questions regarding the CLFRF can be directed to the Michigan Department of Treasury by e-mail at Treas-ARPA@michigan.gov.

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

State Budget Bill Positioned to Appropriate NEU Portion of ARP Funding

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Late yesterday afternoon, the Michigan House of Representatives moved a new version of a supplemental appropriation bill, Senate Bill 37, that appears to represent a deal on a number of outstanding federal stimulus items from last December’s federal stimulus effort and includes appropriating the first installment of the American Rescue Plan Act’s Non-Entitlement Unit funding aimed at Michigan cities, villages, and townships that were not classified as Metropolitan Cities under the federal stimulus.

Senate Bill 37 appropriates the first half of the NEU funds that will be distributed on a per capita basis by the Michigan Department of Treasury.  The appropriation of this $322 million is a necessary first step before Treasury can distribute these dollars to the eligible NEUs identified by the US Treasury late last month.  The League is co-hosting a webinar with Michigan Department of Treasury staff on Thursday, June 17th to further discuss how local units can apply/request these funds and some of the reporting and calculation details that communities will need to follow to receive and utilize these funds.  League members are strongly encouraged to attend this webinar as they begin strategy and community planning conversations around these dollars.

Senate Bill 37 also includes additional Coronavirus-related FEMA Disaster Assistance funding and over $378 million for emergency rental and utility assistance.  With the House’s action yesterday, this bill now goes back to the Senate for an expected concurrence vote today and the Governor’s signature.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Webinar on Federal Stimulus Scheduled for June 17

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The Michigan Department of Treasury released the following agenda and registration details for their first webinar on the American Rescue Plan Act, aimed at offering the Department’s initial guidance for implementing the ARP’s Coronavirus Local Fiscal Recovery Funds.

This webinar is scheduled for:

Thursday, June 17, 2021
2 p.m. – 3:30 p.m.

In partnership with the Michigan Municipal League, Michigan Townships Association, and Michigan Association of Counties, the Michigan Department of Treasury is pleased to announce the 13th webinar in the “Updates and Resources for Local Governments” webinar series.

Topics covered will include:

  • Updates on the American Rescue Plan Act, including eligible uses and receipting
  • Strategically utilizing funds

Participants can register and submit questions on the webinar’s registration page.

Agenda

  1.  Welcome & Introductions Heather Frick, Bureau Director, Bureau of Local Government and School Services, Michigan Department of Treasury
  2. Special Message to Locals
  3. Updates on the American Rescue Plan Act
    1. Receipt of Funds
    2. Eligible and Ineligible Uses of ARPA Funds
    3. Revenue Losses
    4. Reporting
      Eric Bussis, Chief Economist and Director of the Office of Revenue and Tax Analysis, Michigan Department of Treasury
      Rod Taylor, Administrator, Community Engagement and Finance Division, Michigan Department of Treasury
  4. Strategically Utilizing All Funds
    Tim Dempsey, Vice President, Public Sector Consultants
  5. Question and Answer 
  6. Closing Remarks
    Heather Frick, Bureau Director, Bureau of Local Government and School Services, Michigan Department of Treasury

Additionally, the Michigan Department of Treasury has developed a webpage with numbered letters, memorandums, webinars, and resources regarding COVID-19 updates for local governments and school districts. This webpage was created to ensure that Michigan communities have access to the most up-to-date guidance and is updated frequently with information and resources as they become available. 

Disclaimer: The U.S. Department of Treasury has issued interim rules for the American Rescue Plan Act. These rules are subject to change. The information provided during this webinar is solely intended for general reference and is not comprehensive or final information. It is recommended that local governments review all guidance from federal Treasury and contact their legal counsel and auditor for your specific situation.

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

U.S. Department of Treasury Releases Additional FAQs on the Coronavirus State and Local Fiscal Recovery Funds

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The League and our partners at the National League of Cities received the following information from US Treasury regarding the posting of 10 additional FAQs on the Coronavirus State and Local Fiscal Recovery Funds that are part of the American Rescue Plan Act. The full FAQ document, which includes FAQs from the original May 10 publication date, the previous May 27 update, and this week’s update, can be found here.

Questions added in the last two updates can be referenced within the FAQ as follows.

