The Arkansas Legislative Council on Friday granted the state Department of Finance and Administration up to $150 million in spending authority to use federal relief funds to reimburse cities and counties for their coronavirus-related expenses.
The $150 million is part of $1.25 billion that the state received under the federal Coronavirus Aid, Relief and Economic Security Act. A 15-member steering committee, appointed by Gov. Asa Hutchinson to recommend the best uses of the money, last week endorsed the cities' and counties' plan for the funds.
The state's 499 cities and towns will be eligible to be reimbursed up to a total $75 million, and the 75 counties will be eligible to be reimbursed the same amount, Association of Arkansas Counties Executive Director Chris Villines said Friday in a letter distributed to the Legislative Council.
Each city may get reimbursed up to a certain amount of federal funds based on its population, while each county's reimbursement will be partially based on a general turnback formula that the state uses and partially based on public safety compensation, according to Villines.
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"The allocation amounts are only to be used as a cap for reimbursement and are not assumed or distributed unless the city/town or county provides adequate documentation, which properly meets the requirements of allowable expenses," Villines said in his letter.
The cities eligible for the largest amounts include Little Rock, up to $7.6 million; Fort Smith, up to $3.4 million; Fayetteville, up to $2.9 million; Springdale, up to $2.8 million; Jonesboro, up to $2.6 million; North Little Rock, up to $2.4 million; Conway, up to $2.3 million; and Rogers, up to $2.2 million, according to figures distributed by Villines.
The counties eligible for the largest amounts include Pulaski County, up to $6.7 million; Washington County, up to $4.5 million; Benton County, up to $3.7 million; Sebastian County, up to $2 million; Craighead County, up to $1.8 million; Crittenden and Saline counties, up to $1.7 million each; and White County, up to $1.6 million, according to figures distributed by Villines.
Villines said the application process, being developed by the state finance department and the consulting firm CTEH, will be the mechanism through which cities, towns and counties can apply for and receive the reimbursements.
"The applications will be online and will be allowed if CTEH and [the finance department] determine that they are indeed allowable expenses under current U.S. Department of Treasury guidelines regarding allowable expenses under the CARES Act," he said in his letter. "Large expenditures (currently set at $50,000 or more) and non pre-approved expenditures will be reviewed by the CARES Act steering committee for inspection and approval or rejection."
Villines said the application process is designed to allow quick turnaround so excess federal relief funds return to the state and these excess monies will revert back to the CARES Act steering committee and Arkansas Legislative Council for use in other allowable ways.
"The first phase in the application/award process will have a deadline of October 30,2020," he said in his letter.
"A second and final application deadline will be November 16, 2020, to provide a minimal extension of time for cities/towns and counties to turn in additional information needed to approve applications or to submit new applications which were overlooked in the first round," Villines said. "This design will allow all unspent funds to return to the state of Arkansas for alternative uses in the second half of November."
State Rep. Jim Dotson, R-Bentonville, said some municipalities have utility accounts of customers that they haven't been able to cease service on for nonpayment because of restrictions during the covid-19 pandemic.
"Will any of these funds be able to be used to help residents cover the cost of their back bills for those utilities that haven't been discontinued?"
In response, Paul Louthian, a deputy director for the finance department, said, "Yes. That will be the type of expenditures that we'll be able to review and approve. We are looking at the rental assistance, mortgage assistance, food bank assistance. All of that will be on the table."
Louthian said the finance department will present at Wednesday's meeting of the CARES Act steering committee a list of expenditures that he would hope to be preapproved so those applications for reimbursement can be processed quickly.
At that time, the department also plans to introduce the application portal itself, he said.
"We'll start handing out the sign-on and log-ons to the cities and counties for them to enter in applications for reimbursement of expenditures already incurred and for projects that would be over that next 90-day period of time," he said.
"We are going to offer training, after we bring the portal up," he said. He added that four people from the contractors would be on-site to help.
Arkansas Municipal League officials started training staff members from the largest cities this week, Louthian said.
State officials have discussed some projects with county judges "that we think would be very quick wins for them, and we are trying to build those ... into the portal," he said.
Sen. Bruce Maloch, D-Magnolia, said "we know some of these funds will be turned back and I'm interested in doing something for our convention and visitors bureaus.
"They are limited in number in the state, but they've been hit tremendously hard, so I don't think it takes but a few million dollars to help them survive," he said. "They bring people into the state. They generate sales tax money from hotels, restaurants."
Elizabeth Smith, chairwoman of the CARES Act steering committee, said cities and counties could give some of their relief funds to the convention and visitors bureaus.
"We are looking at [federal coronavirus relief] funds that are coming back to us, and we are trying to count those dollars right now to see how much we have," Smith said.
In June, the steering committee recommended setting aside $250 million of the CARES money as reserve funds to allocate in the last three months of the year.
Sen. Missy Irvin, R-Mountain View, who serves on the steering committee, said she shares Maloch's concern.
"The tourism industry is a huge part of our economy in the state of Arkansas," she said.
Irvin said the steering committee last week endorsed a proposal to create a $50 million grant program to help the hospitality and self-service industry overcome the impact from the pandemic, which started in Arkansas in March.
Dotson asked about the status of this proposed grant program.
Louthian said he has been working with officials for the state Department of Parks, Tourism and Heritage to develop a list of expenditures eligible for reimbursement for the grant program and to create a business process for the program, but that hasn't been finalized yet.
"We are still in the middle of that," he said. "We are trying to get this down to a very simple, basic expenditure that we know they've had that we can reimburse on a very quick basis with a limited amount of work on their part and documentation and still meet the requirements of the CARES Act."
Smith said Parks, Tourism and Heritage Secretary Stacy Hurst plans to ask the Legislative Council to approve spending authority for the $50 million grant program during next month's meeting.