The Mayor's Five Alarm Assertion
As the Saratoga Springs City Council has struggled, often contentiously, to put together a city budget for 2023, Mayor Ron Kim, a Democrat, has chosen to blame his fellow Democrats in the previous City Council for the problems they are having with this task. At the recent Budget Workshop for the Public Safety Department, he shockingly falsely alleged that the problems they are having are because the previous Council had misused federal money from the America Rescue Plan Act (ARPA).
If his accusation were true, that the city "did exactly what the ARPA money wasn't supposed to do...", it should have been like ringing a fire alarm. It should have generated some kind of statement from Finance Commissioner Minita Sanghvi that she was initiating an investigation as to how this happened and what the city would need to do to address such a huge misappropriation. But of course, Mayor Kim's statement was false, and the city did not misuse the funds. Commissioner Sanghvi made no such statement.
It is striking how cavalierly Mayor Kim makes such a grave accusation. The city received $7.9 million from the federal government in ARPA funds. Were the federal government to agree with Mayor Kim, it would be a devastating blow to the city, which could have to pay back the funds.
ARPA Funding Requirements: Mayor Kim's Statement Is False-- Funding Can Be Used To "Fill Salary Holes"
The American Rescue Plan Act was signed into law in March of 2021 to provide additional funding to state and local governments in the midst of the Covid pandemic. According to the government document "American Rescue Plan Spending: Recommended Guiding Principles," the ARPA requirements are "very broad." It states, "The funding provided under ARPA provides a unique opportunity for state and local governments to make strategic investments in long-lived assets, rebuild reserves to enhance financial stability, and cover temporary operating shortfalls until economic conditions and operations normalize."
Possible uses for the funds include "revenue replacements for the provision of government services to the extent of the reduction in revenue due to the COVID-19 health emergency...."
The National League of Cities has a helpful Q & A webpage to assist cities in utilizing ARPA funds.
The following is from their webpage:
What are eligible uses for funding?
Municipalities are granted flexibility in choosing how they will spend their ARPA funds. As outlined in the Final Rule, funding must fit into one of the following categories:
- Responding to the public health and negative economic impacts of the pandemic
- Providing premium pay to essential workers
- Providing government services to the extent of revenue loss due to the pandemic
- Making necessary investments in water, sewer, and broadband infrastructure
Can recovery funds be used to fund lost revenue?
Yes, recipients can use SLFRF dollars to fund lost revenue. This is one of the eligible uses of ARPA funds. The definition of General Revenue draws on the Census definition of General Revenue of Own Sources (excluding utilities). The fiscal relief funds give recipients broad latitude to use funds to provide government services to the extent of the reduction in revenue or the standard allowance. Government services can include but are not limited to maintenance of infrastructure, modernization of cybersecurity, health services, school or educational services, and public safety services. When calculating lost revenue, recipients should sum across all revenue streams covered as general revenue for administrative ease.
The only restrictions on the use of funds listed in the American Rescue Plan Spending: Recommended Guiding Principles document are the following:
-Funds allocated to states cannot be used to directly or indirectly to offset tax reductions or delay a tax increase;
-Funds cannot be deposited into any pension fund.
It is curious that Kim was so disturbed that he could not show Tonko any projects funded with ARPA funds given that this document also warns that "Care should be taken to avoid creating programs or add-ons to existing programs that require an ongoing financial commitment."
In 2020 and 2021, the city used the money to maintain its services by, among other things, ensuring that the city had enough resources to keep key staff.
The use of ARPA money to "fill salary holes," as Mayor Kim put it, was totally appropriate and in line with ARPA guidelines and got the city through difficult times without sacrificing city services. That revenue hole has now been filled with the strong return of the city's economy. It is ironic that this current Council is creating its own future revenue hole by accepting the federal grant that requires the city to continue to fund 16 new firefighters after the grant expires. This City Council needs to take responsibility for developing a budget with the current costs and revenues they have to work with and stop trying to blame their fellow Democratic predecessors for the issues they are having.
A Docile Council Offers No Response to Mayor Kim's Claim
One has to wonder about the lack of response by Mayor Kim's colleagues on the Council to his alarming accusation. How can this be explained? I offer the following possibilities:
- No one on the Council actually listened to what the Mayor said.
- No one on the Council felt any responsibility to do anything about it.
- No one takes these kinds of accusations by Mayor Kim seriously anymore.