  • 5/27/21: 1.5, 1.6, 2.13, 2.14, 2.15, 3.9, 4.5, 4.6,10.3,10.4 (updates are noted with “[5/27]”)
  • 6/8/21: 2.16, 3.10, 3.11, 3.12, 4.7,6.7,8.2, 9.4, 9.5,10.5  (updates are noted with “[6/8]”)

The specific questions added on 6/8/21 include the following:

  • May recipients use funds to establish a public jobs program?
  • In calculating revenue loss, are recipients required to use audited financials?
  • In calculating revenue loss, should recipients use their own data, or Census data?
  • Should recipients calculate revenue loss on a cash basis or an accrual basis?
  • Do restrictions on using Coronavirus State and Local Fiscal Recovery Funds to cover costs incurred beginning on March 3, 2021 apply to costs incurred by the recipient (e.g., a State, local, territorial, or Tribal government) or to costs incurred by households, businesses, and individuals benefiting from assistance provided using Coronavirus State and Local Fiscal Recovery Funds?
  • How do I know if a water, sewer, or broadband project is an eligible use of funds? Do I need pre-approval?
  • May recipients use Fiscal Recovery Funds to fund Other Post-Employment Benefits (OPEB)?
  • Once a recipient has identified a reduction in revenue, how will Treasury track use of funds for the provision of government services?
  • What is the Assistance Listing and Catalog of Federal Domestic Assistance (CFDA) number for the program?
  • May recipients use funds to cover the costs of consultants to assist with managing and administering the funds?

U.S. Treasury intends to update their FAQs periodically to help clarify questions about the Interim Final Rule.  They anticipate another update soon, which is likely to include additional questions recently posed by communities across the country. U.S. Treasury is trying to respond as quickly as possible to these questions.

It is important to note that because the Interim Final Rule is still in the 60-day public comment period, there may be some points raised by stakeholders that cannot be addressed via FAQs and will need to be considered as part of the process for revising the rule. It you have specific questions we strongly encourage you to submit comments for the record to ensure that these perspectives are reflected in the public comments when it comes time to finalize the rule.

Additionally, U.S. Treasury posted an FAQ supplement regarding distribution of funds to non-entitlement units of local government (NEUs).  This FAQ supplement includes several questions answered as part of previous FAQ updates, as well as answers to 12 additional high-priority questions that were received from stakeholders over the course of our engagement since the release of the NEU guidance on May 24.

The new questions added to the NEU FAQ supplement are listed below.

  • Can states impose requirements or conditions on the transfer of funds to NEUs?
  • Can states transfer additional funds to local governments beyond amount allocated to NEUs?
  • May states use funds to pay for the administrative costs of allocating and distributing money to the NEUs?
  • What steps do states and territories need to undertake to receive their NEU payments?
  • What are the specific deadlines for state governments in distributing funds?
  • How long does a state have to wait until an NEU can be treated as “non-responsive” and the state can issue a subsequent distribution based on unclaimed funding?
  • How should a state treat a local government on the list posted on the Treasury website that is no longer in operation and has been dissolved?
  • How should territories allocate and distribute payments to their NEUs?
  • Can states pay entities that are not included in the list of local governments provided by Treasury?
  • Is a Second Tranche payment guaranteed for NEUs, provided that they comply with the terms and conditions of the funding?
  • How should states check to see whether an NEU is excluded or disqualified as outlined in the guidance?
  • Are states required to collect key information from the NEU as outlined in the guidance (e.g., banking information or top-line budget totals) or may states rely on existing information in their systems?
  • Do states have to collect actual budget documents to calculate the “75 percent budget cap,” or can they rely on a budget total?
  • Do states have to monitor NEUs for compliance with use of funds?
  • Is there a requirement to distribute funds to NEUs electronically, or can funds be distributed via check?

The League will continue to update members on the legislature’s activities around this funding as well as forthcoming updated guidance from the US and Michigan Department of Treasury.

Additionally, the MI Department of Treasury has joined with MML to host a webinar on the American Rescue Plan Act.  This webinar is scheduled for June 17th. Stay tuned for agenda information and registration details.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

New ARP Guidance for “Non-Entitlement Units” Released

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Monday evening, the US Treasury released guidance specifically related to the majority of Michigan communities that will receive American Rescue Plan Act funding on a per capita basis.

For Michigan, these Non-Entitlement Units (NEUs), are scheduled to receive more than $644 million in federal aid that will be distributed through the State of Michigan on a per capita basis.  While US Treasury did not attribute specific allocations to each of Michigan’s NEUs, they did provide a List of Local Governments eligible for this federal funding support.  This list also includes the 2019 census data that the State of Michigan will use to allocate this funding to our eligible NEUs.  The NEU definitional and data methodology is also outlined by US Treasury here.

