Maine’s local governments are set to receive more than half a billion dollars of pandemic-related federal relief funds, but most have yet to develop any major plans for investing the unprecedented windfall.

County and municipal governments in the state are entitled to almost $502 million from the American Rescue Plan Act, a coronavirus relief bill passed by Democrats and signed by President Biden in March.

Funding is intended to support urgent responses to the pandemic, replace lost government revenue, provide local economic relief and be invested in water, sewer and broadband infrastructure. The funding was broken into two tranches, with the first delivered two months after the legislation was passed, and the second to be distributed a year later. Governments have until 2026 to spend the funding on eligible expenses.

But the vast majority of Maine towns and cities have yet to receive funding, and others are considering where to make investments and whether to partner with one another and other entities to stretch the money further.

“I think a lot of communities are still trying to get a handle around the issue and how best to invest that revenue,” said Kate Dufour, director of state and federal relations for the Maine Municipal Association.

Typically, federal money flows into communities through competitive grants or as pass-throughs from the state, Dufour added. Direct payments of this magnitude are unheard of and could be used to make long-term investments instead of subsidizing regular municipal budgets, she said.

“Here is an opportunity to think a little broader about investing in broadband or affordable housing,” Dufour said. “We have this revenue available, and it is not taking away from other local priorities.”

Maine’s 16 counties and six “entitlement” cities that manage federal grants were allocated the first tranche of funding this month. But almost 500 towns and cities set to receive $119 million as a pass-through from state government may have to wait until August to receive the money.

The state was supposed to distribute funds 30 days after receiving them from the federal government, but it applied for a one-month extension to wait for final  U.S. Treasury program rules and create an online application portal.

Funding ranges from more than $2 million each for Sanford, Scarborough, Brunswick and Saco, to just over $300 for Glenwood Plantation, an Aroostook County hamlet that had just three residents in the 2010 census.

“We are attempting to keep the process for disbursement and accounting as streamlined and as simple as possible for municipalities, which is why we are creating and launching a portal for this purpose,” said Kelsey Goldsmith, communications director for the Department of Administrative and Financial Services. “It is our goal to distribute these funds quickly and expect Maine communities to have them in hand in short order.”

Even cities and counties that received funding directly are not rushing to spend it. Local governments have some flexibility to spend the money, but it cannot be used for any purpose they wish.

The money is eligible to pay for public health measures, vaccinations, personal protective equipment and things such as hazard bonuses for public and private front-line workers, grants to businesses, affordable housing, child care and other priorities.

But local governments can’t use the money to pay down debt, cover pension obligations or finance rainy day funds. It also cannot be used to reduce taxes or as matching funds for federal grants. And generally, local governments can’t use the funds to subsidize their budgets or pay for new roads, vehicles or equipment, unless they are covering a budget shortfall.

However, if cities use the money to replace lost revenue, it can be used to cover standard municipal expenses. South Portland has already committed about $2.4 million of its initial $5.3 million tranche, according to a city budget memo.

South Portland allocated nearly $1.4 million to cover lost revenue, covering capital improvement projects, part of a new fire engine and an asphalt roller. Another $738,700 was spent on public health and economic impacts, including mental health services, a new social services position and a health study. Premium pay for essential city workers was funded with $525,000, and another $350,000 went to broadband internet infrastructure.

That leaves the city with about $8 million over the life of the program.

“We are going to come up with a process over the next several weeks or so to ensure we get good input from the public and direction from the city council so that the funds are used in the most meaningful way possible,” said City Manager Scott Morelli.

Portland, set to receive about $46 million, the biggest amount for any municipality, envisions a public engagement process to collect ideas from the city council, administration and citizens, City Manager Jon Jennings said at a finance committee meeting last week.

“I think it is really important to have not only a council workshop, but a mechanism for us to hear from the public in terms of what priorities may be for the community that we might not be thinking about or recognizing,” Jennings said.

That could include collaboration between Portland and nearby communities, agencies and governments, including Cumberland County, about how to use funds collectively to the greatest extent, said Portland City Councilor Tae Chong.

“This is a generational investment – this should not be about backfilling programs we are doing now,” Chong said. “It should be about what kind of construction or programs we can build that gives us benefits beyond just year three and four, when the money runs out.”

Maine counties received some of the largest rescue act disbursements, from about $3.2 million for Piscataquis County to more than $57 million for Cumberland County.

But unlike other parts of the country, especially the South and West, Maine counties have minor administrative functions outside of sheriff’s offices, jails and courts.

“It is a unique situation in Maine and a lot of New England,” said Travis Kennedy, Cumberland County’s director of public affairs.

Moving forward, the county wants to assemble coalitions with towns, other parties and the state to put the money to the greatest regional use, Kennedy added.

“Our hope is that we may be able to find some ways to leverage each other’s resources to have bigger bang for our buck and prevent duplication of efforts,” he said. “The last thing we want to do is compete to solve the same problems when we could address them regionally.”


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