City awaits further spending guidance

Burnsville officials have many unanswered questions about the city’s latest round of federal COVID-19 relief. But after more than a year of providing public services during a pandemic, some uncertainty over how $8.04 million can be spent is a good problem to have.

That’s Burnsville’s allocation from the $1.9 trillion American Rescue Plan Act signed March 11 by President Joe Biden.

Officials will know more after a 60-day comment period on guidance for using the funds issued May 10 by the Department of the Treasury.

Last year the city received $4.71 million from the $2.2 trillion federal CARES Act. The window for allocating that money was relatively short, but the city will have until the end of 2024 to allocate its American Rescue Plan funds, City Manager Melanie Lee told the City Council Tuesday.

Broadly, eligible uses include replacing lost revenue, responding to the public health emergency, providing direct aid within the community, improving infrastructure, and spending on housing and community development, according to a city staff report.

The federal guidance encourages spending that addresses racial disparities, inequities and disproportionate harm caused by the pandemic, the report said.

Local governments are encouraged to address “the real issues communities are facing,” Lee said.

Replacing lost city revenue is a council priority, she said, but some details are unclear.

“What we’re hearing is that lost revenue for general operations is presumed to be COVID-related,” Lee said. “We are still learning whether that includes our enterprise funds, including the Ames Center and the ice arena.” Enterprise funds are user-supported.

Also unclear is whether funds can be used for economic development, which enriches the tax base.

“Building back better, building our infrastructure, building our fiscal resiliency — is there a way we can use any of our funds to help with that?” Lee said.

Officials also wonder if federal money can be used to backfill property-tax revenue lost to declining market value of large retail malls.

The pandemic “had a very strong impact on our retail market,” Lee said.

Officials also want clarity on whether funds can be used to replace budget reserves spent last year on pandemic response and whether they can backfill revenue lost when the council gave bars and restaurants temporary waivers on liquor license fees.

The American Rescue Plan includes $350 billion in aid to states, municipalities and counties. There are many other “buckets of money” in the works for this round of pandemic relief, Lee said.

“We want to make sure we are filling a need that isn’t already being met in another program,” she said.

Allocations to cities were based on a federal formula whose measures include population, poverty level and age of housing, Lee said.

Last year the council set aside $2 million of its $4.71 million in CARES Act funding for relief grants for businesses and a few community nonprofits.

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