Following significant lobbying by MML and our partners at the National League of Cities, this updated list of local governments from US Treasury recognizes all of Michigan’s villages as distinct NEUs, eligible for their own per capita allocation from the state.  This is an important acknowledgement for Michigan communities becasue of our unique system of local government compared with our national peers.  We are now working with the Michigan Department of Treasury and the State Budget Office to determine how the state intends to implement and distribute this funding based upon the specific guidance that US Treasury provided to the states.  According to language in the American Rescue Plan, the state is required to forward these dollars within 30 days of receipt from the federal government, with only minor allowances for extensions.  A state appropriation bill must be passed to distribute this $644 million to all 1,724 eligible Non-Entitlement Units in Michigan.

The League will continue to update members on the legislature’s activities around this funding as well as forthcoming updated guidance from the US and Michigan Department of Treasury.

HEADS UP – We are also working with the Michigan Department of Treasury on a webinar for local government officials in early June.  Stay tuned for agenda information and registration details.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

White House Briefing Offers Insights Into ARP Guidance Released Today

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Staff from the White House Office of Intergovernmental Affairs and the U.S. Department of the Treasury just wrapped up their second local government briefing following today’s release of the Interim Final Guidance for the Coronavirus State and Local Fiscal Recovery program within the American Rescue Plan (ARP) federal stimulus.

Here are some of ineligible uses of the American Rescue Plan support for municipalities. These were shared Monday as part of a presentation by the U.S. Department of the Treasury during a webinar Monday.

Prior to the briefing, Treasury and the White House offered a Fact Sheet that outlined many of the highlights found within the 150 page guidance document and accompanying initial FAQ. These documents are meant to assist states and local units of government with eligible expenditure opportunities for the stimulus funds.

Administration officials offered insight into many of the goals behind the inclusion of these state and local relief dollars within the stimulus bill, including a desire to blunt many of the negative impacts that the country’s economy experienced due to the contraction in economic activity from state and local governments following the Great Recession.  The Administration views the ARP as an opportunity to help states and local governments avoid a repeat of the post-Great Recession years by providing a longer tail of support that will allow local communities to weather any unforeseen shortfalls or economic downturns on the path to recovery.

Here are some of eligible uses of the American Rescue Plan support for municipalities. These were shared Monday as part of a presentation by the U.S. Department of the Treasury during a webinar Monday.

The presenters acknowledged the need for continuing work on the guidance and related FAQs in the coming weeks and promised a robust staff response through a call center, a planned series of additional briefings, and other updates and communications with local units of government.

Specific to Non-Entitlement Local Units of Government who will receive their funding on a per capita basis as a pass-through from the state, officials this evening relayed that individual allocations for those non-entitlement units are planned for release next week.  While today’s announcement and guidance release identified the overall funds that Michigan will receive for these non-entitlement units ($644.3 million), the individual amounts are delayed while Treasury continues to navigate the unique local government structure in each state.

Tonight’s presentation offered three main focus points as the driving force behind the guidance:

  • Fighting the pandemic
  • Replacing lost revenues
  • Building a foundation for a stronger economic recovery

Here are some of eligible uses of the American Rescue Plan support for municipalities. These were shared Monday as part of a presentation by the U.S. Department of the Treasury during a webinar Monday.

League staff and our partners at the National League of Cities are diving into the guidance documents tonight and over the next few days and we will be scheduling a series of webinars for members to help understand their meaning and opportunities for investment and fiscal relief as these dollars begin to be distributed from Washington.

League members are encouraged to visit US Treasury’s Coronavirus State and Local Fiscal Recovery Funds website for continuing updates and updated FAQs.  This website also offers access to the portal for receiving direct payments for those cities classified as Metropolitan Cities according to the Act. The link to the portal can be found here.

Local governments designated as non-entitlement units are eligible to receive Coronavirus State and Local Fiscal Recovery Funds, as provided in the American Rescue Plan Act. However, they will receive this funding from their applicable state government, not though this link.

SUBMISSION REQUIREMENTS

Here are some of eligible uses of the American Rescue Plan support for municipalities. These were shared Monday as part of a presentation by the U.S. Department of the Treasury during a webinar Monday.

