Local governments reject $73 million in pandemic relief

From small towns to big cities, every government across the United States was offered a slice of $350 billion in federal coronavirus relief funds to help shore up their finances, cover pandemic costs and invest in community projects.

Officials in 1,468 local governments — including 68 in Iowa -- effectively said "no," turning away a potential total of $73 million, according to an Associated Press analysis of data compiled from every state. The declined money ranged from $177 for the one-person village of Monowi, Neb., to $3.9 million for DeWitt County, Texas, population about 20,000.

The city of West Alton, Mo., a community of more than 500 at the confluence of the Mississippi and Missouri rivers, turned down a potential $106,341 in federal aid. Though the rejected amount was almost half the size of the city's budget, there wasn't much discussion about accepting it during a city council meeting.

"The conversation probably lasted 15 seconds. Without having really any need for it, it wasn't something we felt like we wanted to get in the middle of," Mayor Willie Richter said.

Other small-town mayors and village administrators provided a variety of reasons for rejecting the federal money. Some thought they had no eligible uses for it. Others didn't want the hassle of dealing with the federal bureaucracy, or were politically opposed to the financial aid approved last year by the Democratic-led Congress and President Joe Biden.

The AP's analysis identified 1,460 small cities, towns, villages or townships that declined a potential allocation of $61 million. That amounts to about 5 percent of the nation's roughly 28,000 small local governments, but just 0.3 percent of the total dollars allotted for those entities. Eight counties also have forgone a total of $12 million. No states or territories declined funds.

Iowa communities rejected a total of over $1.25 million. Sigourney, with a population estimated at 2,017, turned down $300,580.73. It was the largest Iowa community to refuse aid.

Mayor Jimmy Morlan said the City Council voted down the funds because the city already had received grants and “it seemed like a hassle to jump through the hoops to get qualified.”

“We had several grants going at the time that were taking care of the things we were interested in, so it arrived a little late, so to speak, for us,” Morlan said. “And then businesses weren't that interested because of all the information they would have to divulge and submit to get this, and it just seemed like a lot of work to get everything in for them.”

In September 2020, the city was awarded a $500,000 Downtown Revitalization Fund Community Development Block Grant that was intended for the improvement of seven building exteriors. More recently, Sigourney also received a $225,000 Community Development Block Grant from the Iowa Economic Development Authority for upper story housing in the downtown area.

Morlan said that the city is working on attracting businesses and people to the area, and the offer for the funds came at a time where Sigourney had funds and projects in the works to do so.

“At the time, it just wasn't the right timing for it,” Morlan said. “You know, everything that we wanted to do was already in the process.”

The smallest city in Iowa to turn down the funds was Le Roy in Decatur County, population 14. It turned down $2,086.33.

The U.S. Treasury Department said it was pleased with the overall response to the American Rescue Plan, which marked the first time it had distributed money to such a broad swath of governments across the nation. The pandemic aid began flowing to governments one year ago.

Data released by the Treasury show that, as of the end of 2021, a total of 1,756 states, territories and larger cities and counties had budgeted about $106 billion of the initial $208 billion they received. That money helped expand high-speed internet, assist residents with housing costs, provide aid to small businesses, shore up depleted unemployment funds and pay for public health initiatives and government services, among other things.

A second payment for local governments could come soon. But smaller governments that rejected the initial payment aren't eligible for the second round — a source of regret for some.

The Village of the Branch, on New York's Long Island, probably could have used the federal aid to improve the village hall, pave streets or repair water drainage systems, Mayor Mark Delaney said. But that wasn't clear to Delaney and other village board members when they declined the funds. At that time, the eligible uses seemed limited and the federal reporting burdensome.

Under a final Treasury rule issued in January, the village could have used its entire $183,149 allotment for almost any government services. But by then, the village's share already had been reallocated among other local New York governments.

"Because you did the right thing and you responded quickly, you basically lost out on an opportunity," Delaney said.

The Treasury Department said it worked with states and associations for local governments to simplify the application process, clarify the rules and encourage participation. Larger governments that got paid directly by the federal government had no deadline to accept the money.

States were in charge of passing along funds to so-called "nonentitlement units" of government — generally cities with fewer than 50,000 residents. Once a state received that money, it had 30 days to distribute it. But some states requested as many as eight monthly extensions, pushing their deadlines into 2022.

The board of Algoma Township, Michigan, voted last July to decline its $1.3 million allotment.

"We're very liberty-oriented, and we didn't want to be stuck as a township with any kind of strings attached or mandates," said township Supervisor Kevin Green, who considers the aid a waste.

But as Michigan kept extending the response deadline and township officials learned that their share would be redistributed to others, Green and some of his colleagues had a change of heart. They ultimately accepted the money.

"As conservative as we are, we're also practical," Green said.

Hannah Pinski of The Gazette contributed to this report