Small SC cities still waiting for their share of federal COVID relief money. Here’s why
More than 250 cities and small towns in South Carolina are waiting for access to their share of $435 million in federal COVID-19 relief money because the state government has yet to formally request the money.
As part of the American Rescue Plan Act money coming to South Carolina, $435 million has been designated to go to small municipalities, which will determine how to spend the money, under federal guidance.
However, for that money to come, the state must formally ask for the cash.
Larger cities — such as Columbia, Rock Hill, Charleston, Hilton Head Island, Myrtle Beach and Greenville — as well as county governments all receive direct payments from the federal government, according to the state’s Executive Budget Office.
Accelerate SC, a committee created by Gov. Henry McMaster to come up with recommendations on how to spend federal COVID relief money, is crafting proposals on where the American Rescue Plan Act funds should go.
“There’s a lot of the municipalities already getting a lot of money, but those are the things we’re discussing in this meeting today, is how to get the funds out to the places where they are needed. I would say we’re working hard to be sure that those funds are given to the places that need the money,” McMaster said.
According to the US Treasury Department, as of Monday, South Carolina was one of seven states not to request distribution of money for local governments that typically serve fewer than 50,000 people and are referred to as non-entitlement units.
The state’s move not to formally request the local government money from the federal government has drawn criticism from Democratic gubernatorial candidate state Sen. Mia McLeod, D-Richland.
“The longer South Carolina waits to request the $435 million in ARP funding available to our smaller cities and towns, the more our state loses in interest earnings, contractual opportunities, infrastructure investments and other economic boosts that will help jump start our local governments’ ability to fully recover,” McLeod said. “Smaller communities across SC need that funding now to begin their recovery from losses and devastation sustained during the height of the pandemic, which have been compounded by years of neglect.”
Among the allowed uses for the money are water and sewer infrastructure projects and expanding broadband internet access.
Department of Administration Executive Director Marcia Adams acknowledged smaller municipalities have discretion on how to spend their share.
However, “the state of South Carolina has a vested interest in maximizing the benefit of all federal Coronavirus relief funds received by the state and its political subdivisions,” Adams wrote in a letter responding to McLeod.
At an earlier Accelerate SC meeting, Adams suggested a possible cost-share program on infrastructure projects between the state and local governments to ensure ARP money would be spent in a way that is in accordance with the federal government rules.
Budget writers also are considering ways to incentivize certain expenditures “that will create a synergy among various state and local government funding streams,” Adams said.
Ultimately, cities know how much they each will be receiving, so they can have discussions on how to use the money when it becomes available.
“We have been advocating for our cities to look at the infrastructure projects piece of the ARP funds,” said Todd Glover, executive director of the Municipal Association of South Carolina. “We think a dollar-for-dollar match or any type of match that can help encourage our cities to expand their water, sewer or stormwater infrastructure would be helpful — not only would it help in some cases rehabilitate systems but also, water and sewer are great economic development catalysts.”
Relief needed ‘sooner rather than later’
Allowing cities to have money sooner may help them if they want to use the money for infrastructure projects, like was done with federal stimulus money doled out amid the Great Recession in 2009, when local governments were carrying out projects.
“What you found is that projects cost more to complete,” Glover said. “You also are seeing some inflation in our economy right now and also seeing a rise in the cost of goods. Either they’re not available or there’s a small supply and a high demand. By the time our folks get their money, get out there in the market to do these projects, the lack of contractors and the inflationary pressures could really end up resulting in them receiving about 75 cents on the dollar of actual use.”
The money would be useful for smaller towns with tourism-related economies to replace some lost revenue because people stopped traveling during the pandemic.
“We had a number of governments who were affected by revenue,” Glover said. “They were mostly around our tourism areas.”
He gave the example of smaller cities in the Grand Strand that are too small to receive direct payments from the federal government.
“From a revenue replacement side, they probably are hurting more than most,” Glover said.
One of those towns waiting for money is Batesburg-Leesville, which has a population of between 5,500 and 5,600 people. The town is expecting to receive about $2.7 million of ARP money.
“We’re definitely advocates for having the money come as soon as possible,” Town Manager Ted Luckadoo said.
Batesburg-Leesville still needs to decide how it will ultimately use the money, but has had discussions of what it is allowed to be used for.
“We’ve got our share of water and sewer infrastructure needs we’ve got to improve on, and I would certainly think that’s going to be in the discussion,” Luckadoo said.
Luckadoo said not having the money is not hurting the town, but he wishes smaller municipalities had the power to have it in their bank accounts.
“Certainly the sooner we could have access to the funds, the sooner we can do the improvements that are drastically needed,” Luckadoo said. “I can’t say it’s negatively impacting us, but we certainly would rather get the funds sooner rather than later.”
This story was originally published July 29, 2021 at 6:00 AM.