To complete a submission on behalf of your jurisdiction, you will be asked to provide the following information:

  1. Jurisdiction name, taxpayer ID number, DUNS Number, and address
  2. Authorized representative name, title, and email
  3. Contact person name, title, phone, and email
  4. Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number
  5. Completed certification document (to be signed by the authorized representative)

Jurisdictions must submit a request to receive funding even if they have previously applied for other programs through the Treasury Submission Portal. Eligible jurisdictions will receive further communications regarding the status of their submission via the email address provided in the Treasury Submission Portal.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

John LaMacchia is the Assistant Director of State and Federal Affairs for the League handling transportation, infrastructure, energy and environment issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

Legislature Preps Competing Versions of State Budget

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Since their return from Spring Break last month, the House and Senate budget subcommittees have been working to finalize their respective versions of the state budget for every state department and program for the upcoming FY21-22 state fiscal year.  Those budget subcommittees recently released their proposed spending plans and they are now being considered by the full Appropriations committees in each chamber before they will cross to the opposing chamber for further consideration and conference committee discussions, which are expected following the state’s May Consensus Revenue Estimating Conference scheduled for Friday, May 21st.  These House and Senate proposals are being developed in response to the Governor’s Executive Budget recommendation released earlier this year.

The League has been extremely active on a number of key state budget components, especially revenue sharing and transportation funding, among other municipal priorities.  None of the proposed budget versions described below have been negotiated with the other chamber or with the Whitmer Administration and a final budget agreement, expected prior to the summer recess, will look extremely different as all three sides negotiate for their priorities.

In the House:

The General Government budget for FY 21-22 funds a number of state departments, including revenue sharing and the Treasury department and the Labor & Economic Opportunity department (MEDC) spending. This spending proposal is being developed within House Bill 4398.

  • The House proposal provides a 1% increase ($2.6M) to statutory revenue sharing as opposed to the Governor’s recommendation for a 2% increase ($5.2M).
  • The House language would also require any increased CVTRS revenue sharing a community received that is “underfunded” on their pension system to spend any increase from revenue sharing on their pension system.
  • Additionally, the House has added new language that would require all cities, villages, townships, and counties to maintain the same level of public safety funding as their prior budget had expended as a condition for receiving statutory revenue sharing.
  • Following a League request, the bill does include $290,000 to restore August revenue sharing payment losses for any community that was unable to utilize the CARES funding they received as a replacement for the stricken August CVTRS payment last year.  Also included is a $245,000 line item that we had requested to provide for a restoration of any forfeited revenue sharing payments due to a community missing the December 1, 2020 “dashboard” reporting and certification requirement, so long as the certification was submitted by February 1, 2021.
  • The Governor’s recommendation of $40M for shoreline erosion grants for the coming budget year were referenced in this bill with a $100 placeholder amount.  As an alternative approach, the House did propose funding that $40M in recommended spending for shoreline erosion in their current year budget supplemental proposal (HB 4420) which is outlined later in this article.
  • The House version did not include the Governor’s recommended $5M recommendation for grants to local units for recruiting and training first responders.
  • This bill does also not include the Governor’s recommendation for $10M to be deposited into MSHDA’s Housing and Community Development Fund and reduces the Business Attraction and Community Revitalization line items by $5.9M.
  • The House version does insert an additional $500,000 into the Rural Jobs and Capital Investment Fund for a total line item of $1.5M.

The House proposal for the Michigan Department of Transportation budget is outlined in House Bill 4409.  While the overall revenue available to the State Trunkline Fund is expected to stay relatively flat for the coming year, balancing lower gas tax and vehicle registration fee revenue against the full $600M earmark from the state income tax and expected higher federal aid opportunities, the following items are important for local road agencies:

  • Local road agencies are estimated to receive an additional $52.8M through their PA 51 distribution.
  • The House version agrees with the Governor’s recommendation to restore $12.8M to the Transportation Economic Development Fund and a $3M restoration to transit agencies through the Comprehensive Transportation Fund.
  • The House adds a $226M line item aimed at local road and bridge repair and replacement, and a new program funded with $374M designed to repay existing transportation bond debt.

The House Environment, Great Lakes, & Energy Department budget proposal for next year (HB 4397) did include the Governor’s recommendation of $15M for responding to dam safety emergency issues, but the House did not fund the $20M one-time recommendation for contaminated site clean-ups or the Governor’s $290M MI Clean Water Plan proposal.  The House also included a one-time allocation of $25M for PFAS clean-up and other emerging contaminates.

In the Senate:

Their General Government budget proposal is included in Senate Bill 82 –

  • The Senate proposal agreed with the Governor’s recommendation on statutory revenue sharing by funding a 2% ($5.2M) CVTRS increase.  Additionally, the Senate builds this 2% directly into the CVTRS base, where the Governor’s recommendation had this 2% increase listed as one-time.
  • The Senate maintained the current requirement that any CVTRS increase amount must be dedicated to an unfunded pension liability for any community identified as “underfunded” under PA 202.
  • Based upon the League request, the bill also includes $433,000 to restore August revenue sharing payment losses for the more than 100 cities, villages, townships, and counties that were unable to utilize the CARES funding they received as a replacement for the stricken August CVTRS payment last year.
  • The Senate did not include the Governor’s $5M recommendation for local first responder recruitment and training grants, but they did include a $50M 100% matching grant program for any community with a pension system funded at less than 40% that makes an accelerated payment towards that unfunded liability.

In the Senate LEO budget for the coming year (SB 85) the Governor’s recommendation for $10M in MSHDA’s Housing and Community Development Fund was not included.  The subcommittee did recommend an additional $15M for Pure Michigan and increased Arts and Cultural grants by $1.5M above the Governor’s recommendation.

In their EGLE budget proposal (SB 91), the Senate subcommittee included $15M for dam safety and put $10M towards high water and shoreline erosion grants, but declined to fund the $290M MI Clean Water Plan or the $20M recommendation for contaminated site clean-up.

The subcommittee recommendation for the MDOT budget is detailed in SB 92. The Senate included the Governor’s recommendation for increasing local road fund through the MTF by $52.8M and supported the restoration of last year’s cuts to the TEDF ($12.8M) and transit agencies within the CTF ($3M).

 

In addition to the work on the budget for the upcoming state fiscal year, each chamber is discussing competing proposals to spend portions of the December federal stimulus funding and the recently passed American Rescue Plan Act stimulus.  These supplemental budget appropriations would apply to spending in the current state fiscal year and represent very different approaches from the two chambers.  The Administration has issued their recommendations for the spending of the December federal stimulus, but await forthcoming US Treasury guidance before making detailed ARPA spending recommendations.

The House has two General Fund related supplemental budget bills on the House floor awaiting further action.  House Bills 4419 and 4420 propose approximately $6 billion in new, non-education spending for the current budget year.  Highlights from the two House bills that would impact local governments include:

  • HB 4419 would pass through the anticipated $686M in ARPA funds that are designated for the “non-entitlement” local units of government.  Pending the disbursement of those funds from the federal government to Michigan.
  • The bill also includes $103M in federal LIHEAP funding, $378M from the December stimulus proposal for rental and utility assistance and housing stability services, $68M for airports, $65M of federal funds for local road agencies, and $76M for rural transit agencies.
  • HB 4420 moves federal dollars into a number of state GF/GP line items to free up those GF/GP dollars.  The bill then appropriates those state GF dollars into a host of different programs and lines.
  • This bill puts $350M into the state’s rainy day fund.  It directs $40M into high water and shoreline erosion grants and $25M for PFAS remediation and $25M for contaminated site cleanup grants.
  • The bill fully funds the state’s Flint water settlement, appropriating $595M versus the annual $35M bond debt service that is currently planned.  Along the same lines, the bill invests $74M into State Trunkline Fund bond repayment and another $626M into a new Transportation Bond Repayment Sinking Fund.
  • Additionally for infrastructure, this bill would spend $250M for natural gas infrastructure expansion, $150M for broadband expansion, $250M for water and sewer replacement grants, and $300M for local road and bridge replacement and repair.

The Senate’s supplemental budget bill for the current year (SB 36) focuses mainly on appropriating the remaining December federal stimulus funds.  The only ARPA dollars in this bill are related to anticipated day care funding the state expects to receive from the March federal bill.  This bill is also on the Senate floor awaiting further action.

  • SB 36 appropriates the $378M federal emergency rental and utility assistance dollars allocated to Michigan.  $46M of additional FEMA disaster assistance.
  • Of the transportation funds the December stimulus allocated to Michigan, the Senate proposes a statute change that would allow all of the dollars coming into Michigan to be distributed solely to cities, villages and counties.  Under this proposal, cities and villages would receive $93.5M and counties would get $167.8M.  State trunklines would not receive any of these stimulus dollars.

 

With additional federal guidance on ARPA expected in the next week and the state’s May revenue estimating conference scheduled for later this month, most of the upcoming budget activity will likely focus on positioning the budget and supplemental bills for final negotiations between legislative leadership and the governor.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

US Treasury Releases ARPA Pre-Award Requirements

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Late last week, the US Treasury Department released the pre-award requirements that local governments will need to comply with in order to receive their allocated payments from Treasury for the Coronavirus State & Local Fiscal Recovery Fund in a timely fashion.  These requirements are similar to what local units needed to follow to access the CARES dollars that were distributed last year.

The following text was taken from the US Treasury webpage and provides the pre-award criteria to follow for municipalities that have been classified as Metropolitan Cities according to the ARPA (those cities that will receive a direct payment from Treasury) and those cities, villages, and townships that are classified as Non-Entitlement Units of Local Government that will receive their funds following pass-through from the state budget.  All League members should note that US Treasury has not finalized allocations or final classifications for cities and expect to have necessary spending guidance out in the coming weeks.

Prior to the formal launch of the Coronavirus State and Local Fiscal Recovery Funds Program, those entities that are eligible to receive a direct payment of funds from Treasury under the program should prepare certain information in advance as outlined below. By undertaking these preparatory steps, eligible entities will be better positioned to receive payments from Treasury in a more timely manner after the program is launched.
Direct payment from Treasury will be made to:

  • States (defined to include the District of Columbia)
  • Territories
  • Tribal governments
  • Counties
  • Metropolitan cities

All Federal financial assistance recipients must have a Data Universal Numbering System (DUNS) number and an active registration with the System for Award Management (SAM) database at SAM.gov. As a result, all eligible entities receiving direct payment from Treasury under the State and Local Fiscal Recovery Funds Program will need a DUNS number and an active SAM registration to receive payment. The DUNS and SAM registration process may take several business days to complete. Therefore, Treasury recommends that eligible entities begin those registration processes if they have not already completed them.

As soon as possible, these governments should take the steps below.

  1. Ensure the entity has a valid DUNS number. A DUNS number is a unique nine-character number used to identify an organization and is issued by Dun & Bradstreet. The federal government uses the DUNS number to track how federal money is allocated. A DUNS number is required prior to registering with the SAM database, which is outlined below. Registering for a DUNS number is free of charge.
    If an entity does not have a valid DUNS number, please visit https://fedgov.dnb.com/webform/ or call 1-866-705-5711 to begin the registration process.
  2. Ensure the entity has an active SAM registration. SAM is the official government-wide database to register with in order to do business with the U.S. government. All Federal financial assistance recipients must register on SAM.gov and renew their SAM registration annually to maintain an active status to be eligible to receive Federal financial assistance. There is no charge to register or maintain your entity SAM registration.
    If an entity does not have an active SAM registration, please visit, SAM.gov to begin the entity registration or renewal process. Please note that SAM registration can take up to three weeks; delay in registering in SAM could impact timely payment of funds.
    Click here for a quick overview for SAM registration
  3. Gather the entity’s payment information, including:
    • Entity Identification Number (EIN), name, and contact information
    • Name and title of an authorized representative of the entity
    • Financial institution information (e.g., routing and account number, financial institution name and contact information)

Eligible Non-entitlement Units of Local Government will receive a distribution of funds from their respective state government. “Non-entitlement units of local government” are defined in 42 U.S.C. 5302(a)(5) that are not metropolitan cities. For these Non-entitlement units of local government, Treasury will allocate and pay funds to state governments, and the state will distribute funds to non-entitlement units of local government in proportion to population. Non-entitlement units must have a valid DUNS number to meet reporting the requirements under the program. If an entity does not have a valid DUNS number, please visit https://fedgov.dnb.com/webform/ or call 1-866-705-5711 to begin the registration process.

Program guidance for the Coronavirus State and Local Fiscal Recovery Fund will be released in the coming weeks. Please continue to check this website for further updates.

Communities are encouraged to track updates from US Treasury and the National League of Cities as new guidance and estimates are prepared. Additionally, last week Treasury announced the formation of a new Office of Recovery Programs to assist with the implementation of many of the federal stimulus programs. The Office of Recovery Programs will oversee programs authorized through the CARES Act, the Consolidated Appropriations Act of 2021, and the American Rescue Plan Act, as well as other legislation. These programs include the State and Local Fiscal Recovery Fund, Emergency Rental Assistance, the Homeowner Assistance Fund, the State Small Business Credit Initiative, the Capital Projects Fund, the Coronavirus Economic Relief for Transportation Services (CERTS) Program, the Payroll Support Program, the Coronavirus Relief Fund and the Airline and National Security Loan Program.  Additional information on this new office is expected in the coming weeks.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.